Secretary-General

Presentation of the OECD Skills Strategy Diagnostic Report: Mexico

 

Remarks by Angel Gurría,

Secretary-General, OECD

10 January 2017

Mexico City, Mexico

(as prepared for delivery)

 

 

Dear Ministers, Ambassador Pérez-Jácome, Ladies and Gentlemen,

 

It is a great pleasure to present the OECD Skills Strategy Diagnostic Report: Mexico. This report is the result of close co-operation between the National Productivity Committee (CNP), the OECD and the key players in the world of skills in Mexico, many of whom are here today.

 

The Skills Strategy of Mexico

 

Let me begin on a cautionary note. Skills are the new wealth of nations in the 21st century. They drive our countries’ economic performance and social development; they are the key to greater productivity; and they are vital to fostering inclusion. The task that the National Productivity Committee entrusted to us is therefore of great importance to Mexico.

 

Since March 2016, we have been working on an intensive programme with a very ambitious schedule. As with Austria, Korea, Spain, Norway, Portugal, the Netherlands, Slovenia and now Peru, a multidisciplinary team from the OECD led by our education experts began working with the CNP to identify the strengths, and especially the challenges, of the skills system in Mexico.

 

A very tightly packed schedule of meetings, visits to Mexico City, exchanges of information, statistics and documents ensued. Questionnaires on the development, activation, utilisation and reinforcement of the skills system (covering 65 broad themes in total) were used in order to identify the main areas of interest and co-operation among the CNP participants. We then discussed a smaller number of areas with stakeholders in the system.

 

We held two workshops, each involving around 80 participants including trade union representatives, business people, authorities, school leaders and government officials. Using the workshops and the exchanges of views that took place there, we conducted a rigorous, comprehensive analysis of Mexico’s skills challenges by way of four basic questions that underpin the pillars of the Skills Strategies.

 

The Diagnostic Report: a four-part analysis

 

The first question: are we developing the right skills?

 

On this point, the evidence revealed a landscape strewn with challenges. As noted by the OECD and Mexico for some time, the skills of students in compulsory education must improve markedly. The results of PISA 2015, presented recently, show that 48% of Mexican students aged 15 do not attain the baseline level of proficiency in science, a proportion that has remained virtually unchanged over the past decade. This highlights the urgent need to implement the Education Reform.

 

Another major challenge is to improve access to higher education, which includes reducing the drop-out rates for upper secondary education. Only 16% of Mexicans between the ages of 25 and 64 have a higher education qualification (45% in Korea), and the skills acquired by a large number of those who do obtain a university degree are not up to the mark. The seriousness of this issue is accentuated by the fact that the Mexican labour market continues to have one of the greatest positive wage differentials in the OECD for graduates. The main barriers to access include the high cost of higher education compared to wages, and the lack of funding for education for young people, while the quality of university education is adversely affected by weak regulation, inadequate quality control systems, poor incentives for teachers and low public investment.

 

The second question: is Mexico doing enough to activate skills supply?

 

Everything would point to the answer being “not yet”. There is still much for Mexico to do by way of removing the barriers to supply and demand for labour in order to activate skills in formal employment. Rates of participation and employment in Mexico continue to be the one of the lowest among OECD countries. Over half of workers in the country work long hours in informal jobs and earn low wages. Moreover, they receive little protection, training or opportunities for professional development. It must be acknowledged that there are barriers to the formal recruitment of such workers. High relative labour costs and a complex tax system are areas that require improvements.

 

We must place emphasis on skills activation among the most vulnerable population groups, such as young people and women. Over 20% of young Mexicans (and almost 40% in the case of the youngsters) are not in education or training and are therefore at high risk of languishing on the margins of education, work and society. They also run a high risk of being drawn into organised crime. Women also face significant challenges in activating their skills in the labour market. The Gender Review of Mexico that we are here to present states that only 47% of women of working age are part of the workforce, far below the OECD average of 67%.

 

Thirdly, is Mexico making effective use of its skills?

 

The Diagnostic Report reflects the fact that there are still significant mismatches and inefficiencies. For example, 26% of workers are over-qualified and 31% are under-qualified for the work that they do. Businesses and educational centres must work together to reduce these mismatches. The culture of co-operation that this requires is not yet sufficiently well established in Mexico.

 

In order to drive innovation and productivity, both demand for high skills and investment in research and development must rise. In 2013, Mexican businesses invested the equivalent of 0.2% of GDP in research and development. That figure is not only lower than the OECD average – it is in fact very much lower than the 3.3% invested by Korea over the same period. If Mexico is to reduce levels of informality drastically, then it must achieve higher levels of labour productivity; accordingly, productive units must work hard to raise levels of innovation, development and research; and the Mexican State must support them in that task.

 

The fourth question we tackled was: how can Mexico construct skills policies that produce better results?

 

One key aspect is to improve public and private funding for skills. Greater public-sector support for education is essential to improve quality. The fiscal system can be a powerful tool to that end, generating more attractive incentives to formalise employment. Mexico spends a considerable proportion of its GDP on education, but expenditure per student, and more importantly the quality of that expenditure, must improve.

 

It is also vital to step up co-operation within government and with stakeholders in the system. There are many government departments and authorities that influence the development, activation and utilisation of skills. The establishment of the National Productivity Committee is an important step in this process, but much remains to be done. Perhaps it is time to redesign the architecture of the public administration in Mexico to provide more effective legal and financial support for inter-ministerial co‑operation.

 

Accordingly, the next step in the OECD Skills Strategy for Mexico is to use this Diagnostic Report to identify sub-themes and more specific areas that can act as a departure point for co-ordinated action as soon as possible. The Chief of Staff and Sherpa of the OECD, who supervises studies on education and social issues, will abound at some points of this presentation. 

 

Ladies and Gentlemen, Mexico has one of the hardest-working labour forces in the OECD, but it has the lowest productivity. Mexico has one of the youngest, most enthusiastic and creative populations in the OECD, but the poorest levels of education. Skills hold the key. The only way to correct these imbalances, the only way to close the gaps, the only way to promote strong, long-term, inclusive, sustainable growth is to improve the skills of all Mexican women and men.

 

Therefore, I welcome the initiative taken by the Government of Mexico in requesting this report from the OECD, I welcome our long-term co-operation, and I welcome the strategic partnership between us that will make Mexico a more competitive, more productive, and fairer country.

 

Ladies and Gentlemen, Ministers, we are ready to embark on our work to draw up an Action Plan together.

 

Thank you very much.