Remarks by Angel Gurría, OECD Secretary-General, delivered at a lunch hosted by Mr. SAITO, Vice-Chairman of BIAC, with members of Keidanren
Tokyo, 24th April 2012
(As prepared for delivery)
Dear friends, dear Mr. Saito,
It is a great pleasure to exchange views with Keidanren members on each of my visits to Tokyo.
Today, more than one year after the Great East Japan Earthquake, I would like to focus on the future, on a fundamental source of growth and human progress, for Japan as for every country: the skills of our people.
The skills of a country have become a determinant factor in their efforts to recover from the crisis and build a stronger, cleaner and fairer economic growth. The skills of our people represent that refined material with which we build the future of our nations, but it is also a key component of our solutions to immediate problems, like unemployment, poverty or climate change.
This is why at OECD we have developed a Skills Strategy, which we will present to our Ministers in May, during our upcoming Ministerial Meeting. This Strategy will help countries identify the strengths and weaknesses of their national skills systems, benchmark them internationally, and develop policies that turn better skills into better jobs and better lives.
We need to better understand the skills that drive our economies. We then need to make sure that those skills are taught and learned effectively over the course of our entire lives. And we need to provide an environment in which employers fully utilise the talent available to them. This is everyone’s business: governments, employers, employees, and learners need to establish sustainable arrangements as to who pays for what, when and how.
Let me share with you some of the main implications of the OECD Skills Strategy for a country like Japan.
It all starts with developing the right skills.
A generation ago, Japanese teachers could be sure that what they taught their students would remain relevant throughout their lifetime. Today, education and training need to prepare people for more rapid change than ever before, for jobs that have not yet been created, using technologies that have not yet been invented, to solve problems that we don’t yet know will arise.
Education today needs to be much more about ways of thinking, involving creativity, problem-solving and decision-making; about ways of working, including communication and collaboration; about tools for working, including the capacity to recognise and exploit the potential of new technologies; and, last but not least, about the capacity to live in a multi-faceted world as active and responsible citizens.
However, results from PISA – the OECD International Programme for Student Assessment -- show that many Japanese students still struggle with tasks requiring them to creatively use and apply knowledge in novel situations. For sure this is an area where Japan has seen important progress. But it still needs to work hard to create a culture of lifelong learning.
Here is what it takes to do this.
Japan first needs to gather and use better intelligence about changing skill demand. Japan can also better engage the business sector in designing and delivering curricula, education and training programmes. You need to link better the world of learning and the world of work.
Learning in the workplace allows young people to develop ‘hard’ skills on modern equipment, and ‘soft’ skills through real-world experience. Hands-on workplace training can also smooth the transition from education into the labour market and help to motivate disengaged youth to stay in or re-engage with the education system. It is also essential to ensure sufficient local flexibility in designing and managing training programmes.
Tapping underutilised resources and talents is also essential.
Once again, developing the right skills is just the beginning. The much harder challenge for Japan lies in making more effective use of its talent. In fact, many Japanese have strong skills, but for a variety of reasons they do not bring them fully to bear in the labour market. And we know from research – and from our own experience – that unused skills deteriorate.
In particular, the female labour force remains heavily under-used in Japan. In 2010, 63% of working-age women were employed in Japan, as opposed to 85% of working-age men. Japan needs to better identify inactive individuals and the reasons for their inactivity. It will need to create financial incentives that make work pay and dismantle non-financial barriers to participation in the labour force. One of these is the workplace culture, which promotes long working hours and excessively favours seniority. Japan will need to reform its remuneration and career systems, provide high-quality affordable childcare to all parents and encourage a more equal sharing of parental leave. This would help, inter alia, to reduce its gender pay gap, the second largest in the OECD.
In undertaking these reforms, Japan can find inspiration in our current OECD initiative on gender equality. This project looks at measures that encourage further gender equality in three critical areas: education, employment and entrepreneurship. We will present its first results in our up-coming Ministerial Meeting end of May.
But women are not the only underutilised labour resource in Japan. Older workers also have much to contribute and could be brought to the labour force. With the highest dependency ratio in the OECD, Japan will need to consider extending its retirement age, even if 69% of its older workers are already employed.
Aligning skills with demands and needs is another a key challenge
But even if the right skills are developed and people are willing to supply them, that does not guarantee that they will be effectively used. Youth unemployment is a tragedy in many OECD countries. And a bad start into professional life leaves scars. In this regard, Japan looks a lot better than most other OECD countries. But improvement is possible in some important areas. Let me highlight those where employers can act:
- First, Japanese employers need to re-align their business strategies with human-resource practices and skills development in their workforce. Firms that are good at deploying accepted best-practice management techniques are more innovative and perform significantly better. In well-managed firms, the skills of employees are used more productively and this also has a strong positive impact on job satisfaction.
- Second, Japan needs better information on the skills needed and available, including through transparent qualification systems. Quality career guidance should become a critical part of Japan’s skills strategy. It can steer individuals to the learning programmes that would be best for their prospective careers. Coherent and easy-to-interpret qualifications facilitate recruitment and matching. Competency-based qualifications provide employers with a sense of what a future employee can perform on the job. They also enable individuals with work experience to secure credentials reflecting their skills “learned on the job”.
- Third, Japan could benefit from still more flexible work arrangements. Family and professional lives are increasingly interwoven and have to be managed in parallel. Work places have to adapt to these changes and offer much more flexibility to avoid excluding individuals from active professional life, beginning with women. As already mentioned, this is crucial and duly documented in our report on Gender Equality.
Another avenue for Japan is to stimulate the creation of more high-skilled and high value-added jobs. Labour markets are not static; policies can ‘shape’ demand, rather than merely respond to it. By fostering competition, policy makers can contribute to stronger growth and the creation of more productive and rewarding jobs.
Last but not least, Japan needs still more entrepreneurs. This is critical for the economy to renew itself and stay creative. And entrepreneurship skills can be learned and fostered through education. Japan’s education and training institutions can help their students to identify opportunities, turn them into successful ventures, and recognise and respond to difficulties and obstacles that may emerge. In promoting entrepreneurship, universities themselves need to be entrepreneurial and innovative.
Ladies and gentlemen,
This is a tough agenda, but one on which Japan’s future critically depends. Without adequate investment in skills, people languish on the margins of society, technological progress does not translate into inclusive economic growth, and countries can no longer compete in an increasingly knowledge-based global society.
In short, skills have become the global currency of 21st century economies. But individuals lose the skills they do not use, so this ‘currency’ can depreciate. For skills to retain their value, they must be continuously developed throughout life. Getting the best returns on investment in skills depends on determining and anticipating the skills required by the labour market. It also calls for developing and using those skills effectively.
Working towards achieving this is everyone’s business. And employers have a central role to play. I am confident that Keidanren will be a key player in ensuring that Japan develops and implements a successful skills strategy. I look forward to discussing it with you.