The importance of investing in the demand for skills
OECD research shows that to be successful in today’s knowledge economy, communities need to invest not only in the supply of skills but also in the demand for skills. By investing in skills demand, communities and businesses can become more competitive and can offer more qualified and better paid jobs, thereby improving their local economic profile and stimulating innovation.
What will the project examine?
The OECD LEED has begun work on the “Skills for Competitiveness” project to further examine the advantages of such demand-side policy interventions. The project will evaluate the policy and practice in LEED member countries, including Canada, the United Kingdom and Italy, and will also draw on good practice from across the world through an international literature review. It will build on the lessons learned from LEED’s recently published “Designing Local Skills Strategie” project, which showed that balanced skills strategies are important to raising local productivity and increasing socio-economic inclusion at the local level. The research identified that certain regions, particularly rural ones, are vulnerable to falling into a vicious cycle known as a ‘low-skilled equilibrium’ where a lack of skilled people is matched by a low demand for skills by local employers, who fail to produce quality jobs because they operate at a low level of productivity. In such areas many qualified young people leave to find better quality employment elsewhere. Those that are left suffer from low incomes and limited career progression, while the lack of productivity limits economic growth at the local level.
Understanding the balance between skills supply and demand
The OECD LEED Skills for competitiveness project will seek to better understand the balance between the supply and demand of skills at a local level, asking: how do skills levels vary across different localities and regions? Where are specific skills lacking to support the development of the local economy? Which are the strongest local employment sectors and how are skills used within these sectors? Which regions are particularly vulnerable to losing qualified people as they look for better quality jobs elsewhere? Crucial to answering these questions is having access to sophisticated data on skills needs and being able to accurately monitor industrial change, which can often pose a challenge. The study will review information and data availability in this field, undertake statistical analysis, and assess the best mechanisms for measuring the local knowledge base.
The project: who is involved and what will the outputs be?
At the same time, the project will seek to understand how skills policy can be better aligned with labour market needs, and investigate appropriate policy tools (such as training for managers, support for technology transfer, partnership working on innovation) to help practitioners tackle the problem of the low-skilled equilibrium. Local institutions and local business from participating countries will be fully involved in the project and a series of local case studies will be explored to highlight proactive approaches to the issue. In addition, a Peer Review Expert Group has been established to advise on the development of the project and formulate concrete policy recommendations and a series of capacity building seminars will be held.
The project will produce two key outputs:
- a report summarising the lessons learned for both policy and practice, including country reports (Canada, Italy, United Kingdom), and;
- a manual for practitioners. This will include a compendium of ‘state of the art’ approaches and suggestions as to tools which can be used at the local level.
For further information please contact Ms Francesca Froy
Conceptual framework for “Skills for competitiveness: tackling the low skilled equilibrium”