The global economy is evolving rapidly, creating challenges for firms to align the skills of their workforce with emerging skill needs, resulting in skill gaps in firms. This chapter examines how firms are addressing these skill gaps through strategies such as training and development, recruitment, changes in working practices and outsourcing. Drawing on new data from the PIAAC Employer Module, it also seeks to understand the relationship between firms’ practices for assessing skill needs and the reporting of skill gaps.
Understanding Skill Gaps in Firms
Results of the PIAAC Employer Module
Abstract
How firms address skill gaps
Firms use various strategies to address skill gaps, with the most common being training and developing existing staff. Nine in ten firms facing skill gaps employ this approach. Fewer firms rely on recruitment (49%) and changes in work practices (39%). Only a small share of firms addresses skill gaps through outsourcing or abandoning activities (5%).
The approach taken varies by firm size and sector. Larger firms with skill gaps tend to rely more on training (97%), while smaller firms often adjust work practices (42%), such as by redistributing tasks. Sectoral differences are modest, although service sector firms do provide more training than those in manufacturing.
Recognising skill gaps is essential to addressing them, and new evidence from the PIAAC Employer Module shows that anticipating skill needs is positively correlated with reporting skill gaps (73% of firms with a skill gap assess skill needs compared to 63% of firms with no gap). Firms that do not assess skill needs are least likely to know whether they have skill gaps. This points to the need for policies that support firms – particularly small and medium sized firms – to identify their evolving skill needs.
Recruitment is a key strategy for addressing skill gaps, allowing firms to bring in the skills they need for immediate operational needs. However, tight labour markets make recruitment increasingly difficult, particularly for technical skills. Data from the PIAAC Employer Module highlight the overlap between the skills that firms report as lacking in their own workforce and the skills that they find difficult to recruit in the wider labour market. In addition, data from Portugal show that firms with skill gaps are more likely to experience recruitment and retention difficulties. Taken together, these findings emphasise the need for firms to adopt a variety of strategies to address skill gaps, rather than relying on recruitment alone.
Firms with skill gaps are more likely to provide training (53% of firms with a skill gap provide training compared to 37% of firms with no gap). Larger firms and those operating in service industries are also significantly more likely to provide training. This suggests that training is a key strategy for addressing skill gaps.
Firms with skill gaps are less likely to use modern work practices. Data from Portugal shows that firms with skill gaps have a lower share of employees working in teams (46% vs. 48%), are less likely to have meetings to improve working practices (25% vs. 27%) and to use and update databases of best practices (23% vs. 31%) than firms without skill gaps. This suggests that these gaps limit their ability implement modern work practices.
Skill gaps have a direct impact on productivity, innovation and competitiveness (see Chapter 1). It is therefore crucial for firms to address them to ensure their long-term competitiveness in a changing global market. The literature identifies several strategies that employers can use to tackle skill gaps. These strategies include adapting organisational structures, adopting new technologies, fostering a culture of continuous learning, and adapting human resource management (HRM) practices to evolving needs.
Employers play a central role in shaping their organisation to both utilise existing skills and encourage the development of new ones (Greenan and Lorenz, 2017[1]). Decisions about organisational design and working practices directly influence how skills are used in the workplace and create opportunities for continuous skills development. A key area where employers can have an impact is using technology, particularly information and communication technologies (ICT). Research shows that employers’ decisions about how and when to use these technologies can reshape work processes – sometimes intensifying tasks, but also automating routine functions (Frey and Osborne, 2017[2]; Nedelkoska and Quintini, 2018[3]; Lane, Williams and Broecke, 2023[4]). These changes in skill requirements create opportunities for employers to up-skill their workforce, particularly in emerging areas such as artificial intelligence.
Management practices that encourage continuous learning and staff development are also essential. Techniques such as job rotation, autonomous teams and project groups create an environment that fosters skills development (Fialho, Quintini and Vandeweyer, 2019[5]; OECD, 2021[6]). In addition, organisations that emphasise employee autonomy and flexible co‑ordination mechanisms tend to foster more innovation by giving employees the space to explore new ideas and skills. Formal and non-formal training programmes also bridge the gap between current skills and future needs, reducing skill gaps within firms. Schwalje (2012[7]) stresses that these efforts need to be supported by long-term strategies that integrate internal and external training opportunities, with co‑operation between employers, educational institutions and policy makers playing a crucial role in developing responsive and flexible training programmes.
Human resource policies are another important tool for addressing skill gaps. Recruitment and selection processes allow firms to target specific skills needed to meet current and emerging demands. However, research suggests that recruitment alone may not be sufficient, particularly in the face of demographic change and increasing competition for talent (Braun et al., 2024[8]). Performance management, reward and career development policies are therefore essential to motivate employees to acquire and apply new skills.
This chapter draws on new data from the PIAAC Employer Module to examine the strategies used by firms to address skill gaps. It begins with an overview of the types of strategies used, followed by a more detailed analysis of the use of skill needs assessment, recruitment, training, and work organisation practices. Due to the optional nature of some of these aspects in the survey, some of the analysis is limited to certain countries where data are available.
The Employer Module asks firms about the three most important strategies they use to address skill gaps within their workforce. For the analysis in this section, strategies have been grouped into four categories:
Training and development: Offer training, offer internal job mobility, implement mentoring programmes or buddy schemes, increase performance monitoring, and provide regular feedback to staff.
Recruitment: Hire new staff with the necessary qualifications, skills, and competencies, potentially combined with training.
Work practice adjustments: Change work practices, reallocate tasks, and automate production processes.
Outsourcing or discontinuation: Outsource certain activities or discontinue them altogether.
The most frequently applied strategy by firms facing skill gaps is training and development (Figure 2.1). Around nine in ten firms with skill gaps in all countries use this option. Recruitment is the next most used strategy (between 40% and 57% of firms depending on the country), followed by changes in working practices (between 28% and 51%). Only a small proportion of firms use outsourcing or discontinuation of activities to address skill gaps (between 2% and 10%).
Firms in the Slovak Republic are more likely than those in other countries to report outsourcing or discontinuing activities in response to staff skill gaps (10%), although this still represents a small proportion of firms. Another notable deviation from the cross-country patterns observed is that firms in Hungary report a lower use of recruitment (40%) and a higher use of changes in working practices (51%) than those in the other countries in the sample. Box 2.1 discusses other ways in which firms in Portugal are changing their work practices.
Share of firms with skill gaps that use the named strategy, by country (%)
Note: Categories are grouped as defined in text.
Source: PIAAC Employer Module (2022).
Share of firms with skill gaps indicating strategy employed, by size group and country (%)
Note: Categories are grouped as defined in text; Small refers to firms that employ 10‑49 employees; Medium refers to firms that employ 50‑249 employees, Large refers to firms that employ 250 or more employees; some data for the Netherlands are censored due to confidentiality constraints.
Source: PIAAC Employer Module (2022).
Share of firms with skill gaps indicating strategy employed, by industry and country (%)
Note: Categories are grouped as defined in text; Manufacturing refers to NACE Rev. 2. B, C, D, E, Construction refers to NACE Rev. 2. F, Wholesale; Transport; Accom refers to NACE Rev. 2. G, H, I, Comm; Finance refers to NACE Rev. 2. J, K, Real Estate; Services refers to NACE Rev. 2. L, M, N, R, S; some data for the Netherlands are censored due to confidentiality constraints.
Source: PIAAC Employer Module (2022).
In all countries, large firms are more likely to offer training and development opportunities to their employees than small or medium sized ones (Figure 2.2). This is consistent with existing research showing that larger firms are more likely to provide training in general (OECD, 2019[9]; OECD, 2021[6]) and likely reflects the greater availability of human and financial resources in larger firms to devote to training and development. Managers in larger firms may also be better equipped to train and develop their employees. This is reflected in the wider literature which finds that managerial quality, including the quality of performance appraisal, is better in larger firms, with managerial quality in turn being an important determinant of firm productivity (Criscuolo et al., 2021[10]).
In contrast, small firms are more likely to make changes to their working practices to cope with skill gaps (between 33% and 52% depending on the country), such as redistributing work between teams. This is also in line with the literature suggesting that smaller firms may be more agile in responding to skill gaps (see Chapter 1). While outsourcing or discontinuing activities remains rare across the board, small firms in the Slovak Republic are more likely to use these strategies than all other firms.
Across sectors, firms tend to use similar strategies to address skill gaps, although there are some notable differences (Figure 2.3). For example, firms in the services sector are more likely to provide training to workers than those in manufacturing. In Hungary, service‑oriented firms are also more likely to hire new staff to address skill gaps. Moreover, firms in the communications and finance industries in the Netherlands are the least likely out of all countries and sectors to change their working practices.
Using additional data collected for Portugal, insights can be gained into how firms with or without skill gaps organise their work structures. Firms with skill gaps tend to have a smaller percentage of their workforce working in teams (46% vs. 48% for no gap firms), are less likely to have meetings to improve work practices (25% vs. 27%) and less likely to update databases of good practices (23% vs. 31%).
This suggests that skill gaps may prevent firms from tapping into their collaborative and innovative potential, underscoring the importance of alleviating skill gaps before they impact business performance and productivity. Firms with skill gaps may therefore tend to place a lower value on teamwork and improving work practices than firms with no skill gaps.
Assessing skill needs is a crucial first step in recognising skill gaps and then addressing them. Firms that incorporate these assessments into their planning processes can more effectively manage skill gaps and implement targeted strategies such as upskilling, reskilling, or strategic recruitment (OECD, 2019[9]; Sparkman, 2018[11]). Approaches to skill assessments vary, but often involve the collection and analysis of data on workforce trends, technological changes, and demographics (OECD, 2021[6]). This section examines the extent to which different types of firms assess their future skill needs and the link to skill gaps, analysing patterns across countries, firm sizes and sectors. It distinguishes between firms that do not assess skill needs, those that only do so intermittently and in response to staffing changes (i.e. on an ad hoc basis), and those that integrate such assessments into their overall approach to workforce planning.
There are relatively large differences between countries in the extent to which firms assess skill needs and the regularity with which they do so (Figure 2.4). Italy and Portugal have very high shares of firms engaging in skill needs assessment either regularly or on an ad hoc basis (83% and 80%, respectively), followed by the Netherlands (68%). Skill needs assessment is less common in the Slovak Republic and Hungary (49% and 41%, respectively). Portugal has the highest share of firms assessing skill needs on a regular basis as a part of the overall planning processes of the firm (34%), while on the other end of the spectrum, only one in ten firms in Hungary regularly assesses their skill needs.
Analysing differences between differently sized firms shows a familiar pattern. Between 85% and 95% of all large firms in all countries assess their skill needs, regularly or on an ad hoc basis (Figure 2.5). In contrast, small and medium sized firms are less likely to carry out these assessments, with particularly low rates in Hungary and the Slovak Republic (37% and 44%, respectively). Italy and Portugal show less variation between firm sizes, perhaps reflecting a generally higher commitment to skill needs assessment in the country.
Share of firms indicating use of skill needs assessment, by country (%)
Note: Countries are ordered by descending share of firms conducting skill needs assessments.
Source: PIAAC Employer Module (2022).
Differences between differently sized firms remain significant when controlling for other firm characteristics, such as size, industry and age (Table 2.1). This is consistent with research suggesting that larger firms, with more structured HRM systems and resources, are better placed to carry out skill needs assessment and long-term workforce planning. Smaller firms often lack the capacity for systematic assessment, leading to more reactive and short-term solutions to skills shortages (Braun et al., 2024[8]; OECD, 2021[6]). From a policy perspective, strengthening skill needs assessment in small firms could involve providing targeted support and resources to build assessment capacity, and encouraging partnerships between small firms, larger firms and training providers to address skill gaps more proactively.
The ability of firms to anticipate skill gaps is related not only to their size, but also to the sector in which they operate. Industries undergoing rapid technological change, such as ICT and manufacturing, are often under greater pressure to anticipate skill needs to remain competitive. However, firms in these sectors may also struggle to keep pace with these changes. In contrast, sectors with more stable skills requirements may not face the same urgency but can still benefit from regular skill assessments to improve workforce development. Data from the PIAAC Employer Module show that across countries, firms in service‑oriented industries, such as those in communications, finance and professional services, are more likely than firms in manufacturing and construction to engage in anticipating skill needs. The communications and finance sectors are particularly and significantly more likely than manufacturing to assess skill needs (Table 2.1).
Share of firms assessing skill needs, by size group and country (%)
Note: Small refers to firms that employ 10‑49 employees; Medium refers to firms that employ 50‑249 employees, Large refers to firms that employ 250 or more employees.
Source: PIAAC Employer Module (2022).
The use of skill needs assessment also correlates with the experience of skill gaps. Firms with skill gaps are more likely than firms with no gap to assess and anticipate skill needs (73% versus 63% on average across countries) (Figure 2.6). The difference between firms with and without skill gaps is particularly high in the Netherlands and the Slovak Republic – at about 21 and 12 percentage points, respectively. Further, firms that report that they do not know whether their workforce displays a skill gap are the least likely to assess skill needs. This is as low as 15% in Hungary. This shows that firms that are least aware of their skill gaps are also the least likely to use tools to identify changes in their skill needs.
Regression analysis assessing the link between skill gaps and skills assessment confirms these findings (Table 2.2), highlighting how firms with a skill gap are more likely to assess skill needs than those without a gap, after controlling for background characteristics (Model 1). However, firms with more pronounced skill gaps are less likely to anticipate skill needs than firms with moderate skill gaps (Model 2). These patterns suggest that firms that are proactive in anticipating skill needs may be better at detecting gaps early and addressing them before they worsen.
OLS coefficients
Note: Assess skill needs refers to firms that assess skill needs either regularly or on an ad hoc basis; Medium firm refers to 50‑249 employees, Large firm refers to 250 or more employees (reference category is small firms; 10‑49 employees); Construction refers to NACE Rev. 2. F, Wholesale; Transport; Accom refers to NACE Rev. 2. G, H, I, Comm; Finance refers to NACE Rev. 2. J, K, Real Estate; Services refers to NACE Rev. 2. L, M, N, R, S (references category is Manufacturing; NACE Rev. 2. B, C, D, E); Younger firm refers to firms created 2001‑20 (references category is firms created before 2000); regressions control for country; standard errors clustered at the country-size‑industry level; p-values in brackets; significance levels as follows: * p <0.05, ** p < 0.01, *** p <0.001.
Source: PIAAC Employer Module (2022).
Share of firms assessing skill needs, by experience of skill gaps and country (%)
Note: Gap refers to any size skill gap; countries are ordered by descending share of firms with a skill gap.
Source: PIAAC Employer Module (2022).
OLS coefficients
Note: Any size skill gap includes firms indicating skill gaps for some, few, most or all employees; Pronounced skill gaps include firms indicating skill gaps for most or all employees; Assess skill needs refers to firms that assess skill needs either regularly or on an ad hoc basis; regressions control for firm size, industry and country; standard errors clustered at the country-size‑industry level; p-values in brackets; significance levels as follows: * p <0.05, ** p < 0.01, *** p <0.001.
Source: PIAAC Employer Module (2022).
Recruitment is a key strategy for firms seeking to fill skill gaps, allowing them to bring in the specific skills needed to meet immediate operational needs. When thinking about how recruitment can address skill gaps, it is important to distinguish between external skills shortages and internal skill gaps that may arise after recruitment. External skill shortages occur when firms struggle to find suitably qualified candidates, resulting in hard-to-fill vacancies that can negatively impact business performance (Bennett and McGuinness, 2009[12]; Fabling and Maré, 2013[13]; Filippucci, Laengle and Marcolin, forthcoming[14]) Internal skill gaps, on the other hand, occur when employees are recruited but do not have the necessary competencies to perform their roles effectively. This might necessitate further training to close gaps. Increasingly tight labour markets make it difficult to rely on recruitment to address skill gaps (Braun et al., 2024[8]). Nonetheless, recruitment remains an important tool for firms looking to bring in new talent to fill skill gaps in the short term.
Using data for an optional survey question asked in Portugal, the Employer Module allows for an analysis of the severity of recruitment difficulties across different types of jobs. This data finds that a sizeable share of firms in Portugal report experiencing difficulties recruiting appropriately skilled staff. For jobs which normally require a formal vocational qualification, 50% of firms reported difficulty recruiting, 43% report difficulty for jobs which normally do not require any formal qualification or degree, and 24% for jobs which normally require a university degree (Figure 2.7). This may reflect the supply and demand of workers with these different levels of skills in the economy. The relatively lower difficulty of hiring workers for jobs requiring a university degree may reflect the relatively lower demand for workers, i.e. a lower supply of high-skilled jobs.
The main reason why employers struggled to fill these jobs is because too few or no applicants applied for the job (Figure 2.7). A shift towards removing or reducing qualification requirements in job advertisements as more employers adopt skills-first policies can help increase the pool of applicants going forward (OECD, 2024[15]). More generally, data from the Netherlands (the only country for which this data is available) indicate that 38% of firms experienced difficulties finding candidates who possessed the skills needed to do the job to the required level, reiterating again a relatively high share of employers facing hiring difficulties. Box 2.2 describes the reasons behind these recruitment and difficulties using data for Portugal.
Of the firms that face difficulty hiring appropriately skilled candidates, a very high share (63% in the Slovak Republic, 62% in Portugal and 56% in the Netherlands) state that these difficulties concern hiring for technical, practical, or job-specific skills. This is well ahead of any other skill area as the area of greatest concern. Around a quarter to a third of firms in Portugal and the Slovak Republic also report difficulties in recruiting for teamwork and problem-solving, which are also among the skills that firms identify as their biggest skill gap areas (see Chapter 1). These results highlight the strong correlation between skill gap areas and recruitment difficulties in specific skills.
The Employer Module can also provide insight into the extent of firms experiencing issues of staff retention, using an optional question deployed by Portugal. In Portugal, 37% of firms state that they recently encountered difficulties in retaining employees. This finding on retention, together with the findings on recruitment, likely reflects the tightening of labour markets following the COVID‑19 pandemic. The survey was conducted in 2021 and 2022 and captured data for 2020, a period marked by significant workforce disruption and skills shortages in many sectors as the economy began to recover after the COVID‑19 pandemic (OECD, 2022[16]). This made recruitment and retention more difficult for firms. Future iterations of the Employer Module and similar surveys should investigate whether staff recruitment and retention issues have persisted after COVID‑19.
Share of firms in Portugal experiencing difficulty hiring employees, by education group (%)
Note: Includes data for Portugal only.
Source: PIAAC Employer Module (2022).
Additional data from an optional survey question asked in Portugal provides insight into the reasons behind recruitment and retention difficulties (Figure 2.8). Just over half of firms in Portugal facing difficulties hiring or retaining employees state that there isn’t enough interest in the advertised job. The next most important reason is that employers believe that staff did not want to make a long-term commitment and that there is high competition from other employers. These data suggest that the reasons for recruitment and retention difficulties can be varied, with candidate preferences, competition and job conditions all playing a role.
Share of firms in Portugal experiencing difficulty hiring or retaining employees, by cause (%)
Note: Includes data for Portugal only.
Source: PIAAC Employer Module (2022).
Moreover, firms with a skill gap are more likely to report all the above difficulties to a greater extent than firms without a skill gap, which again underlines the link between internal and external skill imbalances. In addition, Chapter 1 finds that firms with a skill gap are very likely to experience an increase in the workload of existing staff, which can be seen as a common consequence of an inability to recruit appropriately skilled staff. Firms with skill gaps attempt to fill them by hiring new staff, as discussed in Chapter 1. There may therefore be a lag between the emergence of skill gaps and the recruitment of new staff. Alternatively, it may be the case that firms with skill gaps face persistent problems with their recruitment pipeline and should therefore consider alternative approaches to hiring new staff (OECD, 2024[15]).
Source: OECD (2024[15]), Bridging Talent Shortages in Tech: Skills-first Hiring, Micro-credentials and Inclusive Outreach, Getting Skills Right, OECD Publishing, Paris, https://doi.org/10.1787/f35da44f-en.
Training is the primary strategy for addressing skill gaps within firms, providing a proactive means of equipping employees with the skills needed to meet evolving business needs. By investing in targeted training, firms can fill immediate skill gaps, improve overall productivity, and better prepare for future challenges. Firms may also choose to hire not fully skilled workers and provide training as a cost-effective alternative to hiring fully skilled, more expensive workers (Marcolin and Quintini, 2023[17]). McGuinness and Ortiz (2016[18]) found that skill gaps are a key determinant of training investment, with firms more likely to engage in training when both employers and employees are mutually aware of skill gaps.
The direction of the relationship between training and skill gaps is not obvious. On the one hand, firms that prioritise and invest in training should experience fewer or less severe skill gaps – at least in the longer term. This is because training supports the continuous upgrading of skills, enabling employees to adapt to the changing needs of the firm. On the other hand, firms that invest in training may be more aware of and therefore more likely to report on their skill gaps, as they also conduct skill and training needs assessments. There may also be a lag between the provision of training and the closing of skill gaps.
Training is only effective in addressing skill gaps if it is high quality and targeted to help workers develop the specific skill they are lacking. Regular assessment of skill needs is essential to ensure that training remains relevant (OECD, 2019[9]; OECD, 2021[6]). This requires a strong link between skill needs assessment, and the development and implementation of training in firms. Without the alignment to skill needs, training becomes a missed opportunity that fails to improve productivity or business performance. It is important to note that the purpose of training goes beyond improving worker productivity by matching skills to job tasks, but also supports broader career development (Marcolin and Quintini, 2023[17]).
This section examines how firms use training to address skill gaps, focusing on the types of training offered, and the relationship between training and the severity of skill gaps across different sectors and firm sizes. On average across countries, over half of all firms offer some kind of training opportunity to their workers, with training offered by 38% of firms in Hungary, 59% in the Slovak Republic, 69% in Italy, 75% in Portugal, and 77% in the Netherlands. Firms are most likely to offer external continuing vocational training courses or provide on-the‑job training, though internal continuing vocational training courses, conferences or workshops, and self-directed learning are also frequently offered (Figure 2.9).
In line with the above findings on skill needs assessment, larger firms are more likely than small or medium sized firms to offer training to their workers, with almost all large firms in Portugal for example offering training (Figure 2.10). Even in Hungary, the country with the lowest share of firms offering training, large firms are 53 percentage points more likely than small firms to offer training. Large firms are also more likely to offer all types of training.
Differences between differently sized firms remain significant when controlling for other firm characteristics (Table 2.3). This finding mostly reflects the fact that larger firms have greater resources and therefore a greater capacity to offer training, as well more generally better awareness amongst management of the value of training. Financial and in-kind support for smaller firms can support the uptake of training, while more general guidance to help smaller firms identify, assess and address skill needs can help smaller firms adopt a more proactive approach to training.
Firms in the communications and finance sectors are more likely than those in manufacturing to offer training to their workers, even after controlling for other background characteristics (Table 2.3). This may reflect higher training needs present in these service sectors as well their greater ability to conduct skill needs assessment (as noted above). Additionally, this regression analysis shows that firms in wholesale trade, transport, and accommodation and food services are significantly less likely to offer training than firms in manufacturing.
Share of firms offering training, by type of training and country (%)
Note: Countries are ordered by descending share of firms providing training.
Source: PIAAC Employer Module (2022).
Share of firms offering training, by size group and country (%)
Note: Small refers to firms that employ 10‑49 employees; Medium refers to firms that employ 50‑249 employees, Large refers to firms that employ 250 or more employees.
Source: PIAAC Employer Module (2022).
OLS coefficients
Note: Offer training refers to at least one training activity offered to workers in reference year; Medium firm refers to 50‑249 employees, Large firm refers to 250 or more employees (reference category is small firms; 10‑49 employees); Construction refers to NACE Rev. 2. F, Wholesale; Transport; Accom refers to NACE Rev. 2. G, H, I, Comm; Finance refers to NACE Rev. 2. J, K, Real Estate; Services refers to NACE Rev. 2. L, M, N, R, S (references category is Manufacturing; NACE Rev. 2. B, C, D, E); Younger firm refers to firms created 2001‑20 (references category is firms created before 2000); regressions control for country; standard errors clustered at the country-size‑industry level; p-values in brackets; significance levels as follows: * p <0.05, ** p < 0.01, *** p <0.001.
Source: PIAAC Employer Module (2022).
The ability of firms to offer training also correlates with their experience of skill gaps (Figure 2.11 and Table 2.4), whereby firms with skill gaps are significantly more likely than those not reporting a gap to offer training (Model 1). However, firms with more pronounced skill gaps are less likely to offer training than those with moderate gaps (Model 2), indicating that the severity of skill gaps is inversely related to the extent to which firms enact solutions to address them. This may reflect challenges such as resource constraints or the complexity of addressing larger skills gaps. This suggests that firms with moderate skills gaps may be more proactive in offering training as a means of addressing gaps before they become more severe.
Most firms that do not provide training (76%) believe training is not needed; that is, they believe the existing qualifications, skills and competences in their firm are sufficient to satisfy the current needs of their firm. Another 43% of firms prefer to recruit new staff members with the required qualifications, skills and competences instead of training existing staff members. High costs and a lack of time are also noted as barriers to offering training by about one‑quarter of firms, which highlights the importance of both financial support and training courses that are more flexible (OECD, 2023[19]). Similarly, for firms that do provide training but not enough, over half believe that the training provided is sufficient for their business needs. Recruitment is also a preferred option amongst these firms, while cost and high workload are also commonly cited as barriers to further training. Finally, firms with skill gaps are much less likely than firms without gaps to believe that training is not needed (i.e. that the existing skills in their workforce are sufficient). This reiterates earlier findings that firms with gaps are more likely to address skill gaps through training.
Data from the 2023 Survey of Adult Skills can provide a complementary employee perspective on the extent of training offered to address skill gaps. About 40% of employees in the five countries included in the PIAAC Employer Module have engaged in some kind of training over the past year, ranging from 33% in Italy and Hungary to 60% in the Netherlands. Furthermore, about one‑quarter of workers engaged in job-related training that was funded by their employer. This relatively lower share highlights the gap between overall participation in training and the provision of employer-financed training.
When looking specifically at employees that self-report as under-skilled in the Survey of Adult Skills, rates of participation are much higher. On average across the five countries, 61% of under-skilled employees have engaged in some form of training over the past year, compared to 40% of all workers. This reiterates findings from the Employer Module which suggest that employees working in firms with skill gaps are more likely to receive training in order to address their gaps.
Share of firms offering training, by experience of skill gaps and country (%)
Note: Gap refers to any size skill gap; countries are ordered by descending share of firms with a skill gap.
Source: PIAAC Employer Module (2022).
OLS coefficients
Note: Any size skill gap includes firms indicating skill gaps for some, few, most or all employees; Pronounced skill gaps include firms indicating skill gaps for most or all employees; Offer training refers to at least one training activity offered to workers in reference year; regressions control for firm size, industry and country; standard errors clustered at the country-size‑industry level; p-values in brackets; significance levels as follows: * p <0.05, ** p < 0.01, *** p <0.001.
Source: PIAAC Employer Module (2022).
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