Launch of the OECD Skills Strategy for Italy: Diagnostic Report

Remarks by Angel Gurría

OECD Secretary-General

Rome, Italy, Thursday 5 October 2017

(As prepared for delivery)

Dear Minister Padoan, Minister De Vincenti, Excellencies, Ladies and Gentlemen:

I am delighted to be in Rome to present an important policy tool for this nation: the Diagnostic Report of the OECD’s Skills Strategy for Italy. We hope this report will catalyse a national conversation on skills and put Italy on the path to more prosperous, sustainable and inclusive growth.

Special thanks to Minister Padoan for his leadership in launching this project, along with Minister De Vincenti and all the Under-Secretaries and officials from the tavolo interministeriale. This study has been a truly collective effort ─ the result of collaboration with five Italian ministries and more than 200 key stakeholders. I would also like to thank the European Commission for providing financing and data.

Skills challenges have contributed to sluggish growth

In the post-war period, Italy enjoyed high growth by exploiting its decentralised production base and nurturing the technical and vocational skills needed for specialised manufacturing. But over the past fifteen years, Italy’s economic performance has been sluggish and productivity has stagnated. This is partly due to skills challenges.

Italy is struggling more than other advanced economies to meet growing demand for new and higher levels of skills in response to globalisation, digitalisation and demographic change.

The OECD Survey of Adult Skills (PIAAC) reveals that over 13 million adults ─ or 40% of Italy’s adult population ─ have low numeracy and literacy skills. This is much higher than the share of low-skilled adults across OECD countries, who on average make up 27% of the population. It is also higher than what is observed in Germany and Poland, where the share of low-skilled adults comprise 23% and 29% of the population, respectively. Italy also has a relatively low share of first-time tertiary graduates at 35% ─ on par with countries like Hungary, Mexico and Luxembourg ─ compared to the OECD average of 49%. But, on the upside, Italian workers display relatively good ‘readiness-to-learn and problem solving’ skills, suggesting that more targeted education and training policies could help develop and make better use of skills.

Italy has already taken important steps towards this, through an ambitious reform process. The Good School Reform, the Jobs Act, and the Industry 4.0 programme have been milestones. This report can help build on this progress, by improving the way the skills of Italians are developed, activated, and used in the labour market.

Let me share with you some of the findings of the study.

Developing skills

Firstly, on developing skills. Thanks to the Good School reform, young Italians can now acquire work experience while still in school. Italy’s new tertiary professional education institutes (Istituti Tecnici Superiori – ITS) are also producing positive results in terms of graduates’ employability. And the Provincial Centres for Adult Education (CPIAs) are increasing the provision of adult education and training.

The OECD Skills Strategy Report makes a number of recommendations that will help sustain this positive momentum. For example, we recommend:

fully implementing the Alternanza Scuola Lavoro (ASL) and increasing incentives for firms to host trainees;
expanding and improving the quality of professional tertiary education institutions (ITS); and
subsidising training programmes that target low-skilled adults who often face difficulties in accessing such opportunities.

Activating skills

But developing skills is not enough. Italy also needs to step up efforts to “activate” skills in the labour market. Italy’s employment rates remain among the lowest in the OECD at 58% in the 2nd quarter of 2017.

Italy’s reforms have already help create around 850,000 jobs since 2015, both by establishing new permanent contracts and converting temporary, atypical, and apprenticeship contracts into permanent ones.

This report is on hand to support Italy to realise the full potential of these reforms, recommending, for example, that Italy:

strengthen collaboration between the National Agency for Active Labour Market Policies (ANPAL) and local actors in the delivery of labour market programmes, ensuring that ANPAL can set national standards and monitor performance;
scale up resources for public employment services (PES) and active labour market policies;
design active labour market policies that are based on local skills needs by consulting with firms, education and/or social institutions;
provide better career guidance services for youth, and fully implement the Youth Guarantee; and
stimulate job creation by permanently lowering employers’ social security contributions.

Finally, Italy should also support the use of flexible working arrangements, provide access to affordable childcare to help Italians balance work and family life, and encourage spouses to work.

These are just a few examples of the main recommendations in the report on how to develop and activate skills. These are key; however, so is making full and effective use of skills!

Using skills

Italy is currently trapped in “low-skill equilibrium” ─ the low supply of skills is accompanied by low demand from firms.

To boost Italy’s sluggish skills demand and help firms become more innovative and active on international markets, the government has introduced the Industry 4.0 National Plan (Industria 4.0). Shifting towards new technologies will require technological hubs to engage with firms and support skills development across the country, including in the south.

The OECD Skills Strategy Report identifies several ways in which Italy can tackle this low skill equilibrium. These include policies to:

improve the entrepreneurial and managerial skills of employers, especially in family owned enterprises and in SMEs;
disseminate Industry 4.0 technologies and related initiatives to all firms, particularly smaller ones;
encourage the use of wage incentives and bonuses linked to worker productivity to make fuller use of available skills; and
promote cost sharing through tax credits, so that SMEs operating within the same supply chains can afford to hire skilled workers.

All these recommendations can help Italy achieve a sustainable improvement in skills outcomes, but all rely on well coordinated and aligned governance systems.

Strengthening the skills system

Efforts to improve collaboration between different levels of government, like the “Delegation to the Government for Public Administrations’ Re-Organisation Law” and the Open Government Initiative, have strengthened the capacity of Italy’s public administration to interact with citizens and business.

But Italy can do more:

First, there is a need to fill existing gaps in skills assessment and anticipation by facilitating long-term planning, involving all key actors and including more evidence about available skills ─ including soft skills.
Second, the dissemination of information and data about skills should be strengthened to position everyone to make informed decisions about education, training, and work.
Third, information sharing across ministries, subnational levels of governments and all relevant stakeholders must be enhanced to adopt a whole-of government approach to skills policies.
Fourth, transparency and accountability should be strengthened by clarifying responsibilities across public authorities and introducing reporting requirements.
And, finally, Italy needs to increase private, but also public investment in skills, and carefully monitor and evaluate the way investment is allocated and its results. Italian authorities have to make their way along the “narrow path” ─ to quote Minister Padoan ─ to find a sustainable equilibrium between managing high debt and propelling Italy forward with policies that strengthen education, labour market outcomes and innovation.

Ladies and Gentlemen:

One the greatest sons of Italy, Leonardo da Vinci, whom you might also describe as a highly-skilled individual, said “Knowing is not enough; we must apply. Being willing is not enough; we must do”.

This is what skills are all about. Applying knowledge to action, to create opportunities, to drive innovation, to adapt to change, to deliver more sustainable and inclusive growth. And this call to action applies to policy too. Italy is already engaged in an ambitious reform effort and the OECD is committed to help you go further. Together we can design, develop and deliver, better skills policies for better lives in Italy. Thank you.