Matching Skill Supply with DemandExperiences and lessons learned from World Bank supported activities

Margo HoftijzerSenior Economist

Education Global Practice

Turin - November 26, 2015

Building bridges between education and employment

This Presentation

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1. Key Messages

2. Critical Elements for Matching Skill Supply with Demand

3. Examples of World Bank Support to Matching Skill Supply with Demand

Skill MatchingGeneral Lessons Learned

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1. Skills matching requires a sound understanding of the nature and the causes of mismatches.

It includes identifying skill demand and supply, and constraints to skill matching. But this is only part of the story.

2. Education and training systems’ contribution to skill matching requires a life-cycle approach, and starts early.

Sound early childhood and basic education are essential to equip future workers with the necessary foundational skills, prior to TVET, higher education, and adult learning.

3. Knowledge on skills matching continues to grow, but sound and tested instruments exist to promote inclusive acquisition of relevant skills.

Information, coordination, and a sound system for service delivery (governance, finance, facilitation) are essential to structurally improve skills matching.

Labor and Skills ObservatoriesBest Practices

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Information is of high quality

Information is used

Information is useful

• Objectives clearly defined• Leadership & vision among

key stakeholders• Accountability to stakeholders

• Data available,

reliable, updated

• Statistical

infrastructure

• Analytical capacity

• End-users clearly

defined

• Products tailored

and presented in

accessible way • End-user incentives

to use information

Critical elements for matching skill supply with demand … and what can go wrong

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Successful skills

matching

Individuals invest in

Skills

Employers train &

coordinate

Responsive education systems

Labor markets

reward skills

• Inequitable access to quality and relevant education and training

• No strategy that considers short-and long-term demand expectations

• Weak coordination among employers, and with providers, to assess mismatches & facilitate education / training supply

• HR practices not skill-based (hiring, wages, promotion)

• No info on skill demand & supply used for decision making

• Implementation weaknesses re: e.g. governance, financing, incentives, and facilitation.

• No information on demand & supply to guide education/training decisions

• No incentives or possibility to train

Building bridges between education and employmentExamples of World Bank Support to Match Skill Supply With Demand

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Individuals invest in

Skills

Employers train and

coordinate

Responsive education systems

Labor markets

reward skills

Setting the stage (Analytical Support)1. Identify mismatches STEP skill demand and supply surveys

Preparing Reforms (Technical Assistance)2. Increase access to lifelong learning LLL Strategy Romania

Implementing reforms (Project)4. Improve skills info & relevance of TVET/HE Skills Project Macedonia

• Why? Generate knowledge to guide education & training reforms to better align supply with demand, on (i) skill demand, constraints, and employer perceptions/engagement with education & TVET providers; and (ii) skill base of adult population, and its relation with labor outcomes

• What? Skills-centered employer and household surveys, with a focus on various cognitive, socio-emotional, and technical skills

• Where? Globally. E.g. Armenia, Azerbaijan, Georgia, Sri Lanka, Vietnam and Yunnan (China). Ongoing in Kosovo, Macedonia, and Serbia, starting in Bosnia and Herzegovina

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1. Skills Toward Employment and Productivity (STEP)Examples of World Bank Support to Match Skill Supply With Demand

Selected findings

1. Firms need workers with a diverse mix of technical, socio-emotional, and cognitive skills, especially in innovative firms.

2. Different skills are linked with earnings. Cognitive, socio-emotional and job-relevant skills all correlate with higher wages, beyond a worker’s educational attainment.

3. Socio-emotional skills matter for school-to-work transition, especially conscientiousness, emotional stability, and grit.

4. Cognitive and socio-emotional skills beget job-relevant skills.

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1. Skills Toward Employment and Productivity (STEP)Selected preliminary findings, and policy directions

Policy Directions

1. Promote a diverse skill set throughout the education and training system

2. “Matching skills” starts early,considering that foundational cognitive & socio-emotional skills are built from ECE and basic education.

Where to intervene in the skills development system?Foundational skills remain a challenge in SEET countries

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Functionally illiterate/innumerate 15-year olds Early Child Education attendance

0%

10%

20%

30%

40%

50%

60%

70%

Albania Montenegro Serbia

functional illiteracy

functional innumeracy

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

BiH Macedonia Montenegro Serbia

Roma Poorest Richest

Source: World Bank staff estimates

Context:• Economic growth impeded by ageing, emigration, low employment, and low labor productivity• Skills shortages among labor force• Weak supply, participation, and relevance of adult learning. No stakeholder interaction.• Preparation of Strategic Framework for Lifelong Learning a condition for accessing ESF

Objectives:• Support development of LLL Strategy to increase participation in, and relevance of adult learning.

Approach:• Support over 13 months period• Combination of technical assistance and capacity building• Financed through European Structural and Investment Funds

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2. Support to a Life Long Learning Strategy in RomaniaExamples of World Bank Support to Match Skill Supply With Demand

Outcomes and Next Steps:

• Draft LLL Strategy prepared: (i) Access: financing to diversify provision and enhance demand(ii) Quality and Relevance: HE engagement, quality assurance, NQF, M&E(iii) Partnerships: stakeholder coordination, awareness campaigns, counseling

• Increased capacity for implementation:(i) Strengthened coordination and partnerships (consultations with 530 stakeholders from

government, training providers, employers, social partners(ii) Monitoring system developed, staff trained

• Implementation:(i) LLL Strategy adopted in June 2015(ii) Implementation 2016-2020, financed by EU funds(iii) World Bank to support monitoring of implementation

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2. Support to a Life Long Learning Strategy in RomaniaExamples of World Bank Support to Match Skill Supply With Demand

Context: • Constraints to promoting export-driven, competitive private sector• Low labor participation, wages, and labor productivity• Skill mismatch: high unemployment combined with recruitment difficulties. • Systemic weaknesses in ensuring quality and relevance of TVET and higher education

Objectives:• Improve quality and relevance of higher education and TVET, and improve innovation capacity.

Approach:• 5 year project (2014-2019)• USD 24 million World Bank loan• Implementation by government, with support from World Bank

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3. Skills Development & Innovation Support Project - MacedoniaExamples of World Bank Support to Match Skill Supply With Demand

Selected project elements

1. Establish Skills Observatory (with ETF) to guide key actors in providing/choosing relevant education and training (e.g. policy makers, students, job-seekers, firms, education providers).

2. Modernizing Secondary TVETa. Quality and relevance: occupational standards, competency-based curricula, teacher

training, equipment.b. Relevance and collaboration: school grants to promote relevance and practical training

through collaboration with industry

3. Higher Education - Transparency and Efficiency of Quality Assurance and Financinga. Quality Assurance: incl. EMIS, international external evaluationsb. Financing Reform: design, pilot, and roll-out of performance based funding modelc. National Technology Transfer Office: incl. to promote private sector engagement

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3. Skills Development & Innovation Support Project - MacedoniaExamples of World Bank Support to Match Skill Supply With Demand

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Thank you !