Skill up or lose out

by Andreas Schleicher
Deputy Director and Special Advisor on Education Policy to the OECD's Secretary-General

For the first time, the Survey of Adult Skills allows us to directly measure the skills people currently have, not just the qualifications they once obtained. The results show that what people know and what they do with what they know has a major impact on their life chances. On average across countries, the median wage of workers who score at Level 4 or 5 in the literacy test – meaning that they can make complex inferences and evaluate subtle arguments in written texts – is more than 60% higher than the hourly wage of workers who score at or below Level 1 – those who can, at best, read relatively short texts and understand basic vocabulary. Those with poor literacy skills are also more than twice as likely to be unemployed. In short, poor skills severely limit people’s access to better-paying and more-rewarding jobs.

It works the same way for nations: The distribution of skills has significant implications for how the benefits of economic growth are shared within societies. Put simply, where large shares of adults have poor skills, it becomes difficult to introduce productivity-enhancing technologies and new ways of working. And that can stall improvements in living standards.

Proficiency in basic skills affects more than earnings and employment. In all countries, adults with lower literacy proficiency are far more likely than those with better literacy skills to report poor health, to perceive themselves as objects rather than actors in political processes, and to have less trust in others. In other words, we can’t develop fair and inclusive policies and engage with all citizens if a lack of proficiency in basic skills prevents people from fully participating in society.

The case for acquiring and maintaining literacy skills is clear, but people’s proficiency varies widely. Roughly one in five adults in Japan and Finland reads at the highest levels on our test. In contrast, in Italy and Spain just one in twenty adults is proficient at that level, and more than one in three adults perform at or below the baseline level. And even highly literate nations have significant shallow areas in their talent pools. Across the 24 countries that took the test, more than 80 million people do not possess the most basic skills needed to succeed in today’s world. On top of that, in the United States, Poland, Germany, Italy and England, a difficult social background often translates into poor literacy skills.

And yet, the Skills Survey shows that some countries have made impressive progress in equipping more people with better skills. Young Koreans, for example, are outperformed only by their Japanese counterparts, while Korea’s 55 to 64 year-olds are among the three lowest-performing groups of this age across all participating countries. The results from Finland tell a similar story. But young Brits and Americans are entering a much more demanding job market with similar literacy and numeracy skills as their compatriots who are retiring.  The share of these countries in the global talent pool will shrink significantly over the next decades unless urgent action is taken both to improve schooling and to provide adults with better opportunities to develop and maintain their skills.

What our data also show is that actual skill levels often differ markedly from what formal education qualifications suggest. For example, Italy, Spain and the United States rank much higher internationally in the share of young people with tertiary degrees than in the level of literacy or numeracy proficiency among people that age. On average, young Japanese and Dutch high school graduates easily outperform university graduates in some other countries. In fact, in most countries at least a quarter of university graduates do not score higher than Level 2 on our literacy test, and are thus insufficiently equipped for what their jobs demand of them. Conversely, in Australia, Finland, Japan, the Netherlands and Norway, more than one in four adults without a high school degree have made it to Level 3 in literacy, which shows that people can, indeed, recover from poor initial schooling. Surely there are many reasons why skills and qualifications differ; but these data suggest that we may need to update and re-define our education qualifications.

We can’t change the past; but we can do something about our future. The Nordic countries, the Netherlands and Canada, for example, have been much better in providing high-quality lifelong learning opportunities, both in and outside the workplace, than other countries. They’ve developed programmes that are relevant to users and flexible, both in content and in how they are delivered. They’ve made information about adult education opportunities easy to find and understand, and they provide recognition and certification of competencies that encourage adult learners to keep learning. They’ve also made skills everybody’s business, with governments, employers, and individuals all engaged.

All this said, skills are only valuable when they are used effectively, and the Skills Survey shows that some countries are far better than others in making good use of their talent. While the US and England have a limited skills base, they are extracting good value from it. The reverse is true for Japan, where rigid labour-market arrangements prevent many high-skilled individuals, most notably women, from reaping the rewards that should accrue to them. At times, over-reliance on qualifications also makes it harder for those who have the right skills, but who did not have the same access to education as others, to gain entry into jobs where those skills can be put to full use. The data show that this is particularly true among migrant workers. Overall, the Skills Survey suggests that we can – and should – do better in matching the demand and supply of skills.

Figuring out how to get us there will not be easy, but the Skills Survey provides a foundation to build robust policies. It takes away excuses from those who are complacent, and it allows countries to set meaningful goals in terms of what’s achieved by the world’s leading skills systems.

Links:

OECD Skills Outlook 2013: First Results from the Survey of Adult Skills (2013)
Programme for the International Assessment of Adult Competencies (PIAAC) 
For more on skills and skills policies around the world, visit:
http://skills.oecd.org

Bridging the skills gap

by Kathrin Hoeckel
Analyst, Skills Beyond Schools Division, Directorate for Education

If you were to ask someone which countries tend to bear the brunt of a shortage of skills in this era of globalised trade, you couldn't fault them for thinking of developing countries.

While this is certainly true, the problem is by no means limited to poorer countries. Indeed, even in countries at the forefront of the developed world and consistently at the top of the PISA rankings, skills shortages can plague the economy.

Two such countries are Australia and Canada.

The Canadian Council on Learning says there is a clear “gap between the demand for workers with strong literacy and numeracy skills and the supply of Canadians who possess them.” They point out that the growth in the information communication technology industries, coupled with the reduced demand for unskilled workers due to foreign outsourcing, has only served to intensify the need for skilled workers. The question is why there is such a gap when Canadian teenagers do so well on tests such as PISA's. The answer, they posit, lies in the failure of adults to keep up with the “demands of the emerging knowledge society and information economy”. In other words, lifelong learning is as essential to a strong economy as successful schools (as can be seen in the OECD’s Education at a Glance statistics on adult participation in education and learning, job-related training is comparatively low in Canada).

Australian companies are also hard hit by the skills gap. The Australian Institute of Management recently released a study that found 82% of organisations admit to a skills shortage in their workplace, with middle management lacking particularly in leadership and technical skills.

Brian Schmidt, Australia's 2011 Nobel Prize winner for Physics, feels that a key problem is the lack of skilled teachers, particularly in maths and science. He points to the OECD’s Education at a Glance statistics on teacher salaries, which indicates that there tends to be a correlation between well paid teachers and students that excel.

The country's mining industry is suffering, in Mr Schmidt's opinion, from a direct consequence of this. He says that the industry's lack of highly trained engineers threatens the resource boom currently under way in Australia. He relates how the chair of the mining company BHP Billiton told him the biggest problem his company faces is finding highly skilled employees competent in mathematics.

The consequences could be dire for Australia. BHP Billiton predicts that the mining industry alone will require an additional 150 000 workers over the next five years.

Furthermore, Chris Evans, Australia's Minister for Tertiary Education and Skills, estimates that Australia will need over 2 million additional workers by 2015 with higher vocational education and training (VET) qualifications. To meet this challenge, Australia drew up ambitious plans just last year to improve its existing VET system (which, as Learning for Jobs: OECD Reviews of Vocational Education and Training shows, is already quite strong) by investing up to €15 billion by 2020.

In Latin America, an altogether different region of the world, the economic pain from the skills gap – evocatively known in Spanish as “la brecha”, or the breach – is also acutely felt. According to the Inter-American Development Bank (IDB), youth unemployment has increased across Latin America more than any other region in the world, and this can be directly attributed to young people lacking the skills required by the labour market. Not surprising when time and time again the research shows that poor skills go hand in hand with economic hardship.

In a study released earlier this month, the IDB stated that the youth in Latin America have a long way to go in developing the “interpersonal skills the market requires, such as responsibility, communication and creativity”. Its research shows that the majority of young workers across the region have informal jobs and lack social benefits.

One thing that is common to all these countries is that children from disadvantaged socio-economic backgrounds are disadvantaged when it comes to foundation skills in reading, mathematics and science (see OECD’s Education at a Glance statistics on equality in educational outcomes and opportunities). However, countries with the very best scores in PISA tend to have schools that are more inclusive. In other words, students can score well regardless of their socio-economic background. This in turn benefits the economy and society as a whole.

For if knowledge and skills are the global currency of the 21st century, countries will do well to stock up on their reserves. They can do so by encouraging people to learn, enticing skilled people to enter their countries, encouraging people to use and build their skills at work, retaining skilled people, matching skills to demand, and finally increasing the demand for high-level skills. That goes for economic heavyweights and flyweights alike.

Interested in learning more? Watch out for the OECD Skills Strategy, coming in May 2012, where we will lay the land for bridging the skills gap, turning brain drain into brain exchange, coping with ageing societies and declining skills pools and more.

Links:
OECD Skills Strategy
Education at a Glance 2011: OECD Indicators
Programme for International Student Assessment (PISA)

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