Skills will drive inclusive economic growth in Portugal

by Andreas Schleicher

Director, Directorate for Education and Skills

Skills and human capital are the bedrock upon which Portugal is building a new bridge to growth.

Portugal is recovering from the most serious economic and financial crisis the country has experienced in recent history. The reform agenda over the past few years has been ambitious, comprehensive and challenging.

Awareness is now growing among policy makers, employers and households that Portugal’s future economic and social well-being will depend upon securing equitable and high-quality education and jobs while promoting innovation and entrepreneurship.

Portugal is on the road to recovery

Signs of Portugal’s recovery can be seen across the board. Youth unemployment and long-term joblessness rates are falling, even if levels remain too high. Job creation is picking up, and the majority of new jobs created in 2014 were on permanent contracts, which is a good indication that Portugal’s longstanding labour market dualism has been reduced by recent reforms. Educational attainment levels and learning outcomes are rising steadily, as reflected in Portugal’s PISA scores which now approach the OECD average. Measures have been introduced to stimulate entrepreneurship, and in 2014 Lisbon was selected as one of the European Entrepreneurial Regions (EER), in recognition of its strategies to promote entrepreneurship and spread innovation among small and medium enterprises (SMEs).

Building a shared diagnosis of Portugal’s skills challenges 

We know that in countries where a significant proportion of adults have poor skills, it is difficult to introduce productivity-enhancing technologies and new ways of working. This, in turn, stalls innovation and improvements in living standards.

Yet skills affect more than just earnings and employment. Data from the Survey of Adult Skills (PIAAC) show that 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.

Put simply, a lack of proficiency in foundation skills prevents people from fully participating in society and democracy.

In the course of 2014, we have worked closely with Portugal on a collaborative project to build a more effective skills strategy. Throughout this initial diagnostic phase, we have witnessed strong commitment to improving Portugal’s skills outcomes across central and local governments, employers and trade unions, as well as education and training providers.

Today, the results of this work are published as the OECD Skills Strategy Diagnostic Report: Portugal. The Prime Minister of Portugal, Mr Pedro Passos Coelho, will be officially launching the report in Lisbon together with the OECD Secretary-General, Mr Ángel Gurría. This is a strong signal of the importance afforded to skills policies in Portugal.

Portugal’s 12 skills challenges

The diagnostic report applies the framework of the OECD Skills Strategy to identify 12 skills challenges for Portugal as it seeks to maximise its future skills potential. These skills challenges were distilled from a series of four interactive workshops held in Lisbon and Porto in 2014, which engaged a wide range of stakeholders. The report includes a rich set of evidence from OECD and other sources, and offers concrete examples of how other countries are tackling similar skills challenges.

So what are the main skills challenges facing Portugal today?

With regard to developing relevant skills, the report concludes that Portugal should focus its efforts on:
- Improving equity and quality in education
- Strengthening the responsiveness of VET to labour market demands
- Targeting adult education and lifelong learning towards the low-skilled

When it comes to activating its skills supply, Portugal will need to tackle the challenges of:
- Reducing youth unemployment and NEETs
- Increasing labour market re-entry for the long-term unemployed
- Reducing barriers to employment

Furthermore, Portugal could make more effective use of the skills it has by: 
- Promoting entrepreneurship
- Stimulating innovation and creating high-skilled jobs
- Providing employers with incentives to engage in skills development, especially SMEs

Finally, Portugal could improve the overall governance of the skills system by: 
- Financing a more equitable and efficient skills system
- Adjusting decision-making power to meet local needs
- Building capacity and partnerships for evidence-based skills policy

Moving from diagnosis to action 

Taken individually, these challenges may not be new or surprising to the people of Portugal. Yet by laying them out side by side, the need for a more systemic approach to skills policies emerges clearly.

As the diagnostic report demonstrates, skills policies are not just a matter for one ministry. Tackling skills challenges requires a whole of government approach. Moreover, skills are everybody’s business. Stakeholders and civil society need to play an active role in developing and implementing skills policies that are sustainable over the long term. 

By bringing together stakeholders, ministries and agencies to map out Portugal’s skills challenges, this project has built shared insights and deeper mutual understanding. The next step for Portugal will be to decide which challenges should be tackled as a priority and to develop concrete plans for action. This will mean building on the many reforms already underway and the continued engagement of all skills stakeholders.

Skills and human capital are the bridge to a more inclusive and prosperous future for the people of Portugal. The OECD stands ready to support Portugal as it designs and implements better skills policies for better jobs and better lives.

Links:
OECD Skills Strategy Diagnostic Report: Portugal 
OECDSkills Strategy
Survey of Adult Skills
For more on skills and skills policies around the world, visit: skills.oecd.org
See also the country page on skills for Portugal

Photo credit: The 25 de Abril bridge over Tagus river and big Christ monument in Lisbon at sunset, Portugal/ @Shutterstock 

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Knowledge and skills are infinite – oil is not

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

As the bible notes, Moses arduously led the Jews for 40 years through the desert – just to bring them to the only country in the Middle East that had no oil. But Moses may have gotten it right, after all. Today, Israel has an innovative economy and its population enjoys a standard of living most of its oil-rich neighbours don't offer. More generally, countries with greater total rents from natural resources tend to be economically and socially less developed, as exports of national resources tend to appreciate the currency, making imports cheap and the development of an industrial base more difficult. And as governments in resource-rich countries are under less pressure to tax their citizens they are more prone to autocratic leadership.

But there is more to this: OECD’s PISA study shows that there is also a significant negative relationship between the money countries extract from national resources and the knowledge and skills of their school population (see figure): Israel is not alone in outperforming its oil-rich neighbors by a large margin when it comes to learning outcomes at school, this is a global pattern that generally across 65 countries that took part in the latest PISA assessment. Exceptions such as Canada, Australia and Norway, that are rich of natural resources but still score well on PISA, have all established deliberate policies of saving these resource rents, and not just consuming them. Today’s learning outcomes at school, in turn, are a powerful predictor for the wealth and social outcomes that countries will reap in the long run.

One interpretation is that in countries with little in the way of natural resources - other examples are Finland, Singapore or Japan - education has strong outcomes and a high status at least in part because the public at large has understood that the country must live by its knowledge and skills and that these depend on the quality of education. So the value that a country places on education seems to depend at least in part on a country’s view of how knowledge and skills fit into the way it makes its living. Placing a high value on education may be an underlying condition for building a world-class education system and a world class economy, and it may be that most countries that have not had to live by their wits in the past will not succeed economically and socially unless their political leaders explain why, though they might not have had to live by their wits in the past, they must do so now.

The most troubling implications of these data relate to the developing world. Many of the countries with below-average GDP succeeded to convert their national resources into physical capital and consumption today, but failed to convert these into the human capital that can generate the economic and social outcomes to sustain their future.

But there is an important message for the industrialised world too. Particularly in these times of economic difficulties, it is tempting to resource our standard of living today through incurring even greater financial liabilities for the future. But in the long term, there is no way to stimulate our way out or to print money our way out. The only sustainable way is to grow our way out, and that requires giving more people the skills to compete, collaborate and connect in ways that drive our economies forward. Without sufficient investment in skills people languish on the margins of society, technological progress does not translate into productivity growth, and countries can no longer compete in an increasingly knowledge-based global economy.

In short, knowledge and skills have become the global currency of 21st century economies. But there is no central bank that prints this currency, you cannot inherit this currency and you cannot produce it through speculation, you can only develop it through sustained effort and investment by people and for people.

Moreover, this new ‘currency’ depreciates as skill requirements of labor-markets evolve and individuals lose the skills they do not use. The toxic coexistence of high unemployment and skill shortages in many countries today illustrates that producing more of the same graduates is not the answer. To succeed with converting knowledge and skills into jobs, growth and social outcomes which nations require, we need to develop a better understanding of those skills that drive strong and sustainable economic and social outcomes; we need to ensure that the right mix of skills is being taught and learned over the lifecycle of people; we need to develop effective labor-markets that use their skill potential; and we need better governance arrangements with sustainable approaches to who should pay for what, when and where. OECD’s new Skills Strategy is now providing a framework to support countries with building, maintaining and using their human capital to boost employment and growth and promote social inclusion.
Links:
Figure: The negative relationship between national resources and skills
OECD Skills Strategy
Presentation: Skills matter: Developing an OECD Skills Strategy
PISA: www.pisa.oecd.org
Follow Andreas Schleicher on twitter @SchleicherEDU
Photo credit: © diez artwork / Shutterstock