EMPLOYABILITY AND LABOUR MARKET POLICIES Guillermo MONTT Division for Employment, Analysis and Policy Directorate for Employment, Labour and Social Affairs guillermo.montt@oecd.org July 3, 2014
Skill levels Literacy proficiency among adults Data from PIAAC, we can only make an informed guess of where Portugal lies. Japan Finland Netherlands Australia Sweden Norway Estonia Flanders (Belgium) Czech Republic score below Level 2, below baseline Slovak Republic Canada proficiency. Average Korea Across all countries, skill levels are lower England/N. Ireland (UK) Denmark among the unemployed Germany United States Skill depreciation as skills are not used Austria Or they may have lower skill levels Cyprus** Poland Ireland Generally, older workers have lower skill France levels due to 1) changes in the quality of Spain Italy education and training and 2) skill % 80 60 40 depreciation 20 0 with age 20 40 60 80 In Spain and Italy, more than 2 of 3 of adults Level 2 Level 1 Below Level 1 Level 3 Level 4/5
Unemployment, youth, NEET 70 60 Employment rate, percentage Portugal Portugal 15-24 OECD OECD 15-24 50 Employment rates show signs of recovery, but signs are weak for youth 40 30 20 10 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2013 Source: OECD Labour Force Statistics Database
35 30 25 20 15 10 5 0 Unemployment, youth, NEET 20 24 year olds not in employment, education or training (NEETs), percentage Around 2 out of 3 NEET-youth in Portugal are inactive (not seeking employment) Netherlands Switzerland Portugal 2000 Australia Denmark Germany Czech Republic Sweden Finland New Zealand Belgium United States OECD Countries Poland Portugal 2011 United Kingdom France Korea Greece Chile Ireland Mexico Italy Spain Source: OECD Education at a Glance
Ok. Good. People (may) have skills, they need jobs and many youth need to be brought into the labour force. But, Let s be a bit more ambitious and think about employability in terms of having a good job.
Skills mismatch Under-qualified Over-qualified 40 30 20 10 0 Data from PIAAC, we can only make an informed guess of where Portugal lies. Data from the Eurofund Survey of Working Conditions (2010) suggests that overqualification in Portugal is somewhat lower than that of Italy and Spain Sweden Finland Canada Netherlands Estonia Poland Denmark Flanders (Belgium) England/N. Ireland Norway United States Australia Cyprus Japan Average Korea Italy Slovak Republic Germany Ireland Czech Republic Spain Austria % Under-skilled Over-skilled 0 5 10 15 20
Skills shortages and saturation Index of field saturation (graduates / workers per field) 1,0 A Portugal particular 0,9 field may be saturated: there are more graduates 0,8 than people working EU Compared in that to the EU, field saturation is less of field 0,7 a concern in Portugal It could be experiencing 0,6 a shortage: there are more workers 0,5 in the field than Some graduates indication that of shortage in social can fill those 0,4places leading to sciences, mismatch business and law and engineering, 0,3 manufacturing and construction 0,2 0,1 0,0 Opportunity for ALMPs to retrain workers in fields experiencing skills shortages Source: OECD Calculation based on EU Labour Force Survey 2012
Labour market dualism 40 35 30 25 Share of temporary workers (of all dependent workers) 57% of youth have temporary jobs Indication of segmentation along temporary / regular contracts: need to reduce differences across types of work arrangements 20 15 10 5 0 Australia Employment protection offers workers a safety net in case of loss of employment, but other policies can be envisaged to promote employability, match and a fluid functioning of labour markets while avoiding current unemployment to become structural: Unemployment benefits Active labour market policies United Kingdom Belgium Denmark Czech Republic Greece Ireland OECD Countries Switzerland Japan Italy Germany France Finland Netherlands Portugal 2000 Portugal 2012 Spain Korea Poland Source: OECD Labour Force Statistics Database
5,0 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Employment protection Strictness of employment protection individual dismissals (regular contracts) United States United Kingdom Japan New Zealand Ireland Switzerland Australia Belgium Mexico OECD Countries Spain Greece Finland Denmark Poland Korea France Italy Netherlands Sweden Chile Germany Czech Republic Portugal 2013 Portugal 2009 Portugal 1990 Source: OECD Labour Force Statistics Database
Employment protection 5,0 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Strictness of employment protection individual dismissals (temporary contracts) Different regulation for different workers run the risk of maintaining the dualism of the labour market Although reforms have brought employment protection closer to the OECD average, more can be done: But, if flexibility is increased, it needs Severance to come pay reduction (planned) with in hand with more support for workers introduction of binding arbitration to tackle disputes Support firm-level wage bargaining (planned) Increase working time flexibility Reduce the labour tax wedge to foster demand in SMEs sector United States United Kingdom Ireland Sweden Japan Australia Netherlands New Zealand Switzerland Germany Denmark Czech Republic Finland OECD Countries Poland Portugal 2013 Portugal 2009 Italy Mexico Korea Greece Belgium Spain Chile Portugal 1990 France Source: OECD Labour Force Statistics Database
Active labour market policies Challenge to develop ALMPs given current ALMPs can keep budgetary jobseekers constraints close to the labour market and Current enhance job-creation their programmes human may be capital effective in the short term and the local level, but may not necessarily improve long-term Can prevent cyclical employability rise in unemployment from becoming permanent Areas for improvement: Job-search assistance (better targeting of Counselling, placement, resources, job-search outreach to employers, assistance better use of available information on jobseekers Active expenditure per person unemployed: and vacancies) USD 2 500 (in 2010), Job centres below can other improve OECD management of countries and the low-spending referrals by targeting Italy, those who Korea, need Japan, UK employment the most Monitoring and sanctioning of job-search and benefit cancellation is strict on paper but not in practice
Unemployment benefits In 2010, among the most generous in Europe (benefit level and duration) Difficult to achieve rapid placement of unemployed Unequal distribution of benefits by age (high benefit level for older workers, tight eligibility for young workers) 2012 reforms in the right direction Benefit duration remains age-dependent Evaluate whether eligibility has increased coverage for younger workers
Apprenticeships 3,5% 3,0% Percentage of apprentices out of total employed Well-designed apprenticeship systems can promote skill acquisition and a smooth transition from school to work. 2,5% 2,0% 1,5% 1,0% 0,5% 0,0% Finland Australia United Kingdom Switzerland Czech Republic Norway Germany Italy Source: OECD Labour Force Statistics Database Good apprenticeship systems consider: Joint management with social partners Incentives for employers Regulation protecting against abuse to apprentices Flexible arrangements for employers Competency-based criteria for workers with recognised credentials upon completion Flexibility for individuals and older workers to re-enter apprenticeship systems Increase coverage through flexible entry (pre-apprenticeship programmes) France New Zealand Canada Portugal Turkey Brazil Belgium United States Ireland Estonia Spain Japan Korea
So, what do we make of all this?
In closing Portugal s labour market challenges and opportunities to ensure that skills potential is achieved lies at several levels: Skills stock? Overall demand for skills? Matching of workers into the right jobs? Labour market policies and programmes at the local and national level? that can improve skills stock, aggregate demand and matching?
Up for discussion 1. Based on your experience, give concrete examples of labour market policies or programmes that are working well to improve skills use in the labour market and where you think improvement is needed 2. What are the top 3 challenges that need to be addressed so that labour market policies boost people s skills and employability in Portugal? At the local regional or national level Broad national policies or specific targeted programmes Public, private and/or joint initiatives Discuss scaling up or implementation on the ground
OECD Thematic Session: Labour market policies and employability Please take some time to reflect on how this question resonates with your individual experience and daily work. Based on your experience, give concrete examples of where labour market policies are working well to improve skills outcomes and where you think improvement is needed. As a group, please: Discuss Provide concrete examples that illustrate your points On each poster, please write down: The results of your group discussion 17