Challenges and Priorities for
Skills Gap Analysis in the
Western Balkans
Will Bartlett
LSEE – Research on South East Europe
London School of Economics
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Nature of skills mismatch and skills gaps
Stylised facts in developed market economies
Transition economics and structural change
Policy conclusions
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
Outline
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Nature of skills mismatch
• This can be measured by employer skill-needs surveys
• Employer surveys show high levels of skill shortages in some
transition economies
• Skills mismatch among employees may reflect over-education
(within sectors) or mis-employment (across sectors)
• Sometimes referred to as vertical vs. horizontal mismatch
• Measured by employee surveys, labour force surveys
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
• Skills gaps and skill shortages refer to the overall balance of
demand and supply of labour with different level of skills,
leading to unemployed workers and dissatisfied employers
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Skills mismatch in developed
economies
• Explanations for mismatch
• Mismatch as a temporary phenomenon
• On-the-job training
• Career mobility
• Both imply that mismatch should decline with age
• Main problem in developed countries seems to be skills
mismatch as a result of overeducation at individual level
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
• Bounded rationality
• Imperfect information
• Imperfect mobility (regional mismatch)
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Overeducation and wages
• On average the wage penalty for over-education is around 15%
(McGuiness, 2006)
• Varying from 8% in Portugal (Kiker et al. 1997) to 35% in UK
(Dolton & Silles 2008)
• Bumping-down
• Workers with higher education take jobs which require lower
skills, while lower skilled workers have higher rates of
unemployment (or work in informal economy)
• In contrast, in transition economies main problem is often skill
gaps and shortages at sector level
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
• Studies of over-education in developed economies find strong
evidence of wage penalty associated with overeducation
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Labour markets in transition
economies
• Intense labour market change in transition countries due to:
• Additionally in the Western Balkans:
• Conflict and collapse of ex-Yugoslav market
• All this led to problems in the labour market:
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high long-term unemployment
youth unemployment
low employment rates
informal economy
deskilling of the workforce
emergence of skills gaps and shortages holding back growth
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
• Collapse of former state-owned industries
• Restructuring and growth of new service sectors
• Globalisation and new technologies
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Emerging skills gaps
• Main constraints to business in later stages of transition:
• Infrastructure
• Skills gaps and shortages
• Communication skills, team work skills, attitudes to work,
entrepreneurship skills, ICT skills
• Increased demand for such generic skills due to:
• Overall rapid structural changes in supply and demand for skills
• Decline of manufacturing and growth of services sector
• Skills gaps are often found in the higher range of qualifications
while excess supply of (inappropriate) skills found in
intermediate range of qualifications
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
• Skill needs identified in employer surveys:
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RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
“Inadequate education is a serious
obstacle to the firm” (%)
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Unemployment and education (%)
Primary
40%
Secondary
Higher
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
30%
20%
10%
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0%
Macedonia
Bosnia
Montenegro
Serbia
Croatia
Skills mismatch in transition
• Because of structural change, skill mismatch is a more
permanent phenomenon in transition countries than in
developed economies
• Initial mismatch could be overcome by on-the-job training or
career mobility, but:
• Employers reluctant to spend on training their workers ‘on the job’
• Transaction costs of reskilling raised by lack of public infrastructure for
life-long learning
• Career mobility both between and within sectors is limited
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
• Mismatch increases with age of workers
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Serbia: employee training within firms
(% of firms that carry out training)
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
Health and social work
Education
Real estate activities
Financial intermediation
Transport communications
Hotels and restaurants
Wholesale and retail trade
Construction
Electricity, gas and water supply
Manufacturing
Mining
Agriculture and forestry
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0
20
40
60
80
Education systems and skills gaps
• curricula developed under former system are unsuited to postFordist market economy
• Skills are too specialised in obsolete occupations
• Education methods often out-dated (rote learning)
• Lack of education in transferable skills (soft skills)
• Relatively low expenditure on education
• Political economy of reform in education system
• Reform resistance by teaching unions
• Corruption in state system reduces education quality
• Growth of private tertiary education with little quality control
RCC Conference Sarajevo "New
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2011
• Given a legacy of high level of human capital, why have skills
gaps emerged?
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Public expenditure on education
(% GDP)
4%
•Public
expenditure on
education
3%
2%
•The crisis and
austerity
measures
1%
0%
EU-27
Croatia
Serbia
Macedonia Albania
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
•IMF budget
deficit
requirements
5%
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Participation in Lifelong Learning
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Skills for New Jobs" 27-28 October
2011
(% of adult population aged 25-64)
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Approaches to skills gap analysis
• Analysis of administrative data
• Used to analyse skills shortages at macro or sectoral level
• Usefulness depends on quality of data collected by PES
• Used for analysing skills shortages at macro or sectoral level
• Macro or sectoral forecasting models
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Example: EU-wide analysis by CEDEFOP
Based on assumptions of equilibrium in markets
Based on projections of past behaviour into the future
Not good at dealing with rapid structural change
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
• Employer surveys
• Employee surveys
• Used for analysing skills mismatch at individual level
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Skills surveys - Serbia
• Statistics Office (RZS): employer survey of skills needs
• Sample size: 2,500 employers
• Performed only once
• ILO survey on skills mismatch
• USAID sector skills gap analyses in four sectors
• IPA project employer survey (ongoing)
• NES uses information from branch offices to develop local
training programmes
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
• Other surveys (also one-off):
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Skills surveys - Macedonia
• Sample size: 1,500 employers (covering
4.5% of firms and 48.5% of employees)
• Provides medium-term information to
the Employment Agency
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
• Skills Demand Survey annually since
2006 (CARDS)
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Skill surveys Croatia
• Croatian Employment Office
• Annual employer survey used to develop training programmes
• Identified gap of 270 ICT specialists with university diploma each
year (i.e. 42% of current number of graduates)
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
• USAID sector employer survey of ICT industry (2007)
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• Estimates of current skills gaps, or forecasts of future skills
gaps, should inform changes in education and training
curricula
• Implementation through top-down adjustment of supply of
skills to demand requirements
• But depends upon ability of decision makers to use this
information
• Numerous problems with this approach:
• Lack of incentives for education system to adjust
• Lack of coordination between ministries
• Lack of administrative capacity to carry out skills gap analysis
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
Policy response (i): “supply-led” approach
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• Skills gaps emerge faster than planners can change the
education system implies supply-led approach may be
ineffective
• The alternative is a decentralised approach which empowers
employers and workers to make their own decisions
• Competitive ‘quasi-market’ replaces central planning
• ‘Formula funding’ of schools and universities in which state funds
providers on basis of their success in attracting students
• Employers: training subsidies
• Employees: training vouchers
• Depends on also stimulating competition among providers
• Reforms to permit entry of new private providers
• These can be ‘social enterprises’ in order to maintain quality
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
Policy response (ii): “demand-led” approach
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Conclusion (i): uses and challenges
of skills gap analyses
• Providing better information for individual employers, job-seekers
and careers guidance professionals
• Developing new educational curricula in secondary and
vocational schools
• Developing participative local plans, engaging local employers
and trades unions in design of new educational programmes
• Challenges
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Weak administrative capacities to carry out analyses
Slow certification and accreditation of new courses
Resistance to educational reforms
Unwillingness of employers to carry out on-the-job training
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
• Uses
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Conclusion (ii): policy priorities
• Joined-up policy making between ministries of economy, labour
and education
• Sector skills councils bringing together social partners to make
use of skills gap analyses
• Build administrative capacity within PES to carry out skills gap
analyses and skill forecasts
• Demand-led ‘quasi-market’ approach within the public sector
• To empower workers and employers skill choices
• Promote competition among training providers by encouraging
entry of social enterprises
• Publicly financed using training vouchers for employers and
unemployed workers
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
• Create coordinating institutions
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comments welcome at:
w.j.bartlett@lse.ac.uk
RCC Conference Sarajevo "New
Skills for New Jobs" 27-28 October
2011
Thank you for your attention!
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