Skills mismatches hurt job creation prospects

The crisis has forced millions of workers to seek new jobs but their skills are often not those that employers are seeking, and this skills mismatch is driving up unemployment levels.

GENEVA (ILO News) – Several developed economies are seeing increasing numbers of job vacancies but their unemployment rates are not going down. In some cases, they are even rising.

What is happening is that many of the workers who lost their jobs to the crisis do not have the skills that the labour market now demands.

“These skills mismatches mean that unemployed people need much longer to find a new job, which in turn drives up long-term unemployment,” says Labour Economist Theo Sparreboom, one of the authors of the ILO’s recently published Global Employment Trends 2013.

This particularly affects young people, who get most of their training and education before they start working or early in their careers.

Workers in the construction and financial sectors in countries like the United States and Spain were among the first to be hit by the crisis in late 2008 and 2009. When they lost their jobs, they found that sectors which had not been affected did not require the skills they had.

More is needed to bridge the gap between existing skills and what employers demand”
As the crisis spread through international trade, occupations in the exporting industries were also affected. They also faced and continue to face the same problem.

In the United States, for example, about 30 per cent of jobs in construction were lost between 2007 and 2012, and employment in durable goods manufacturing is 15 per cent below pre-crisis levels. In contrast, employment in education and health services is estimated to have risen 20 per cent. This has raised concerns about skills and occupational mismatches that could drive up unemployment rates, since the crisis-hit and the recovering sectors require different competencies.

In some cases, workers have relocated to different areas or countries, where jobs are available in their field, as is the case with Spaniards moving to Germany and even Portuguese workers heading to Angola.

Some have opted for “occupational downgrading” – taking a job below their previous level of skills – which will lead to increasing numbers of over-qualified workers.

The issue of skills mismatches has received particular attention in developed economies as a result of the economic crisis but it is a problem that affects labour markets in all countries.

Skills mismatches can be a transitory phenomenon if dealt with properly. Targeted educational policies can help address the issue by ensuring jobseekers continue to be employed in the more dynamic sectors of the economy.

But as the number of unemployed workers, as well as the length of their unemployment spells increase, it becomes more and more difficult to tackle the problem.
The challenge for countries is to link skills to productivity, employment, and development. And the key is policy coordination and involvement of social partners and key stakeholders in skills’ development.

“We recommend that policy-makers take coordinated action to reduce unemployment, including services to make job searching and matching more effective, like investing in job skills and retraining programs,” says Sparreboom.

“What the crisis has brought into sharp focus is that so that we can get more people back to work,” he concludes.