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Tackling the skills gap

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Across Europe, is there a perceived mismatch between the skills that are in demand and those that the workers have? If so, what policy measures could be taken to reduce this gap?

If a European Commission report on the job skills most in demand until 2020 is to be believed, Europe is going to need a great deal more talent and many more skilled workers than it currently produces. Meanwhile, Europe is mired in record high unemployment, with the situation even worse for youth. In Spain, for example, overall unemployment stands at around 27 per cent but 76 per cent of 16-to-19-year-olds and 54 per cent of 20-to-24-year-olds are unemployed.

Why are these numbers so high? On the face of it, job candidates appear to be overqualified and their skills seem to be underutilised. Could it be, however, that the skills most in demand are those that many of today’s workers don’t currently have?

To find out, Lourdes Susaeta, Paula Apascaritei and José Ramón Pin of the Instituto de Estudios Superiores de la Empresa at the University of Navarra surveyed managers of national and multinational companies from various sectors, as well as career advisers from various universities, to see if the reason for such high youth unemployment might be, at least in part, a perceived skills mismatch — and, if so, how to close this gap.

In Spain the number of students taking university entrance exams has increased by 25 per cent since 2007, suggesting that more and more young people are keen to pursue higher education. However, as one human-resources manager noted, these supposedly educated job candidates cannot even pass a company exam asking basic math questions. This highlights a serious educational problem.

Because the academic training that young people receive is not up to workplace standards, 80 per cent of responding managers said that they offered some form of on-the-job training themselves. In this regard, many companies mentioned corporate-social-responsibility programmes as a good tool, given their capacity to motivate and encourage people in the process of identifying and developing skills and talent.

As companies demand more from their employees, only the truly standout candidates make the grade. This means that, in a labour market like Spain’s, only the best candidates get hired, leaving many lower-skilled or average-skilled workers on the unemployment line.

Although 65 per cent of respondents said that they would employ overqualified youth, 35 per cent said that they preferred not to do so. Indeed, some of the positions most in demand in Spain are those for manual workers, sales reps, electricians and plumbers.

“We have millions of applicants with bachelor’s degrees in business, economics or law,” one human-resources manager said, “but it is impossible to find someone with vocational training in business administration.”

It seems that the push by successive Spanish governments to produce more university graduates has led to a decline in the number of vocational graduates. Thus, even with unemployment at a whopping 27 per cent, 9 per cent of Spanish managers report that they can’t find employees to cover their organisation’s needs.

One person working in career services noted that many young people applying to universities do not have a realistic idea of what the labour market is actually demanding. This skills mismatch begins at home, first with families and then during primary education, as youths are not to taught to think in terms of acquiring marketable skills that will increase their employability.

One solution would be to enhance vocational training and steer more youths toward this type of qualification. University education, as well as vocational training, should be flexible and adaptable to labour market demands. Above all, entrepreneurial skills should be taught and actively encouraged in school.

The authors recommend the following solutions to tackle the skills gap: Make the educational system more flexible. Rebrand vocational training to make it more desirable. Increase collaboration between the public and private sectors regarding course curricula. Offer entrepreneurship education in secondary school. Introduce apprenticeships to solve the immediate problem. Shift toward a new industry model focused on attracting foreign investment, and shift public policy in response to labour-market changes.

From IESE Insight

© 2013 Instituto de Estudios Superiores de la Empresa, IESE Universidad de Navarra

As companies demand more from their employees, only the truly standout candidates make the grade.

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