Too small to “productively” use skills at work?

By Paulina Granados Zambrano and Glenda Quintini

 

Human capital is key for economic growth. Not only is it linked to aggregate economic performance but also to each individual’s labour market outcomes. However, a skilled population is not enough to achieve high and inclusive growth, as skills need to be put into productive use at work.

Skills used at work are extensible measured in the Survey of Adult Skills (PIAAC, 2012). Basically, individuals are asked the frequency at which they perform certain tasks at work, ranging from (1) “never” to (5) “everyday”. In Chapter 4 of the OECD Skills Outlook 2013, indicators related to the use of information-processing skills (reading, writing, numeracy, ICT skills and problem solving skills use at work) as well as other generic skills (task discretion, learning at work, influencing skills, co-operative skills, self-organising skills, gross physical skills and dexterity) were identified and analysed in detail across countries. Additionally, Quintini (2014) shows how skills use, not only proficiency, affects a number of key labour market phenomena.

At the firm level, the use the skills of workers is a key determinant of productivity. However, while employers have an important role in training their own staff, smaller enterprises might struggle to identify and provide such training for their workers. Similarly, small establishments find it more difficult to make the best use of their workers’ skills. The Survey of Adult Skills (PIAAC, 2012) shows that workers in smaller firms make less use of their reading, writing, ICT and problem solving skills. For numeracy use at work, even though the same pattern is observed starting at firms with more than 10 workers, establishments with 1 to 10 employees do apparently as well as the biggest firms (Panel A in the figure). By country, a similar pattern is observed across information-processing skills use at work. For example, reading skills use at work steadily increase with the establishment size in most of the countries, but in the Slovak Republic, Czech Republic and Belgium where in any case the biggest establishments do better than smaller firms. Notably Korea, Japan and Ireland have the highest skills use difference between the smallest and biggest firms, and Australia does better in every segment of firm size compared to every country in sample (Panel B in the figure).

 

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Source: Survey of Adult Skills (PIAAC) (2012).

 

The under-use of available skills can result from the introduction of new technologies that accomplish tasks previously performed by workers. In other cases, workers may not have been well-matched to their jobs when hired, due to the difficulty for employers of assessing the actual skills of job applicants – particularly those with limited work experience. In addition, there may be a lack of high-skilled jobs in a preferred sector or geographical location. Whatever the reason behind skills mismatches, skills policies should support employers in making better use of the skills available to them.

Mechanisms that help managers, particularly in Small and Medium size Establishments (SMEs), to identify effective work and organisational practices should be emphasised. These include promoting innovation and adopting technologies and practices that complement the existing skills base, such as through brokerage services. Successful practices also include employee engagement and high-performance organisation of working and learning, which involves job flexibility, delegation of authority, and incentives for innovation.

SMEs also face particular barriers to up-skilling their workforce, such as lack of information about training opportunities, insufficient funding for training, small scale in training procurement and human resource management and concerns related to employee turnover. Training provision in SMEs could be supported by encouraging small firms to join forces to identify providers and finance courses. For example, in Korea, a private or public training provider can receive public subsidies if it forms a partnership or consortium with SMEs in which the providers’ facilities or equipment are used to develop skills. Similarly, Australian SMEs can form group training organisations to organise apprenticeship training.

 

Next July 2016 these and other issues related to skills use at work will be further discussed in the Second International Report of PIAAC, which will include extra nine participating countries (Chile, Greece, Indonesia, Israel, Lithuania, New Zealand, Singapore, Slovenia and Turkey).

 

Photo Credit: ©Shutterstock/ArtFamily

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