By Thomas Manfredi.
Skills are key determinants of prosperity and well-being. However, developing skills is costly and so these investments need to be made wisely. This requires good information about where skill development is most needed, how well the skills of individuals match those required in the labour market, and the returns to investments in skills in terms of economic and social outcomes.
In 2010, the G20 called for the development of a set of internationally comparable indicators of skills for employment and productivity for Low-Income Countries (LIC) as part of its Multi-Year Action Plan on Development. To respond to this call, the OECD has established the World Indicators of Skills for Employment (WISE) database in close collaboration with the World Bank, ETF, ILO and UNESCO. The WISE database offers a “one-stop” location that can be used to create a statistical snapshot of the current status of each country’s skills development based on a cross-sectoral approach, with indicators covering the fields of education and training, employment and economic and social development. It covers both developed and developing economies, allowing them to assess their skill challenges and performance from a comparative perspective.
The database covers more than 200 countries and includes around 60 internationally comparable indicators for the period 1990 to 2014, although not all indicators are available for every country and for every year. The data are primarily extracted from the databases and repositories of international organisations, including the ILO, OECD, UNESCO, World Bank and Eurostat. A small number of indicators were constructed by the OECD from the microdata from national labour force or household surveys. Some indicators are also available by educational attainment and gender.
The conceptual framework used to identify the set of skills indicators included in the database is set out in Figure 1. Five broad indicator domains are identified. There are a range of factors (contextual factors) driving both the supply of skills (skill acquisition) and the demand for skills (skill requirements). These factors also have an impact on how well skills obtained through education and training are matched to skills required in the labour market (matching) which in turn has an impact on economic performance, labour market outcomes and social outcomes, such as health (outcomes).
The framework on which the WISE Database is based has the potential for identifying a range of interactions between the different domains. This can be demonstrated by a few examples. For instance, the two domains of skills acquisition and outcomes are strongly interrelated. As shown in Figure 2, the wage-premium of high-skilled labour – a key indicator of economic outcomes – is negatively correlated, across countries, with the proportion of the workforce having attained higher education. This captures a “supply effect” in labour markets: other things being equal, a relatively abundant supply of high-skilled labour tends to be associated with a lower relative price. At the same time, the relative wage of high-skilled labour has an impact on the decisions, primarily of young generations, to invest in human capital.
The efficiency of the matching process of skills with jobs also appears to have an impact on wage outcomes. As shown in Figure 3, there is a positive cross-country correlation between the proportion of “well-matched” workers, whose educational attainment is equal to the one normally required by their job, and the wage-premium of high-skilled labour. This suggests that the returns to skills are higher in countries that succeed better in matching the skills of workers with those required in their jobs (see OECD Employment Outlook 2015).
The WISE database can be accessed through OECD.Stat, the online statistical platform of the OECD, under the Labour theme. Two ready-made table layouts are available: Comparative tables, allowing for direct comparison of selected indicators over time and across countries; and Country tables, displaying individual country profiles using all of the available skills indicators. Other options are available to select data, build user-defined tables, customise and save layouts and dynamically graph selected indicators.
Extra references and further reading:
OECD (2013), OECD Skills Outlook 2013: First Results from the Survey of Adult Skills, OECD publishing Paris;
OECD (2014), OECD Employment Outlook 2014, Chapter 3. “How good is your job? Measuring and assessing job quality”; OECD publishing Paris;
OECD (2015), OECD Employment Outlook 2015, Chapter 2 “Skills and Wage Inequality”; OECD publishing Paris;
OECD (2015), OECD Employment Outlook 2015, Chapter 5 “Enhancing job quality in emerging economies”; OECD publishing Paris.