The growing need for developing (the right) STEM skills

By Marieke Vandeweyer.

Blog38.0The past decades have seen important shifts in the skills required by the labour market as a consequence of important structural changes such as the rapid improvement in computer technology. As pointed out in previous blog posts, these changes have led to a decrease in the share of employment in routine-intensive occupations, such as accountants and assembly line operators.  Several recent studies have estimated that technological change might lead to significant job destruction in the coming years, as computer technology will become a substitute for an increasing number of tasks. However, many high-skilled technical occupations will experience increased labour demand as the tasks performed in these occupations are complements to technology rather than substitutes.

The contribution of STEM to overall employment

As documented by Goos, Hathaway, Konings and Vandeweyer (2013), STEM (science, technology, engineering and mathematics) occupations were an important driver of overall employment growth in the European Union in the past decade. While total employment over the period 2000-2011 grew by 8%, STEM employment increased by 34%. As such, the share of STEM employment in total employment grew significantly, reaching 7% in 2011.

Figure 1 shows that there are significant cross-country differences in the share of STEM employment in the European Union. The STEM share in Finland (12%) is almost three times the share in Lithuania (4.3%). These country-level differences mask substantial regional differences in STEM intensity within countries.

The figure also shows that the cross-country differences in STEM shares can, to a large extent, be explained by differences in employment in IT occupations, such as software developers or web technicians. Indeed, the importance of IT in total STEM employment is larger in countries with bigger STEM shares. In Finland, IT accounts for 34% of STEM employment, while this share is only 20% in Lithuania. The largest contributions of IT to STEM can be found in the Netherlands (46%) and the UK (42%).

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The attractiveness of STEM jobs

Job quality, measured in terms of earnings, is high in STEM occupations, as hourly wages in these occupations in 2013 in the European Union were about 36% higher than the average (based on EU-SILC data). Moreover, wages of workers employed in STEM occupations were about 7% higher than wages of workers with tertiary education. As such, employment in STEM occupations is associated with a considerable wage premium. This wage premium has been on the rise, as the annual growth rate of average hourly wages in STEM occupations during the period 2010-2013 was almost 40% higher than average.

STEM jobs are also characterised as high quality in terms of job security. Compared to an overall unemployment rate of 10.4% across EU countries in 2013, the unemployment rate in STEM occupations is low at only 3.9%. Although unemployment in STEM occupations has increased over the period 2011-2013, this change was lower than the average change across all occupations.

 Is there a STEM shortage?

The fact that employment in STEM occupations is growing strongly suggests that demand for these workers is high. At the same time, the low unemployment rate suggests that the relative supply is low. The above-average growth of wages in STEM occupations provides some preliminary evidence of the emergence of labour market pressures (i.e. skill shortages) created by unbalanced supply and demand, as employers raise wages to attract the right workers. The existence of STEM shortages is confirmed by employer surveys (e.g. Manpower Talent Shortage Survey) in which employers list several STEM jobs in the top ten of vacancies that are ‘hard-to-fill’.

According to a EU report, the negative perception of STEM occupations (especially for women) has resulted in insufficient numbers of STEM graduates. Research has shown that the interest in STEM careers declines with a country’s level of development and its living standard. The low and declining attractiveness of STEM jobs can be attributed to a range of social, cultural, economic and educational factors, such as the changing attitude of society towards science and technology and the view that a STEM degree is not the best career track to a top position. Other key drivers of STEM shortages are the rapid depreciation of STEM-related degrees because of technological change, and the lack of experienced STEM staff.

The skills required for a STEM job

As demand for STEM workers is high, it is important to know which skills are required in STEM jobs, such that education and training institutions can optimally respond to skills needs. The O*NET database gathers information on the skills and abilities required across a large range of occupations. Based on these data it is possible to compare the skills and abilities needed in STEM occupations to the average need.  The list below shows the skills and abilities with the highest relative importance in STEM occupations. As expected, STEM jobs mainly require highly technical skills such as programming, mathematics and science. In term of abilities, STEM jobs require above-average abstract reasoning capacity. Also important, however, is creativity, as ‘Fluency of Ideas’ and ‘Originality’ feature among the top 5 STEM abilities.

Skills Abilities
Programming Mathematical Reasoning
Technology Design Number Facility
Science Fluency of Ideas
Operations Analysis Originality
Installation Visualization
Mathematics Inductive Reasoning
Systems Analysis Flexibility of Closure
Systems Evaluation Information Ordering
Troubleshooting Written Comprehension
Quality Control Analysis Deductive Reasoning

 

As STEM employment has been a driving force of economic growth, and STEM occupations are expected to become even more important in the coming years, it is imperative that the supply of STEM skills can keep up with this growing demand. It will be crucial to assess which skills, both technical and soft, are most needed in these jobs, in order for individuals to be equipped with the optimal skill set to be employed in STEM jobs. Given the rapidly changing nature of jobs, the evolution of skills needs has to be monitored closely. With its recently launched project on the assessment of skills needs, the OECD will contribute to the measurement of skill shortages in STEM occupations in a large range of countries.

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