What skills are in high demand? Evidence from the OECD Skills for Jobs database

Skills-visual-high-resBy Priscilla Fialho

Several trends, such as technological change, population ageing and globalisation, are simultaneously affecting the demand and supply of different types of skills. This can generate skill shortages, particularly in countries where supply is not sufficiently responsive to changes in skill demand.

Despite the costs that these skill shortages can entail for employers and the economy, good measures of the phenomenon are hard to come by. Notably, most cross-country studies analysing skill shortages have been based on surveys asking employers to report any difficulties in recruiting talent. The collected information tends to be subjective and confound poor working conditions, which may explain a firm’s recruitment difficulties, with actual skill shortages.

To fill this information gap, the OECD recently launched the Skills for Jobs Database (see our previous post) that provides measures of skills imbalances across European countries and South Africa using a range of hard data, notably on wage and employment dynamics overtime. The database provides interesting insights into how ongoing structural changes are associated with the emergence of skills imbalances. This information can be used to inform the design of education, adult learning, employment and migration policies, and guide individuals and firms in their training decisions.

All countries exhibit, to varying degrees, shortages in cognitive skills such as active learning, critical thinking, judgement and decision making, system analysis and evaluation, and complex problem solving (Figure 1). Social intelligence skills – notably, social perceptiveness, instructing, persuasion and negotiation skills – are also found to be in critical shortage in many countries. Other skills that are commonly in shortage  include some basic information process skills (reading comprehension, writing and speaking skills) and soft skills such as time management and learning strategies.

These are all cognitive non-routine skills that are associated with occupations such as managers and analysts, but that also cut across a wide range of other high-skill occupations that are in high demand. Increasing demand for these occupations could be driven, for instance, by substantial work reorganisation, potentially triggered by technological change and requiring better mangaement. Emerging skills shortages are also in line with the existing literature on job automation. For instance, communication skills, social perceptiveness, instructing, persuastion and negotiation skills are also related to human interactions that are, so far, difficult to automate through the use of artificial intelligence or robotics. These skills are particularly important in the education and health care sectors, where wages have been increasing (along with employment) in response to population ageing and the increasing demand for lifelong learning.

Among soft skills, adaptability appears to be in particularly high demand in almost all countries. This is in line with the idea that workers are increasingly required to adapt to new tasks in the context of changing workplaces and employment relationships.

The Skills for Jobs Database also confirms the prevalence of shortages in several knowledge areas that are directly linked to technological progress. The results identify, for instance, shortages of workers with computer and electronics or mathematics knowledge in all countries examined. On the other hand, the picture emerging on other knowledge areas such as that of engineering and technology is more mixed, with some countries exhibiting shortages and others surpluses, mostly in line with differences in production structures. For instance, Estonia, where the production of electricity based on oil shale has been drastically reduced recently, exhibits a surplus of qualified workers in engineering and technology.

While some skills are in strong demand and their importance has been increasing in almost all countries, the opposite pattern occurs for other skills. For instance, control precision abilities (e.g. the ability to quickly and repeatedly adjust the controls of a machine or a vehicle to exact positions), finger dexterity, peripheral vision or depth perception, are in surplus across a wide set of countries. The latter abilities can be effectively automated through the use of smart sensors of sophisticated robots.

As discussed in the report that describes the main findings from the Skills for Jobs Database, changes over time in skill gaps can also be analysed using the database (Figure 1). The changes in skill imbalances have been more intense in those skills that were already most in shortage and in surplus, exacerbating the gap between the demand for cognitive skills and that for manual, physical and routine skills.

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Note: A more complete figure with a broader set of skills can be found in the report Getting Skills Right: Skills for Jobs Indicators. Skills are ordered by their degree of shortage in the final year. The data cover the period 2004 to 2014 (or latest year available,  see Annex Tables A.1 and A.2 of the report for further details). Results are simple averages for European countries and South Africa.

Source: OECD Skills for Jobs Database.

More details about each country’ specific skills shortages and surplues can also be found in the OECD Skills for Jobs country profiles.

Stay tuned for more!

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