Targeting policy to local employment sectors and investing in quality jobs

Recommendation:Place a greater emphasis on emerging growth sectors and ensure the employment and training system is well aligned to these areas.

Employment and training programmes are geared towards a broad range of employment sectors but there are few sector-based approaches to skills. There appears to be less awareness of how these programmes could capitalise on global trends to contribute to future employment growth and no analysis is carried out to identify the potential impact of global trends on the local labour market. Labour market forecasting at the sub-national level to identify emerging markets is still in the nascent stages of development.

Given demographic changes, the care sector could be a potential area of future employment growth and expansion of this sector may produce positive externalities. For example, improved care services can free up family members of working age (particularly woman) to go back to work. Further consideration on opportunities provided by future growth areas may better guide decisions on skills initiatives and programmes. However, it is important to bear in mind that while this is useful in creating programmes that are well targeted to specific sectors, there is a risk of failing to serve broader economic diversity and becoming over-reliant on a small number of sectors.

In the United States, local and regional government agencies have increasingly adopted sectoral strategy approaches to economic development and a similar approach is surfacing in the workforce-development field. Ireland has recently launched a national programme for long-term jobseekers to assist them in gaining in-demand skills and to access work in growth sector, including ICT, digital media, healthcare and social services, and the green economy - see Box 4.10.

Box 4.10. MOMENTUM programmes - more innovative, rapid responses to employers’ training needs

A recent Irish government initiative has been launched which will provide free education and training projects for up to 6 500 long-term jobseekers to assist them in gaining in-demand skills and to access work in sectors of the economy where there are job opportunities. The programmes include on-the-job training in the form of work experience modules as well as the development of the workplace skills required to obtain and retain employment. 36 education and training providers from both the private and public sectors will offer 62 individual MOMENTUM programmes in 87 locations across the country. These projects will be in the expanding employment areas of ICT, digital media, healthcare and social services, the green economy, food processing, and sales and marketing. Programmes are based on clusters of occupations in sectors associated with good national employment opportunities. Specific projects will also be available for those under 25 to assist them to enter or return to employment, including “Train To Work Opportunities”, “Green Pathways”, and a Graduate Activation Programme.

MOMENTUM is an outcomes-based model of education and training. The payment system to providers is outcomes based with part payment reserved for key stages of the programme, including challenging certification, progression and employment outcomes at the end of the programme. The courses are tailored to both the needs of the long-term jobseeker, but also employers who are experiencing skills shortages. MOMENTUM is administered by FAS and funded by the Department of Education and Skills through the ESF supported Labour Market Education and Training Fund.

Source: Employment and Skills Strategies in Northern Ireland, United Kingdom, OECD Reviews on Local Job Creation, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264208872-en.

Recommendation: Put more emphasis on skills utilisation approaches to create and attract better quality jobs and productivity.

The recent economic situation in the Czech Republic has brought about an emphasis on the quantity of job creation and the need for better quality jobs is seen as very much a secondary issue - a trend which can be found in many OECD countries. In many approaches to skills development, there appears to be a conflict between short-term priorities and long-term needs. While flexibility is necessary in times of rapid changes, too much of a short-term focus with a lack of strategic consideration can negatively affect investing in quality jobs in the medium to long-term. The Czech Republic has an outdated skills strategy - the Human Resource Development Strategy 2003. An updated strategy could put a greater emphasis on job quality considerations and improved coordination in the skills area at the central, regional and local levels. A number of bodies are well placed to take a leading role in connecting and driving forward workforce development issues and ensuring a greater emphasis on job quality such as HRD Councils, employer sector councils, Czech Invest and regional development agencies.

Increased support for innovative and entrepreneurial approaches to skills is needed, particularly to raise productivity which is below average in the Czech Republic. Regions which do well over the long term are those which continuously improve and innovate to take advantage of new markets. This means maintaining flexibility while also creating strategic leadership and bringing resources together to create the critical investments necessary to lead to innovation and change, both in the public and private sector. There is little attention paid to improving work organisation or labour productivity.

Universities and training institutions are actively involved in delivering and supporting applied research in a broad range of fields relevant to the regional economy (e.g. via Innovation Vouchers, and in South Moravia in particular research and technology transfer by academic institutions is hugely promoted to boost regional innovation potential, with close working with employers). Learning from the good practice in this region and encouraging similar actions in other Czech regions could boost productivity and innovation nationally and push more regions into a high skills equilibrium.

Promoting innovation is not linked just with high-tech sectors or high-skilled jobs. OECD research (Froy, Giguere and Meghnagi, 2012) has demonstrated that there is also value in pursuing actions to boost productivity in local sectors which have traditionally hosted low-skilled jobs (for example tourism, retail, lower-tech manufacturing), particularly where such sectors are likely to remain an important source of future employment. The focus can be on stimulating incremental innovation in sectors which dominate the local economy - this would be particularly beneficial for a region like Osti nad Labem region where there is low demand for high skills and low supply.

OECD research stresses the importance of not just building the supply of skills in a local economy but also ensuring that skills are effectively utilised by employers. There are a number of tools which local stakeholders can use to support better work organisation and skills utilisation in order to increase productivity while improving job quality (Froy and Giguere, 2010; Froy, Giguere and Meghnagi, 2012) (see Box 4.11).

Box 4.11. Tools to raise the quality of local jobs and improve skills utilisation

Guidance, facilitation and training

• • Support technology transfer: facilitating investment in new technology by employers, setting up partnerships for the sharing of innovation and new technologies.
• • Provide technical assistance to improve working conditions and work organisation: this may mean the re-professionalisation of front-line positions in some sectors and a reduction in dependence on temporary staff, while in others it may mean better problem solving in the workplace. Providing staff with enough time to pass on skills and learning is also important.
• • Encourage participation in training for both managers and workers: better trained managers are likely to create more productive working environments for their staff. At the same time, companies need to be encouraged to make training and other skills development opportunities available to their employees.

Influencing broader public policies

• • Remove local disincentives to a focus on quality in the public sector: this may include changing incentive structures for local employment agencies so that they concentrate on the quality and not just the quantity of job-matches.
• • Ensure that skills policies are embedded in economic development policies: local partnerships are needed between business and policy makers in the sphere of economic development, education and employment, in order to ensure that skills policies are understood in the context of broader economic development.

Source: Froy, F. and S. Giguere (2010), “Putting in Place Jobs that Last: A Guide to Rebuilding Quality Employment

at Local Level”, OECD Local Economic and Employment Development (LEED) Working Papers, No. 2010/13, OECD

Publishing, Paris, http://dx.doi.org/10.1787/5km7jf7qtk9p-en.

Graduate skills mismatch is becoming more common as young people take jobs for which they are overqualified. While taking a job can often be a starting point into the working world and strong performing young people can quickly move into higher skilled positions, it can also result in a waste of talent and a poor return on the investment if their skills are continually underutilised. In addition, those with lower skills are pushed further down the career ladder and qualification inflation can also result. Higher skilled young people may leave their region to look for better employment possibilities, representing a “flight of talent”. Skills and economic development strategies should address the demand/ supply mismatch and provide opportunities to use the skills of graduates by taking a more imaginative approach to how their skills can best be applied. The Copenhagen Career Centre for University Graduates was recently set up in the Copenhagen Job Centre and it has sought to widen the kind of jobs university graduates are looking for, translate qualifications into sectors where there is a skills shortage and where employers have not seen a neat fit previously. Ultimately it seeks to provide new employment opportunities for graduates and particularly within SMEs - see Box 4.12.

Box 4.12. Copenhagen Career Centre for University Graduates - Targeting Employment in SMEs

In Denmark, university graduates are among the most vulnerable groups facing up to 60% of unemployment in the first year after graduating. This is especially apparent among graduates with a Master of Arts degree, librarians and architects. Graduates seem to lack information on labour market demand, very rarely search employment in areas not directly linked to their diploma and have low geographic mobility.

The Copenhagen Career Centre for University Graduates was created in 2012 in the Copenhagen Job Centre (Public Employment Service) with a dual focus: to translate skills and competences of university graduates to match the needs of SMEs and to work with SMEs to better identify their recruitment needs. The centre aims to expand the job search of university graduates and encourage them to re-think where their qualifications and specializations could lead them, and also to open the doors to their employment in SMEs. It is funded from municipal budget and has some 30 employees. Activities include:

• • Counseling and guidance.
• • Early activation measures to widen job search (including geographical mobility) from day one.
• • Working with SMEs to encourage them to rethink their hiring needs.

This is reinforced by intensive networking activities with unemployment insurance funds, universities and other stakeholders, as well as by close collaboration with Copenhagen Municipality Business Service (which supports business startup and growth). It is part of an overall effort to integrate employment policy and industrial policy in the City of Copenhagen. Social innovation, trust based management, active involvement of employees and continuous development of the skills and competences of councilors are seen as key ingredients of this initiative. It is planned that after the current trial period of one year and a half it will be mainstreamed within the Public Employment Service.

Source: OECD (2014, forthcoming), “Local Youth Employment Strategies: Ireland”, OECD Local Economic and Employment Development (LEED) Working Papers, OECD, Paris.

A more proactive approach to public procurement can be a critical tool to improve job quality and skills uiltisation, such as by awarding contracts to tenderers who offer quality jobs (e.g. for vulnerable groups). Using public procurement to stimulate local job quality requires acknowledgement that value for money is not about the lowest cost but also includes social, economic and environmental benefits which may yield returns in longer period. Some localities have also been examining the potential of a “living wage’ to bring about better jobs for residents. Hamilton, Canada, has a living wage policy that stipulates that contractors with the city must pay a wage that allows the worker to have housing and live reasonably within the community - see Box 4.13.

Box 4.13. Hamilton Living Wage Campaign

The Living Wage Hamilton coalition is comprised of the Hamilton Roundtable for Poverty Reduction, the Hamilton Community Foundation, McMaster Community Poverty Initiative, Social Planning and Research Council, and Workforce Planning Hamilton. A living wage is the hourly wage needed for a family to afford basic everyday expenses, such as housing, food, clothing, utility bills, and child care. In 2011, Hamilton’s living wage rate was calculated at $14.95.

Living Wage Hamilton is currently developing a Living Wage Employer Recognition Programme. The programme will include three levels that will recognise the living wages employers already pay and the steps they want to take towards ensuring all workers earn at least a living wage. The details of the programme are part of the conversations Living Wage Hamilton is holding with employers and workers across the city.

Source: OECD (2014, forthcoming), Employment and Skills Strategies in Canada, OECD Reviews on Local Job Creation, OECD, Paris.