Jan Rutkowski World Bank Sarajevo October

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1. The shift in labor demand: from less to more skilled jobs 2. Industrial restructuring is an important source of a skills mismatch in transition economies 3. Hard skills are not enough: soft skills play a critical role 4. Skills mismatch may become an obstacle to modernization and growth of transition economies 5. Skills diplomas need to develop better measures of skills supply and demand 3

World Bank studies on labor market skills in Europe and Central Asia Regional report Country studies Planned surveys of skills supply and demand Main findings of country studies FYR Macedonia Croatia Poland Policy response to the skills gap 4

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Cognitive Involving the use of logical, intuitive and creative thinking Raw problem solving ability vs. knowledge to solve problems Verbal ability, numeracy, problem solving, memory (working and long-term) and mental speed Non- cognitive Soft skills, social skills, life-skills, personality traits Openness to experience, conscientiousness, extraversion, agreeability, emotional stability Self-regulation, perseverance, decision making, interpersonal skills Technical skills Involving manual dexterity and the use of methods, materials, tools and instruments Technical skills developed through vocational schooling or acquired on the job Skills related to a specific occupation (e.g. engineer, economist, IT specialist, etc) 6

Demand for skills in ECA Education and the supply of skills to the ECA market Resolving the skills shortage in the ECA region: A policy framework Managing for results at the pre-university level of education Managing for results in the tertiary education sector Advancing adult learning in ECA 7

Future growth will depend more on improving competitiveness Competitiveness depends on labor productivity and innovation. Labor productivity and innovation depends on skills And because we are ageing, growth depends on activating and keeping adult productive for more years. This requires skills. 8

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Ukraine labor demand study (2009) Croatia: Reaching and sustaining higher rates of economic growth (2009) Are Skills Constraining Growth in Bosnia and Herzegovina (2009) Demand for skills in FYR Macedonia (2010) Fuelling growth and competitiveness in Poland through employment, skills and innovation (2011) 10

World-wide project on the supply of and demand for skills Household based standardized survey of the supply of skills Employer based standardized survey of the demand for skills WB countries to be covered: Macedonia and Serbia 11

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MacedoniaPoland 13

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Between occupational groups Too many social scientists, too few engineers Too many clerks, too few nurses and electricians Within occupational group (skills gap) Inadequate technical (job specific) skills Inadequate cognitive skills Inadequate behavioral & social (soft) skills Too much theoretical knowledge, too little practical skills 16

Only proxies for skills: education, occupation But skills diplomas, educated skilled Labor market indicators Unemployment rate: excess supply Vacancy rate: unmet demand U/V ratio (by education, occupation) Employer surveys Tracer surveys of graduates Poland: obligatory for tertiary education institutions 17

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SkillsDifference in the importance index (ranges from 1 to 5) Foreign language.54 Use of ICT.52 Problem solving skills.27 Technical/vocational skills (basic & advanced).25 Planning and organization.23 Self-management & entrepreneurship.21 24

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Educational system more responsive to the changing labor market needs Broad and transferable skills to prepare workers for the world of growing job and occupational mobility Interactions with employers Life long learning More emphasis on development of soft skills Work attitudes and behavioral skills as important for employability as hard technical skills Educational system focuses on equipping students with cognitive & technical skills rather than soft skills Closing the skills gap will require reorientation of educational and training policy Good and accessible labor market information to guide career choices As opposed to manpower planning Better information on skills supply and demand Employer surveys, tracer surveys of graduates, survey of skills 26