1. Promoting Human Capital: Are governments effective? The case of Macedonia Dr. Nikica Mojsoska Blazevski University American College-Skopje Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

2. Human capital endowment The level of human capital is still low. Without well educated workforce Macedonia cannot become a modern, innovation-driven, export-oriented economy The low level of education and … contribute to a low general level of productivity (EC, Progress Report, p.28) The authorities continued to improve both the physical infrastructure of education and the regulatory framework … Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

3. Growth path: neglected human capital Low-skill specialisation, with low-level equilibrium, low growth, high U, informal work, insufficient technological change Emphasis on school inputs rather than outputs Education policy was mainly focused on dealing with segmented systems of provision, with limited attention to employability (ETF, 2009) Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

4. Education outputs Poor achievements on international assessment Low expected years of schooling (12.3) High share of early school leavers (1.8 p.p. higher than in the EU-27, 6 p.p. for females) Only 14.3% of 30-34 years-olds with completed tertiary education (Europe 2020 targets 40%) Difficult school-to-work transition WEF Competitiveness Report MKDNMS Quantity of Education4.65.9 Quality of Education4.14.5 Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

5. Education pays-off Much higher employment rates and lower unemployment rate for highly educated persons Higher probability of finding a job Lower incidence of discouraged workers Wage premiums Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

6. Variables199820002002 A. Estimated coefficients for dependent variable ln(net monthly wage) constant7.3948.267.772 (90.826) 1 (96.839)(92.262) age0.0310.0130.024 (8.506)(3.583)(6.498) agesquared-0.00034-0.00017-0.00027 (-7.919)(-3.960)(-6.276) 3-year secondary 2 0.2340.1710.146 (11.234)(8.194)(6.938) 4-year secondary0.3670.3240.317 (22.036)(19.825)(19.357) non-tertiary0.5010.5090.427 (18.473)(20.022)(15.562) university0.8080.7690.725 (35.472)(34.076)(34.280) gender0.1510.1480.179 (11.032)(10.965)(13.489) B. Returns to experience, education and other personal characteristics 3 age3.1%1.3%2.4% agesquared-0.03%-0.02%-0.03% 3-year secondary 2 26.4%18.6%15.8% 4-year secondary44.3%38.3%37.3% non-tertiary65.0%66.4%53.2% university124.3%115.8%106.4% gender16.3%16.0%19.6%

7. Educational reforms Recent educational reforms: - introduction of nine-year primary education, - compulsory secondary education, - revised curriculums which promote outcome oriented and interactive teaching and learning, - reform of 4-year VET, - early learning of English language and ICT skills, - implementation of Bologna declaration, - expansion and subsidies to higher education Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011 Improvement of physical capacity at lower education levels and expansion of provision at university education

8. Report: Skills Not Just Diplomas Without adequate information on the skills students acquire and those adults actually have, policies to address skills gaps operate in the dark, Lars Sondergaard, lead author of the report. Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

9. Skill gaps Companies report to face difficulties finding employees with the skills they need in spite of a large pool of unemployed - BEEPS Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

10. Vertical mismatch - LFS 20072008 Q2/2011 EU Excess supplyEU EU University15.57.4-814.27.8-6.518.613.2-5.4 Higher4.42.1-2.342-23.22.0-1.2 4 years secondary42.139.3-2.742.139.4-2.741.438.2-3.2 3 years secondary12.115.33.212.313.41.111.311.70.4 Primary and lower secondary20.729.58.822.331.59.120.529.69.1 Incomplete primary4.24.70.44.34.60.34.33.6-0.7 Without education1.11.70.60.71.50.80.61.81.1 Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

11. Occupational mismatch - ESA Planned demand (vacancies) equal to about 1.5% of current employment (10,060) By industry: manufacturing (50%), trade (21.2%), construction (8%) and 5% in transport and communications Highest demand for secondary educated workers (62.3%) About 10% of total demand for workers with tertiary education Focus on experienced workers, foreign languages, IT, and soft skills Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

12. Occupational mismatch – ESA (2) 10% of firms reported that experienced difficulty in hiring (experience and soft skills) Mainly in manufacturing industry and for secondary- educated Findings are used for designing and implementing some ALMPs Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

13. Findings - ESA Mismatch problem is driven by specific factors at different educational levels - at lowest educational level, it is mainly an issue of low qualifications and lack of specific skills of non- qualified workers; - at lower and upper secondary education, the problem is lack of specialization of gymnasium graduates, and lack of additional skills and working experience for the rest; - for highly educated individuals, it is the occupational choice and surplus of degrees in less market-oriented sciences Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

14. Skill Demand Survey - WB About 30 percent of employers claim that hiring a worker with required skills is difficult Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

15. Skill Demand Survey – WB (2) Modern and dynamic firms are more seriously harmed by skill shortages – potential constrain to growth Newly created jobs differ in the skill content from old destructed jobs: high professional skills, or medium- level non-manual skills Demand for advanced technical and professional skills Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

16. Skill Demand Survey – WB (3) The aggregate job vacancy rate is 3% (unmet demand) Vacancy duration from 2 weeks (sales worker) to 5 weeks (professional) Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

17. Skill Demand Survey – WB (4) Top 5 most important skills for employers: 1.Sense of work ethics, 2.Overall literacy, 3.Communication skills, 4.Customer care, 5.Motivation. Foreign language, ICT, technical / vocational skills, problem-solving Top 5 skills that applicants lack: 1.Responsibility and reliability, 2.Motivation and commitment, 3.Communication skills, 4.Customer care, 5.General literacy skills. Unemployment seems more related to work ethics and key competencies than with technical/vocational and job specific-skills

18. Skill Demand Survey – WB (5) Lessons for educational policy: 1. Education system and curricula should be made more responsive to labour market needs – engage employers 2. More attention should be paid to soft skills – beyond the traditional function of the educational system - Soft skills usually acquired outside the school system: Improve and expand early childhood learning programs, especially for children from disadvantaged social background/rural areas. Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

19. Skill mismatches - AmCham 57% of firms face difficulties in finding workers, only 47% filled in their vacancies with appropriate staff Skills in demand differ across sectors, and range from leadership, management skills, to analytical skills, negotiation and communication skills, etc ¾ of employers report a need for initial on-the-job training (remaining 23% did not answer) Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

20. What do studies show? Employers value key competencies and soft skills Greater demand for: - highly educated individuals and those with secondary education, and - medium and advanced professional and occupational skills Occupations in demand? - Sectoral skill committees Is it effective to invest heavily in higher education? The role of institutions Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011