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In the three decades to the recent economic downturn, wage gaps widened and household income inequality increased in a large majority of OECD countries. This occurred even when countries were going through a period of sustained economic and employment growth. This report analyses the major underlying forces behind these developments. It examines to which extent economic globalisation, technological changes and institutional and regulatory reforms have had an impact on the distribution of earnings. The report further provides evidence of how changes in family formation and household structures have altered household earnings and income inequality, and it documents how tax and benefit systems have changed in the ways they redistribute household incomes. The report discusses which policies are most promising to counter increases in inequalities and how the policy mix can be adjusted when public budgets are under strain.

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While the econometric literature on the impact of immigration on labour markets is well developed, there is a striking gap with regards to the impact of emigration on sending countries. Building on the established literature measuring the impact of immigration, this paper attempts to narrow that gap by investigating whether the short but intense emigration period from Honduras from 2001 to 2007 to the US increased wages in Honduras. It notably exploits the variation of labour supply by skill group in the labour market in the years following Hurricane Mitch. Relying on individual cross-sectional data and an instrumental variable approach, the estimates show that a 10 per cent increase in emigration from Honduras increased wages in Honduras by around 10 per cent, an increase which is higher than previous findings in other countries, but diminishing over time. It also provides evidence on implications in terms of redistribution by gender, rural/urban households and private sector workers.

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After the onset of the crisis, unemployment in Sweden increased markedly, though much less than expected and than during the early 1990s, even as participation in the labour market held up well. The challenge going forward is to ensure that high unemployment does not become entrenched or leads to withdrawals from the labour force. The government has taken measures to mitigate this risk, particularly in the areas of job-search incentives and enrolment in education. Nevertheless, additional reforms are needed to ensure a sustained job-rich expansion. Such reforms should focus on increasing the flexibility of the labour market and strengthening job-search incentives further. This working paper relates to the 2011 OECD Economic Survey of Sweden.

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This book compiles policy lessons on reallocation of the public workforce, managing competencies, and fostering diversity. It finds that for the public service to make a contribution and underpin the economic recovery and growth, it needs to modernise its governance structures. Civil service systems are at the core of public management, hence they are central to governmental effectiveness. In the current context, countries need to: ensure that the public workforce is motivated and committed to delivery, and to produce change as demanded despite the need for pay restraints and redundancies. Investments in the quality of people management, strategic workforce planning, competencies and diversity of the public workforce are critical to make the public workforce more competent, flexible and adaptable in order to have a competitive, innovative and inclusive public sector. Governments have to maintain and improve the capacity of the public service while at the same time producing savings. The key issue is seeing the public workforce as an asset and not as a cost. It is suggested that the reasons why OECD member countries face difficulties in evaluating workforce diversity policies and programs are: unclear objectives; lack of strategic planning and vision; and poor-quality data on workforce diversity. Experience suggests that diversity policies and programs should be assessed on a regular basis under the umbrella of a long-term evaluation framework, clear conceptual foundations, and a methodology for data collection and analysis. One of the biggest challenges is to make reform sustainable. Show less

The New Growth Strategy aims to create demand and jobs through regulatory reform and fiscal measures. The Strategy focuses on key challenges, notably climate change and population ageing, which can be turned into sources of growth. Given Japan’s precarious fiscal position, it is essential to co-ordinate spending related to the Strategy with the medium-term fiscal plan, in part by increasing the emphasis on regulatory reform. Such measures should cover the entire economy, rather than being limited to the seven areas identified in the Strategy. Among those areas, effectively promoting green innovation will require market-based instruments to place a price on carbon, preferably through a mandatory and comprehensive emissions trading system, to promote private investment, accompanied by a range of other policies. Achieving deeper economic integration with Asia depends on reducing support for agriculture to facilitate more bilateral and regional trade agreements, while bringing down barriers to foreign direct investment and foreign workers. Policies to expand venture capital would help launch innovative firms.

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Mismatches between workers’ competences and what is required by their job are widespread in OECD countries. Studies that use qualifications as proxies for competences suggest that as many as one in four workers could be over-qualified and as many as one in three could be under-qualified for their job. However, there is significant variation across countries and socio-demographic groups. Our meta-analysis of country studies suggests that over 35 per cent of workers are over-qualified in Sweden compared with just 10 per cent in Finland, with most other OECD countries located between these two extremes. There is also extensive evidence that youth are more likely to be over-qualified than their older counterparts and the same is found to be true for immigrant workers compared with a country’s nationals. On the other hand, no definitive evidence has been found of the persistence of qualification mismatch, with some papers showing that over-qualification is just a temporary phenomenon that most workers overcome through career mobility and others finding infrequent transitions between over-qualification and good job matches. Across the board, over-qualified workers are found to earn less than their equally-qualified and well-matched counterparts but more than appropriately-qualified workers doing the same job. Under-qualified workers are found to earn more than their equally-qualified and well-matched counterparts but less than appropriately-qualified workers doing the same job. Over-qualified workers are also found to be less satisfied about their job and more likely to leave their work than well-matched workers with the same qualifications.

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The Leveraging Training and Skills Development in SMEs Project is an international effort to look at policy issues related to the: low access to training in [small and medium-sized enterprises] SMEs; barriers encountered by SMEs to training; and formal and informal ways SMEs access knowledge that is relevant for their business operations. The project examines how formal and alternative ways of training and skills development relate to specific outputs for the firm and employees, for the industry and for the local area where they are located. In particular the role of skills and training ecosystems at the local level is analysed. Participant countries are New Zealand, United Kingdom, Poland, Belgium (Flanders) and Turkey.

The project in Poland focussed on the Sosnowiecki sub-region of the Silesian voivodship (NUTS III level). The review consisted of both a quantitative and qualitative survey of local SMEs, and a local workshop on the training ecosystem. The results of the quantitative survey show that most of the SMEs in the sub-region were unable to assess the skills needs of the employees. It may indicate that the enterprises have difficulties in assessing and planning their human resource needs, and that they may have a more general problem with overall business planning. The results of all parts of the research suggest that the way in which public support to training is functioning could be improved in order to better facilitate SMEs learning and promote co-operation in the sub-region.

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The focus of this study is on the potential causes of skill mismatch, the extent of skill mismatch, the socio-demographic make-up of skill mismatch, and the consequences of skill mismatch in terms of earnings as well as employer sponsored adult education/training. A distinction is made between skill mismatch and education mismatch. The analysis is based on the 2003-2007 Adult Literacy and Lifeskills Survey (ALLS) - a dataset similar to the one that is forthcoming from the Programme for International Assessment of Adult Competencies (PIAAC) in 2013. These studies contain direct measures of key foundation skills as well as measures of the use of certain generic skills at work which allow for a direct measure of skill mismatch. The analysis points to the complex ways in which mismatch is generated and the need for an accurate and up to date measure of mismatch, one that reflects the possibilities for skill gain and skill loss over the lifespan, and reflects differences in the quality of qualifications. Two key findings stand out. First, including supply and demand characteristics in an earnings function reveals that labour demand characteristics are more important than labour supply characteristics in explaining earnings differentials. In other words, skills matter for earnings but only if they are required by the job. This has direct implications for understanding better the causes of mismatch on earnings. Second, the skill content of jobs seems to be an even stronger determinant of participation in employer supported adult education/training than educational attainment or literacy proficiency. The influence of demand characteristics thus tends to outweigh the influence of supply characteristics when employers make the decision to support adult education/training. Addressing mismatch thus requires a careful consideration of both the demand and supply sides of the labour market, so as to understand better the variety of factors which may have a negative impact on the effectiveness of skill formation, skill maintenance, and also skill use.

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For OECD member countries, high-level workplace skills are a key means of supporting economic growth. Systems of vocational education and training (VET), or career and technical education (CTE) in the United States, are now under intensive scrutiny to determine if they can deliver the skills required. Based on reviews in 16 countries, ‘Learning for jobs’ is an OECD study designed to help countries make their VET systems more responsive to labour market needs. In Texas, secondary level CTE is provided within a comprehensive high school framework. Texas has encouraged a wide variety of innovative learning initiatives, established good articulation between high school CTE and postsecondary programs and benefits from a strong network of community colleges and universities. At the same time the state faces some challenges in ensuring minimum quality standards in CTE, in providing sufficient good quality career advice, and providing an adequate range of workplace learning opportunities. The OECD review assesses the main challenges faced by the VET system and presents an interconnected package of policy recommendations. For each recommendation, the report describes the challenge, the recommendation itself, supporting arguments, and issues of implementation.

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This paper is the result of a joint effort of [Organisation for Economic Co-operation and Development/Development Assistance Committee] OECD/DAC and [Learning Network for Capacity Development] LenCD to assemble the critical messages about training and learning that are emerging from the current international scrutiny of training and capacity development. It synthesises current wisdom on the topic, and offers a sense of direction on where the debate is going, particularly in terms of approaches to capacity development interventions at country and field levels. The paper is written primarily for the demand side, i.e. those in the South who request and/or are beneficiaries of capacity development activities, together with Northern donor institutions who commission and pay for the activities.

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