Skills for employability and competitiveness

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1 EUROPEAN COMMISSION CONTRIBUTION TO MINISTERIAL MEETING IN RIGA ON 22 JUNE 2015 Skills for employability and competitiveness The economic crisis led to a massive destruction of jobs - many of them filled by low skilled workers across the EU. Yet, the bulk of new jobs created require higher skills levels. Competition with other parts of the world does not rely on cost differentiation. To tap into new and innovative markets, the EU must deliver high-quality products and services, by attracting new investment and talent and investing in creating a workforce whose skills are constantly updated and upgraded. This is key to retaining competitiveness and boosting economic growth. Evidence shows that the most competitive economies invest more in education. In these countries also, the private sector displays a higher propensity of employee training. However, such investment must closely align skills and knowledge-building with business needs in increasingly digitised markets. In recent years, most EU Member States received Country-Specific Recommendations from the Council, underlining the urgency of skills and human capital formation. This strong policy focus needs to be translated into concrete actions at EU and national level, with the active involvement of social partners. This is essential to ensure that skills supply is in line with the changing needs of the labour market. Efforts must be stepped up to better understand future skills needs, to assess gaps across the EU, and to boost skills through initial and continuing VET and apprenticeships. I. SKILLS MISMATCH There is currently a mismatch between available skills and the needs of European labour markets. One-fifth of tertiary graduates work in low and medium-skills jobs, which points to the low relevance and utilisation of attained skills, and results in wasted human capital. Furthermore, almost 40% of companies report difficulty in finding staff with the right skills. SMEs are particularly affected as they lack the capacity to invest in further training. - Skills for the future While 68 million European adults reach only basic levels of proficiency in literacy and numeracy, these skills are at the core of their ability to perform in most jobs. In the near future, nearly all jobs will also require some level of digital skills, yet 70% of EU citizens only have low to basic digital skills. An ability to speak foreign languages, communication, entrepreneurial skills, team working, and problem solving are all areas that require a boost in education and training curricula. Sector-specific skills are also high in demand but they vary significantly across the EU, depending upon the nature of local and regional labour markets and specialisms.

2 - Filling the gaps Overcoming skills gaps and mismatches first requires a better understanding of labour market needs and trends. These must determine the creation of education and training opportunities and influence the supply of career guidance and counselling in schools and employment services. There are already EU and national initiatives to monitor and anticipate changing labour demand. The evidence generated however is patchy, with a lack of timely information on sectoral and regional needs and a scarcity of systemic feeding into policy and decision making. Efforts to improve the production and use of skills intelligence should therefore be stepped up. In order to achieve a consolidated picture, the European Skills Panorama will be further developed to compile data from different sources, with a focus on quality and usability - making it available and easily accessible to all stakeholders and the general public. Together with the European Centre for the Development of Vocational Training (Cedefop), the Commission is also seeking to assist Member States to develop their anticipation and forecasting systems. - Addressing the needs of economic sectors To address the skills mismatch in specific economic sectors, the Sector Skills Alliances should become more effective in attracting a critical mass of stakeholders. Essentially, they must identify and anticipate skills gaps in specific economic sectors and accelerate the integration of results into mainstream training programmes. In order to fill the gaps in national training markets and to boost private investment among training providers, public-private EU financial instruments should be used, including supporting cross-border VET programmes. These would have a particular focus on addressing the skills needs of SMEs, including at European Qualifications Framework levels 5 and higher. II. FROM SKILLS TO JOBS Skills imbalances put the spotlight on the capacity of education and training providers to meet labour market needs. The Education and Training 2020 strategic framework facilitates cooperation among different European education and training sectors and places significant emphasis on skills for employability. - The potential of VET While efforts should be pursued in all sectors to improve the employability and career progression of graduates, vocational education and training (VET) is admittedly best placed to provide tailor-made and quick responses to fulfil the labour market needs. It also plays a vital role in supporting transitions from education to jobs and between jobs. Graduates who have benefitted from Initial VET (I-VET) enjoy higher employment rates. I-VET students in work-based and apprenticeship programmes also find jobs quicker and stay in them longer, with higher pay. Evidence suggests that countries with strong apprenticeship systems have more youth employment, including among disadvantaged groups. 2

3 Despite overall improvements in the performance, quality and attractiveness of VET in the last decade, little attention has been paid to development of VET teachers and trainers. Strengthening of key competences and basic skills is also essential - using data on the employability of graduates to improve VET programmes and quality assurance. Overall, enhanced policy cooperation is particularly urgent in this area. - Making VET open and appealing Despite evidence that VET graduates have higher employment rates, enrolment in upper secondary VET is dropping. There is clearly more work to be done to convince students, their families, and jobseekers that it is a path to employment and quality careers. VET should become a first choice not a second option, on an equal footing with academic programmes. More effort is also needed to implement quality assurance if VET is to have this social recognition. This includes maximising access to training and qualifications, ensuring that the strengthening of key competences is part of the curriculum - particularly digital skills -, and guaranteeing the professional development of VET teachers, trainers and mentors. While employees in larger companies more often enjoy access to continuing VET (C- VET), provision must be improved also for workers in SMEs, and for unemployed people. Such provision is essential if Europe is to develop a dynamic and productive workforce that continuously updates skills. Member States must ensure a more integrated approach to C-VET and its financing, as well as quality of training outcomes with stronger cooperation between trainers, companies and social service providers. - A more flexible VET for a changing labour market The European Credit System for Vocational Education and Training (ECVET) promotes more flexible qualifications - organising them into units that can be individually assessed and validated. This allows for the tailoring of learning pathways to the needs of individual learners, better reflecting the outcomes of mobility, prior learning, work experience and continued training. Training provision that is organised into modules and VET qualifications that are broken down into units are more easily adaptable to technological innovation and changing labour market needs. Overall, cooperation is essential - across borders, within countries and across sectors to align VET provision to modern labour market needs. - Call for more work-based learning The starting point for improving the attractiveness of our young people to potential employers is the widespread promotion of work-based learning. Evidence shows that it pays off serving as a springboard to employment. Currently, only about one-quarter of all EU I-VET students are in work-based programmes. Company and schoolbased training is not balanced across the EU with the proportion of young people in apprenticeships varying significantly from one country to the next. In spite of their proven added value however, recent economic developments have led to a reduction of apprenticeship in many companies. This is particularly worrying as the demand for people with medium-level qualifications - mainly vocational, is set to rise by more than 3.5 million by 2020: representing nearly half of the EU workforce. 3

4 - Taking the European Alliance for Apprenticeships to the next level 2013 saw the launch of the European Alliance for Apprenticeships with almost all EU Member States committing themselves to concrete steps to increase the supply, quality and image of apprenticeships. This support and that of EU social partners - along with pledges from companies, has enabled the Alliance to mobilise initiatives from chambers of commerce, business organisations, VET providers, youth organisations etc. all serving to raise awareness and trigger concrete actions. Recognising the social and economic value of apprenticeships and their proven success as a springboard to quality employment for young people, the Alliance should be expanded. In particular, via an increased company involvement - especially from SMEs to open up more apprenticeship places for young people and to share experience of what works, and where barriers exist, in designing and implementing apprenticeship programmes and how these might be addressed. The Commission is also supporting projects to improve the evidence-base, such as studies led by the social partners on the cost-effectiveness of apprenticeships and a quality framework for apprenticeships and work-based learning. Action is also foreseen under Erasmus+ this year to support the involvement of SMEs in apprenticeships. - Enhancing the role of business More broadly, there is a need to step up engagement with economic actors in order to bring the worlds of education and work closer together and improve transitions to the labour market. In addition to investing in the skills of their existing personnel, employers have an interest to shape and support the skills development of the future workforce. This is why the Commission is working to mobilise employers, including by providing strong evidence on the 'return on investment', encouraging a more active engagement with education and training providers to inform curricula, and to provide opportunities for work-based learning, including via apprenticeships and traineeships. III. FROM TRANSPARENCY TO RECOGNITION OF SKILLS IN THE EU In many cases, skills exist, but are not identified, exploited or appraised. For example, skills or qualifications acquired in one country or sector may not be recognised by prospective employers in another. Also, skills gained non-formally or informally are not necessarily documented. This is particularly problematic for EU mobile workers. - Skills mobility in the Internal Market It is still not possible to establish equivalence between qualifications gained in different Member States - with the exception of two more established areas linked to the free movement of workers, services and freedom of establishment i.e. mutual recognition of diplomas, certificates and formal qualifications in regulated professions; and to the Lisbon Recognition Convention i.e. academic recognition of higher education qualifications. But while work on the European Qualifications Framework (EQF) and on comparability and transparency of qualifications across Europe is advancing, barriers continue to hinder cross-border mobility. Validation of skills acquired in non-formal and informal learning contexts also varies significantly across the EU. 4

5 - Shared understanding of skills A new impetus is needed to move from just transparency to real recognition of skills and qualifications. The implementation of, the Council Recommendation on the EQF and the referencing of national qualification frameworks is progressing well. To improve the effectiveness of the EQF this could be further extended to open it up to qualifications awarded by international sectorial bodies or multinational companies; to reinforce the role of qualifications frameworks in recognition practices; and to boost qualifications transparency between the EU and other parts of the world. The feasibility of using the multi-lingual classification of European Skills, Competences, Qualifications and Occupations (ESCO) to provide automatic translations of individual qualifications should also be explored. Similarly, mechanisms should be developed to support the recognition in all Member States of skills already validated in one - including validation of skills acquired through standardisation and digital services. IV. BETTER SERVICES FOR PEOPLE AND COMPANIES Several EU initiatives and web-tools are geared towards transparency of skills and qualifications for the purposes of employment, further learning or career guidance; and a number of tools help individuals document their skills and qualifications. However, awareness and understanding of these services is rather low - therefore limiting their effectiveness. This is largely due to the lack of interoperability among the different tools and services. Also, they are frequently not up to date with the requirements of modern digitalised learners and workers. The EU is also currently financing a number of networks of national centres or contact points for skills and qualifications. These networks are usually only based in capital cities and do not coordinate activities among themselves and with other broader EU networks, such as the Europe Direct or the Enterprise Europe Network. The Commission is exploring how to streamline and simplify EU tools and services on skills and qualifications in order to ensure, better-targeted and more user-friendly instruments, supported by proper-functioning national networks, to better reach our target audience and achieve their goals more effectively. 5