Nowadays, one of the most worrying aspects of the entrance of youngsters in the labour market is the problem of skills matching.
It is common for people to be overqualified for a certain type of job, or, on the contrary, to be under qualified. And the problem that arises is: How to match people with the correct job given their skills?
As it is quite difficult to observe the skills a certain person holds, this problem will, in many cases, be linked to increasing youth unemployment rate. It is said, that this situation in particular may be the principal obstacle for young people in the labour market.
This is shown when the existence of a large number of vacancies in the labour market is still associated with a high level of unemployment. This happens in a lot of countries in Africa, and South Africa has one of the most extreme cases, with 600 000 unemployed graduates and 3 million youngsters not incurring in any training or job related activity, and still, in the private sector, experienced 800 000 vacancies (data of 2010).
So how is, in fact, possible to address this problem?
One approach to this situation is the increase in education levels, in order to oblige young people to acquire higher levels of education.
However, it is not true that this will lead to a reduction in the problem described above. The quality of the education must be taken into account, and must be improved. On the other hand, it should be taken into account the job one may wish to perform in the future, and orientate youngsters to a field of education more in line with the task to execute (such as specialized and more practical courses).
Regarding the side of the firm, a mismatch in skills in the workers may lead to unskilled employees performing tasks they are not capable of performing, reducing the firm’s productivity, and still the worker is receiving a higher wage than it should. On the other hand, an overqualified worker performing a task that is below his skills might lead to alienation of the worker since he feels he should be receiving a higher wage and performing tasks more in line with the skills and qualifications he possesses. So, in order to address this problem it is necessary to provide a screening and recruitment program. Though it is still rather problematic to overcome it, due to the problems of asymmetric information (adverse selection and moral hazard).
The firms should be thorough concerning the employees and the skills they bear; it may be in the firm’s interest to invest in training and formation, and so it may choose not a very high skilled worker but one that it has confidence that could be a valuable asset in the future.
To sum up, mismatch in the skills possessed by the employees is a difficult situation to address and can cause serious problems not only to the worker but to the firm as well. It is required to invest in screening programs to help identify the workers and, on the side of the employers, an early investment in education an on its quality.
Skill Mismatch: The Role of the Enterprise, research project nr 21, Publications office of the European Union 2012
Maria Almeida – 637