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a blog from young economists at Nova SBE

The Problem of Mismatch Skills

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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.[1]

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.

References:

Skill Mismatch: The Role of the Enterprise, research project nr 21, Publications office of the European Union 2012

Maria Almeida – 637

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Author: studentnovasbe

Master student in Nova Sbe

3 thoughts on “The Problem of Mismatch Skills

  1. The article above highlights some of the issues of job market, namely the match between labour supply and labour demand. I have to disagree with some of ideas pointed out. First, what differentiate a skilled of an unskilled worker? Years of education? I don’t believe so. Every job requires some kind of skilled of the side of worker. The question that remains is what skills are needed and how to address them; quantity is not a synonymous of quality. The truth is that in general schools in Europe create scholars and not workers. I argued that education should be constantly updated but to the realities of the society of the time. Another question that I would like to rise is about expectations of workers. What is such a thing? Workers nowadays look like a spoiled child, when he/she doesn’t get the job that he/she believes it deserves, he/she makes a tantrum and not work properly. It would be perfect that all the people get the job of his dreams but most of the time markets are not prepare to that. Not long ago, people worked to survive not for pleasure.

  2. Skill mismatch in one of the main challenges faced by economics. In fact, the existence of over-qualified and under-qualified workers has an impact in economic and social outcomes. People who are over-skilling can feel a waste of resources that were used to acquire these skills and so, they will earn less than workers who are well-matched with their jobs. As Maria said, this situation can be a big problem not only for the firm but also for the worker. He tends to be less satisfied and less productive, disadvantaging the firm. In the same way, people who are under-qualified couldn’t have sufficient capacity to handle the tasks they are performing, contributing to less productivity as well.
    Skills policies should support employers in making better use of the skills available to them. An example of a program that measures the key cognitive and workplace skills needed for individuals to participate in society and for economies to prosper is the “Programme for the International Assessment of Adult Competencies” (PIAAC). This survey helps the countries to understand how education and training systems can sustain these skills. The survey interviews adults with ages between 16 and 65 and is designed to be valid cross-nationally in order to be possible to compare different results among countries. To do that, it is implemented by assessing literacy and numeracy skills and the ability to solve problems in technology-rich environments and collecting a broad range of information, including how skills are used at work and in other contexts, such as the home and the community.
    However, it is also important to look for other types of solutions. For instance, it is essential to identify positions with responsibilities that have changed since the last time they were filled, gather the group together to give everyone a chance to learn about each member’s role and how the team should ideally work together and offer training and formation to keep the workers skillful to perform their tasks.
    To conclude, the mismatch skills is a problem that is important to solve in order to increase not only the productivity of firms but also the satisfaction of the employees. To do so, it is necessary to invest in programs that help firms to match the workers with their jobs.

    Rita Cordeiro

  3. Skill mismatch in one of the main challenges faced by economics. In fact, the existence of over-qualified and under-qualified workers has an impact in economic and social outcomes. People who are over-skilling can feel a waste of resources that were used to acquire these skills and so, they will earn less than workers who are well-matched with their jobs. As Maria said, this situation can be a big problem not only for the firm but also for the worker. He tends to be less satisfied and less productive, disadvantaging the firm. In the same way, people who are under-qualified couldn’t have sufficient capacity to handle the tasks they are performing, contributing to less productivity as well.
    Skills policies should support employers in making better use of the skills available to them. An example of a program that measures the key cognitive and workplace skills needed for individuals to participate in society and for economies to prosper is the “Programme for the International Assessment of Adult Competencies” (PIAAC). This survey helps the countries to understand how education and training systems can sustain these skills. The survey interviews adults with ages between 16 and 65 and is designed to be valid cross-nationally in order to be possible to compare different results among countries. To do that, it is implemented by assessing literacy and numeracy skills and the ability to solve problems in technology-rich environments and collecting a broad range of information, including how skills are used at work and in other contexts, such as the home and the community.
    Additionally, it is also important to find other types of solutions and take a look to workers’ side. For instance, it is essential to identify positions for the employees with responsibilities that have changed since the last time they were filled, gather the group together to give everyone a chance to learn about each member’s role, how the team should ideally work together and offer training and formation to keep the workers skillful to perform their tasks.
    To conclude, the mismatch skills is a problem that is important to solve in order to increase the productivity of firms and also to promote the satisfaction of the employees. To do so, it is necessary not only invest in programs that help firms to match the workers with their jobs but also increase the qualification of workers.

    Rita Cordeiro
    20/12/2013