L ABOR M ARKET C HALLENGES : A ND H OW T ERTIARY E DUCATION S YSTEMS C AN R ESPOND Claudia Costin...

LABOR MARKET CHALLENGES:AND HOW TERTIARY EDUCATION SYSTEMS CAN RESPOND

Claudia CostinSenior Director

Education Global Practice

14 May 2015

Structure of the Presentation

1. Economic Developments: ECA and Globally

2. Changes in Skills Demand and Supply

3. How can Tertiary Education and Institutions respond?a. The Wider Reform Agendab. Supporting Employability and Labor Market Transition

3

Strong GDP and productivity growth in early 2000sDevelopmentsDemand-sideSupply-sideUniversities

Real GDP growth and labor productivity (2000-2007)

ECA LAC EAP OECD (Europe) OECD (Non Europe)

0

1

2

3

4

5

6

7

8

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Real GDP growth (annual average, percent) Real GDP per capita growth (annual average, percent)

GDP per person employed (US$ at PPP, 1990)

Percent (annual average) Percent (annual average)

Source: World Development Indicators (WDI);World Bank (2014), Back To Work: Growing with Jobs in Europe and Central Asia

4

ECA LAC EAP OECD (Europe) OECD (Non Europe)

-2

-1

0

1

2

3

4

5

6

7

8

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Real GDP growth (annual average, percent) Real GDP per capita growth (annual average, percent)GDP per person employed (US$ at PPP, 1990)

Real GDP growth and labor productivity (2008-2012)Percent (annual average) Percent (annual average)

But GDP and productivity growth slowed downdue to crisis

Source: World Development Indicators (WDI);World Bank (2014), Back To Work: Growing with Jobs in Europe and Central Asia

DevelopmentsDemand-sideSupply-sideUniversities

Limited employment creation in ECA pre-crisis……due to weak relationship between economic and employment growth

Source: Authors’ calculations based on ILO and WDI.

Employment growth, 2000=100 (2000-2012)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201290

95

100

105

110

115

120

125

130

135

140

ECA LAC EAPOECD (Europe) OECD (Non Europe)

Notes: ECA = Europe and Central Asia (Transition economies , and Turkey) ; LAC = Latin America and the Caribbean; EAP = East Asia and Pacific.


6

Average years of lost employment for an individual, circa 2010Ka

zakh

stan

Azer

baija

n

OEC

D

ASIA

Czec

h Re

publ

ic

Slov

enia EU

Russ

ia

Kyrg

yzst

an

Esto

nia

LAC

Bulg

aria

Lith

uani

a

Ukr

aine

Latv

ia

Geo

rgia

Slov

akia

Pola

nd

Rom

ania

ECA

Croa

tia

Arm

enia

Hun

gary

Serb

ia

Tajik

istan

Mol

dova

Mac

edon

ia

Turk

ey

0

5

10

15

20

25

30

35

54 3 4 5 7 5 4 5 5 4 6 5 6 5

36 7 6 6 6

47

6

6 6 7 7

25-34 35-44 45-54 55-64 Female total

As a result, the region is missing out on its human capital potential to spur growth and welfare


Source: World Bank (2014), Back To Work: Growing with Jobs in Europe and Central Asia

7

Demographic trends put added pressures on productivity and growth

Source: World Bank (2014), Back To Work: Growing with Jobs in Europe and Central Asia

ECA Countries: Change in 15+ Population 2010 - 2030 (%)

“Younger” countries also face demographic pressures: Out-migration, youth bulge, and long-run aging

Older workers will outnumber youth due to: Aging, Low Fertility, and Out-migration






9

Globally, skills demand is shifting towards “New Economy Skills”

(non-routine cognitive and interpersonal skills)

Employment Composition (simple cross country average by type of occupation; 2000-2012)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

10

20

30

40

50

60

OECD countries

Non-routine cognitive or inter-personal

Routine cognitive or manual

Non-routine manual

Shar

e in

tota

l em

ploy

men

t (%

)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

10

20

30

40

50

60Developing countries

Non-routine cognitive or inter-personal

Routine cognitive or manual

Non-routine manual

Shar

e in

tota

l em

ploy

men

t (%

)

Source: WDR 2016 team, based on ILO KILM data. Skills classification follows Autor (2014).


10

Youth are, overall, adjusting better to the shift in skills demand

Source: World Bank 2014 “Back to Work”, based on LFS.

2002 2003 2004 2005 2006 2007 2008 2009 201030

40

50

60

70

New Economy Skills

Routine cognitive

Manual Skills

Czech Republic, Cohort born 1975-1984

Mea

n Sk

ill Pe

rcen

til o

f 200

2 S

kills

Dist

ributi

on

2002 2003 2004 2005 2006 2007 2008 2009 201030

40

50

60

70

New Economy Skills

Routine cognitive

Manual Skills

Czech Republic, Cohort born before 1955

Mea

n Sk

ill Pe

rcen

til o

f 200

2 S

kills

Dist

ributi

on


11

Kaza

khst

anA

lban

iaM

onte

negr

oBu

lgar

iaRo

man

iaSe

rbia

Cypr

usSl

ovak

Rep

ublic

Russ

ian

Fede

ratio

nLi

thua

nia

Slov

enia

Hun

gary

Croa

tiaLa

tvia

Czec

h Re

publ

icPo

land

Esto

nia

Mex

ico

Chile

Isra

elSw

eden

Gre

ece

Luxe

mbo

urg

Turk

eyIc

elan

dIt

aly

Aus

tria

Fran

cePo

rtug

alSp

ain

Uni

ted

King

dom

Uni

ted

Stat

esN

ew Z

eala

ndN

orw

ayBe

lgiu

mD

enm

ark

Ger

man

yA

ustr

alia

Net

herla

nds

Switz

erla

ndFi

nlan

dCa

nada

Japa

nIr

elan

dKo

rea

ECA OECD, non-ECA

0.0

10.0

20.0

30.0

40.0

50.0

60.0

OECD Average = 18 percent

But not all education systems prepare youth adequately

Source: WB Staff calculations using OECD PISA 2012.

Too many youth fall behind in basic cognitive skills% of 15-year olds who are functionally illiterate, scoring “below level 2”

on PISA Reading Test 2012


12

Relative to other obstacles, skills have become a more severe constraint to business

Source: World Development Report 2013


13

And the demand for skills may be changing even more: Skills for which jobs?

Probability that occupation will disappear:

HIGH: Tax Preparers, Watch Repairers, Insurance Underwriters, Telemarketers

MODERATE: Shoe and Leather Workers and Repairers, Massage Therapists, Commercial Pilots, Teacher Assistants

LOW: Mathematicians, Floral Designers, Emergency Medical Technicians and Paramedics, Editors

By 2030, 2 billion jobs will be automated…Source: Frey and Osborne 2013






15

Tertiary education responded – and will continue to respond – through rapid expansion

Projections of the number of 25-34 year-olds with tertiary education, 2005-2030

Note: Figures are estimates based on available data. Population estimates are based on OECD’s annual population projectionsSource: OECD, UNESCO, and National Statistics websites for Argentina, China, India, Indonesia, Saudi Arabia and South Africa


16

And the expansion of the 2000s has paid offfor individuals and economies

KGZ TJKARM CZE

EST BGRSV

NRUS

GEOALB

MKDLV

AROM LT

UPOL

HUNTUR

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%average return to college initial value

Retu

rns t

o Co

llege

Edu

catio

n

Evolution of average wage premia for tertiary education in the 2000s, Salaried workers, Age 25-64

Source: Back To Work: Growing with Jobs in Europe and Central Asia (2013).


17

Tertiary education can be a powerful engine of productivity and growth

Highly Proficient Graduates

Skills for

Innovation

Basic and Applied

Research

Technology Transfer

KnowledgeSkills

Competences


“Third Mission”

Tertiary Education

Institutions

Research

Productivity and

Growth

Economic growth is important – but so are social benefits


Citizens’ AwarenessToleranceHealth/Longer lifeEnvironmental Consciousness

Higher education attainmentCitizenship building

19

But tertiary education does not always work as a system of connected actors

Employers(skill users)

Earlier education

ResearchInstitutions

Companies(research

users)

HEIs and Training

providers


Tertiary Education

Institutions

20


21

STRONGERINCENTIVES

HIGHERCAPACITY

BETTERINFORMATIO

N

Financing

Management

Stewardship

HEIs & Training

providers

Earlier education

ResearchInstitutions

Companies(research

users)

Employers(skill users)

POLICY PILLARS DISCONNECTSTO ADDRESS

Making connections through policiesDevelopmentsDemand-sideSupply-sideUniversities

22

How can financing policy improve incentives and capacity?


Identify priority activities for public spending Employability, research, STEM, equity, internationalization…

Fund effectively Increase public resources Improve efficiency of public funding (selectivity, incentive) Complement with private funds (transparent, fair and

equitable system of fees and loans; matching grants) Develop appropriate mechanisms (performance-based

financing, performance contracts)

23

Tertiary education financing remains inequitableIn many ECA countries less well off students pay


Note: Public expenditure only (for Switzerland, in tertiary education only; for Norway, in primary, secondary, and post-secondary non-tertiary education only)Source: OECD, Education at a Glance 2014, Table B2.3

Expenditure on educational institutions as a percentage of GDP (2011)Public and Private Sources

24

How can institutions be improvedthrough incentives and information?

Support more autonomous and accountable institutions: Align academic, managerial and financial autonomy Strengthen governing bodies

Functions, representativeness In particular more voice to employers

Improve internal quality assurance and flow of information Agreed performance indicators Tracking graduates

Nurture linkages to environment (industry and other employers, community…) Provide incentives for collaboration


25

Better governance on system level: Aligning regulations, information, financing, and QA

Clear and efficient regulation (be aware of excessive and undifferentiated regulation)

Agreed learning outcomes laid down in National Qualifications Framework

Information to include indicators of academic, research and labor market performance and to be available to all stakeholders

Financing policy to reward performance and efficiency Effective external and internal quality assurance Strengthen coordination within and across ministries and

with stakeholders


26





How can tertiary education support employability and labor market transition?


Universities (and countries) can improve employability and labor market transition, for example, through:

1. Stronger focus on employability and entrepreneurship in curricula and institutional set-up

2. Bridging Programs

3. Collect information (e.g. tracking graduates) and use for steering

Countries can support these structures and activities at the national level and support a more diversified institutional landscape.

28

No matter what type of institution: Employability of students is key

It can be ensured through: Clearly established learning outcomes (National Qualifications

Frameworks – NQF; Tuning Project, etc.) Involvement of employers and other stakeholders (NQF, curricula

development, practical aspects of studies, teaching) Curricula need to fit envisaged generic and technical learning

outcomes “Skills not just diplomas” - in addition to generic and

technical/professional skills, development of competences/“attitudes”

Practical placements, internships Career guidance Information on labor markets and career perspective before, during,

at the end of tertiary education


29

Focus on employability example: University of Aberdeen

“Our promiseWhat we provide: Support and guidance with planning your future.Attractive and relevant courses with a focus in building attributes sought by employers.Advice on finding work experience.A wide selection of volunteering opportunities.Help with CV building and making effective job applications.The possibility to study abroad as part of your degree.A record of your achievements in your enhanced student transcript when you graduate.”

Source: http://www.abdn.ac.uk/study/about/career-prospects-142.php


http://www.abdn.ac.uk/study/about/career-prospects-142.php

http://www.abdn.ac.uk/study/about/career-prospects-142.php

30

Bridging programsDevelopmentsDemand-sideSupply-sideUniversities

Bridging Programs provide accelerated, focused learning opportunities to help relatively less prepared students acquire knowledge and skills needed for tertiary education success.

Often provided in the summer months (but can be longer) Intended to build skills and competences May be general (e.g. programs about studying at university) or

specific (e.g. math and science bridge program)

Source: Based on National Center for Postsecondary Research, NCPR Brief, July 2012

31

Bridging program example: World Bank ROSE Project


The Romania Secondary Education (ROSE) Project (2015-2022) includes a competitive grant scheme to finance summer bridge programs. Tertiary-level campus-based summer courses will be offered

to 8,000 upper secondary students 160 bridge programs will be offered

Source: World Bank, 2015, Romania – Secondary Education Project

32

Tracer studies provide empirical basis for addressing TE to work transition issues

School Studies Working life

Survey


Source: Puettmann, V., Graduate Tracking in Europe, Tbilisi – December, 2013

33

Tracer study example: The Graduate Survey Cooperation Project (Germany)

• Coordinated by the International Centre for Higher Education Research Kassel (INCHER) since 2007

• INCHER provides advice to participating institutions, processes the data and aggregates them into a database

Institutionalization

• Yearly study surveying all graduates of the participating institutions 1.5 years after graduation• Panel study with graduates 4-5 years after graduation• Common core questionnaire that allows for additions by the participating institutions

Approach and Methods

• Study path and assessment of courses and study conditions• Detailed information on employment• Assessments of the relationship between education and employment

Information

• The average response rate for both parts of the study has been around 50 %

Features



34

How tracer studies inform tertiary education policies

To decide which programs to offer; and how many graduates

to enroll to fill available jobs related to the program.

To assess program effectiveness—whether programs provide relevant skills for students to succeed after they graduate.

To help students make informed choices about which

programs to enter.

To contribute to the program/institutional quality

assurance process.

Data from Graduates



35

Some countries use tax data as a basis for tracking: “Mi Futuro” – My future (Chile)


Informs about 700 professional and technical programs from almost 180 institutions, accounting for more than 90 percent of the current graduates (there are over 12,000 programs):

Income and income dispersion at 4 years after graduation

Likelihood of employment during first year after graduation

Information about the careers: enrollment, graduation rate, drop out rates, duration of the studies, fee ranges and accreditation status of the institutions and its programs

36

Combining information and placements: AlmaLaurea (Italy)

For further review: visit http://www.almalaurea.it


Founded in 1994, Alma Laurea is a university-based consortium, supported by the Ministry of Education in Italy.

Graduates are monitored for five years, beginning just before graduation

Goals:

1. Assessment of Tertiary Education system

2. Labor market insertion

Graduates are encouraged to update their information for future job prospects

http://www.almalaurea.it/



37

Summary

Tertiary education is an important driver of productivity and growth; however on the system and institutional level, more can be done to ensure a better labor market connect.

There are numerous disconnects in the tertiary education system that constrain its potential.

Improving finance, management, governance can help strengthen connections.

This needs to be coupled with specific measures targeted at better employability (tracer studies, observatories, etc.).

This could become an important policy area for the next phase of the Bologna Process.

38

Senior DirectorEducation Global PracticeClaudia Costin [email protected]

mailto:[email protected]

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