Improving the alignment between the skills required by employers and those of workers is increasingly challenging. Not only are digitalisation, globalisation and rapid population ageing t continuing to affect the demand and supply of skills, the COVID-19 pandemic has exacerbated pre-existing skills shortages, particularly in the health sector. Additionally, many countries are implementing measures to support the green transition, which is changing skill demands.
In light of these changes, it is becoming increasingly important to ensure that the skills of workers and individuals are aligned to the needs of the labour market. Skills imbalances, such as shortages (when adequate skills are hard to find in the current labour market) or surpluses (when certain skills are in excess in the labour market relative to the demand, and therefore easy to find) can slow the adoption of new technologies, cause delays in production, increase labour turnover and reduce productivity. Individuals who do not possess the “right” skills would also face poor labour market outcomes.
The OECD Skills for Jobs database is an analytical tool designed for policymakers, practitioners and the general public to understand where gaps are emerging between skill supply and demand, by providing country-level information for a wide range of skill categories, including cognitive, social and physical skills. Since its first release in 2017, the database has expanded its country coverage significantly. The OECD Skills for Jobs database 2022 covers 43 OECD countries and partner economies across the world. It relies on a new methodology for calculating skill requirements in occupations, which leverages information from online job postings, as opposed to the previous vintage, which used expert judgement as reported in the United States’ O*NET database. This allows the skill-occupation mapping to vary over time, which captures changing skill requirements within occupations in a timely manner. Furthermore, the mapping is now based on information from six English-speaking countries (Australia, Canada, New Zealand, Singapore, the United Kingdom and the United States), as opposed to United States information only. Finally, the Database now includes digital skills, too.
OECD Skills for jobs 2022: Key insights Download the data
Skills are defined as hard-to-find (or in shortage) when employers are unable to recruit staff with the required skills in the accessible labour market and at the going rate of pay and working conditions. Skill surpluses arise in the opposite case, when the supply exceeds of demand for a given skill.
The indicators measuring skill shortage and surplus are constructed on the basis of signals extracted from five sub-indices:
• wage growth,
• employment growth,
• hours worked growth,
• unemployment rate,
• under-qualification growth
In a nutshell, the OECD Skills for Jobs indicators exploit time series values for the above-mentioned sub-indicators across occupational groups (ISCO-08 2digit). For each indicator and occupation, the time series is compared to the corresponding economy-wide trend to detect whether each specific occupational group is growing/shrinking with respect to the rest of the economy and by how much. This strategy allows identifying whether jobs in each occupational group are hard-to-fill (i.e. in shortage, where firms struggle to find workers with adequate skills) or easy-to-fill (i.e. in surplus, whereby skills are easy to find and no recruitment bottlenecks emerge).
If, for instance, wages in the occupational group of “Science and Engineering Professionals” grow faster than average wages across occupations in a given country, this signals shortages. In other words, employers compete with one another and use wages to attract scarce talent and workers to the advertised jobs. Similarly, when average hours worked in a specific occupation grow faster than the country average, this signals that employers might be facing hiring difficulties and, as a consequence, are being forced to increase the work hours of their current employees to satisfy rising demand.
No single sub-index provides, on its own, a perfect signal of occupational needs. Wage growth, for example, might be driven by collective bargaining agreements, rather than by skills imbalances and employment growth may signal demand for labour, but not necessarily a shortage of skills. By combining five sub-indices into one final indicator, the impact of conflicting signals is minimised and the power of the final indicator amplified.
The aggregation of the five sub-indicators provides a ranking of occupations that are hard or easy to fill. Skill requirements are then mapped onto each occupation to obtain imbalances at the skill level. This yields a measure of the direction (excess or hard-to-find) and the intensity of labour market demands for more than 50 skill categories.
More details about the methodology:
Skills for Jobs 2022: Mapping skill requirements in occupations based on job postings data Getting Skills Right: Skills for Jobs indicatorsQuestions? Contact ELSSkills1@oecd.org