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Job vacancies and skills are often not matching up

Several developed economies are seeing increasing numbers of job vacancies but their unemployment rates are not going down. In some cases, they are even rising.

Mismatches in skills are hindering job creation

What is happening is that many of the workers who lost their jobs to the economic crisis do not have the skills that the labour market now demands.

“These skills mismatches mean that unemployed people need much longer to find a new job, which in turn drives up long-term unemployment,” says Labour Economist Theo Sparreboom, one of the authors of the ILO’s recently published Global Employment Trends 2013.

According to the report this particularly affects young people, who get most of their training and education before they start working or early in their careers.

Workers in the construction and financial sectors in countries like the United States and Spain were among the first to be hit by the crisis in late 2008 and 2009. When they lost their jobs, they found that sectors which had not been affected did not require the skills they had.

In the United States, for example, about 30 per cent of jobs in construction were lost between 2007 and 2012, and employment in durable goods manufacturing is 15 per cent below pre-crisis levels. In contrast, employment in education and health services is estimated to have risen 20 per cent. This has raised concerns about skills and occupational mismatches that could drive up unemployment rates, since the crisis hit given that the recovering sectors require different competencies.

In some cases, workers have relocated to different areas or countries but some have opted for “occupational downgrading” which involves taking a job below their previous level of skills.

The issue of skills mismatches has received particular attention in developed economies as a result of the economic crisis but it is a problem that affects labour markets in all countries.

The ILO argues that targeted educational policies can help address the issue by ensuring jobseekers continue to be employed in the more dynamic sectors of the economy.

But increasing unemployment levels in many countries added to the extended time period people are out of work makes it more difficult to deal with the problem.
Sparreboom’s conclusion is to recommend “… that policy-makers take coordinated action to reduce unemployment, including services to make job searching and matching more effective, like investing in job skills and retraining programs.”

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Posted in Employment, International Labour Organisation, unemployment

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