Skills mismatch is a discrepancy between the skills that are sought by employers and the skills that are possessed by individuals. Simply put, it is a mismatch between skills and jobs. This means that education and training are not providing the skills demanded in the labour market, or that the economy does not create jobs that correspond to the skills of individuals.
Different types of skills mismatch
- Over/under skilling. A person can be simultaneously overqualified and underskilled. This often happens when the field of education does not correspond to the field of occupation.
- Skills obsolescence often accompanies digitalization and technological advancement but can also occur when skills are not being regularly practiced and become obsolete after time. Both of these scenarios can be a result of changing demands in the labour market.
- Different types of mismatch may co-exist: For instance, a person can be simultaneously overqualified and underskilled. This often happens when the field of education does not correspond to the field of occupation.
Why is it important to address the skills mismatch challenge?The consequences of skills mismatch reach all levels of the labour market.
At the individual level there are serious wage penalties especially for overqualification that eventually affect both job and life satisfaction. For example, you would assume that in developing countries overqualification should not be a problem because of a lack of sufficient training opportunities. However, people receive training and are still unable to find a job that corresponds to their skill level, which means they are not employed at their full productivity potential. In addition, skill deficiencies decrease chances of landing a job altogether.
For companies skills mismatch has negative consequences for productivity and competitiveness, which affects their ability to implement new products, services or technologies. What is more, skills mismatch causes higher staff turnover and sub-optimal work organization. Eventually skills mismatch leads to the loss of profits and markets.
For countries and regions skills mismatch can increase unemployment, and affect competitiveness and attractiveness to investors, meaning lost opportunities on the pathway to productive transformation and job creation. Public or private resources are invested in training with the assumption that achieved qualifications will yield positive results in terms of employment insertion or wages. Yet, if skills mismatch is present, these expectations often do not materialize, leading to returns on investment that are lower than expected.
It's a sad story for individuals but also for enterprises."Olga Strietska, SKILLS Specialist