Skills supply/demand

The very idea of an optimal and perfect match between the supply of skills from the education and training sector and the demand for skills from the labour market (skills match/mismatch) that was advocated by manpower forecasting and human capital approaches has been largely questioned from several theoretical (i.e. new political economy of skills) and political stands. There is ample evidence of the persistence of low skills equilibria in many countries (i.e. the UK), where the competitiveness of companies is basically based on a low-price product strategy and the low wages of workers (Fineglod and Soskice, 1988). In low-skills equilibria, people are matched with their jobs but at a very low level of skills. Low-skills equilibria can adversely affect the economic development of a local economy, region or sector, or indeed an entire country. For example, employers pursuing price-based competition strategies that rely on low-quality and standardized production require only a limited range of low-level skills from the bulk of the workforce. These price-based strategies leave the local workforce vulnerable to displacement because of innovation and competition in global markets and workers have few incentives to remain in education because local employers are neither seeking, nor are they willing to reward, high levels of skills. For their part, employers have little incentive to upgrade production processes or workers' skills since this can undermine their price-based competition strategy (Wilson and Hogarth, 2003). These examples demonstrate that a perfect match between available skills and job tasks is not always a positive indicator. The recent global recession has shown that the traditional orthodoxy of human capital theories, where efficient labour markets reward investment in education and training with better jobs and income gains, does not suffice to explain the high levels of youth unemployment and underemployment in Europe. It is important to understand that lifelong learning policies cannot aspire to provide better welfare opportunities if they operate in a context of high unemployment rates and low-paid jobs. Lifelong learning policies should be an integral part of national and local skills strategies to upgrade the demand for skills and a better skills utilisation in the economy (Warhurst and Findlay, 2012), avoiding this way low skills equilibria that only generate poor working conditions and large social inequalities. These national and local skills strategies require high a degree of coordination between actors and governance activities across different areas and scales of government, and beyond government, in the formulation and implementation of skills policies for young people.


Finegold, D., and Soskice, D. (1988). The failure of training in Britain: analysis and prescription. Oxford, England: Oxford University Press.

Warhurst, C., and Findlay, P. (2012). More effective skills utilisation: Shifting the terrain of skills policy in Scotland, SKOPE Research Paper, Vol. 107.

Wilson, R. and Hogarth, T. (2003). Tackling the Low Skills Equilibrium: A Review of Issues and Some New Evidence. London: DTI.

(Oscar Valiente, Uwe Bittlingmayer & Heikki Silvennoinen)