Lack of skills in large parts of the workforce is a key factor holding back the capacity to absorb innovations and adapt work processes to take advantage of new technologies. While the supply of university graduates compares well internationally, there is a lack of intermediate and vocational qualifications even for the current youth cohorts. Following on from the Survey’s chapter on innovation, this chapter aims to disentangle the root causes of the shortfall of intermediate skills and examines the options for improving the education of 14-19-year-olds as well as developing adult training. Given the magnitude and entrenched nature of the skills shortfall, a wide set of measures is needed. Stronger basic literacy and reduced school truancy should give a better foundation for further learning. Building on this the offer and quality of intermediate and vocational training should be improved to raise its low esteem. Clearer economic incentives to accumulate human capital would also help.