The demand for skills in the labour market is undergoing substantial change as a result of technological progress, globalisation and population ageing. At the same time, developments such as increased labour market participation of women and greater migration flows have altered the supply of skills. In light of these changes, it is increasingly important to ensure that the skills of each country’s workforce are well matched to the skill needs of its labour market. Skills imbalances, such as shortages, surpluses and mismatch, can result in poorer labour market outcomes for individuals, weak firm performance and lower aggregate demand.