Chapter 3. The skills implications of megatrends

This chapter explains how a number of megatrends, including technological change, globalisation and demographic changes are making skills more important than ever for success in today’s world. It explores the combined implications of these trends, including their implications for the skills needed for success in the future; the imperative of a lifelong learning approach; the imperative of ensuring more equitable opportunities and outcomes; and the imperative of making better use of technology as a learning pathway.

    

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

The world is changing rapidly, transforming the skills needed for success in today’s world

Megatrends, including advances in technology, globalisation, population ageing, and migration are combining to increase and transform the skills needed to thrive at work and in society. The skills countries invest in developing and how they use them can help overcome the challenges that these trends pose for economic growth and social well-being and, at the same time, help to take advantage of the opportunities many of these trends present for reshaping our world in a positive way.

Since 2012, the OECD has embarked upon an ambitious agenda to better understand these trends and what they mean for the skills that will be needed for success at work and in society, as well as for how and when skills can be best developed and used to advance countries’ economic and social objectives. The present summary of the key skills implications of these megatrends has been informed by the following work undertaken by the OECD since 2012:

  • The OECD Survey of Adult Skills

  • OECD Going Digital project

  • OECD Skills for Jobs Database

  • 2018 OECD Job Strategy

  • The Future of Work initiative

  • OECD Innovation Strategy

  • OECD Framework for Policy Action on Inclusive Growth.

Megatrends are making skills more important than ever for economic success and social well-being

Developing the right skills and using them effectively is central to the economic success and well-being of individuals. Data collected through the PIAAC shows a high, positive correlation between skills and labour market outcomes. Adults with higher skills proficiency tend to have greater chances of being employed and, if employed, of earning higher wages (OECD, 2016[1]). Skills are also central to the capacity of individuals to participate fully in society, as well as to the cohesiveness of society itself. As shown in (Figure 3.1), more highly skilled people have higher levels of trust, participate more actively in the democratic process and in community life, and enjoy better health (OECD, 2016[2]).

Combined, megatrends are creating pressure for people to develop new and higher levels of skills, as well as to continue upskilling throughout life and to use their skills more effectively. Many of these same trends are also creating opportunities for people with the right skills to proactively transform our economies and societies for the better. The right policies can transform challenges into opportunities by equipping people with the skills needed to thrive in our increasingly interconnected and rapidly changing world.

Figure 3.1. Literacy proficiency and positive economic and social outcomes
OECD average, adjusted and unadjusted difference between the percentage of adults with high proficiency (Level 4 or 5) and the percentage of adults with low proficiency (Level 1 or below) who reported high levels of trust and political efficacy, good to excellent
Figure 3.1. Literacy proficiency and positive economic and social outcomes

Note:

1. All differences are statistically significant. Adjusted differences are based on a regression model and take account of differences associated with the following variables: age, gender, education, immigrant and language background and parents’ educational attainment.

2. How to read this chart: Higher proficiency in literacy is associated with a greater likelihood of engaging in voluntary work. On average, chances of participating in volunteer activities are 22 percentage points higher among people who scored 4 or 5 than among those who scored at or below Level 1 in literacy. The relationship remains strong even after accounting for socio-demographic characteristics.

Source: OECD calculations based on OECD (2018[3]), Survey of Adults Skills database (PIAAC) (2012, 2015), http://www.oecd.org/skills/piaac/.

 StatLink https://doi.org/10.1787/888933927723

Digital transformation

Information and communications technologies (ICTs), advances in artificial intelligence (AI) and robotics are profoundly changing the way people work, communicate and live. Many people now regularly use digital tools such as computers, smartphones and tablets, both at work and in everyday life. In 2015, 57% of workers in the European Union (EU28) regularly used a computer or smartphone for work, a 20-percentage-point surge relative to a decade earlier (Eurofound, 2017[4]). Even for those who do not use ICTs at work, the nature of their work is changing as some tasks are automated. As governments go digital to improve effectiveness and efficiency, people need digital skills to access even basic public services.

Digitalisation brings immense economic potential. Digital technologies can generate productivity gains, spurring growth and creating new jobs. They can enrich the content of some occupations by allowing workers to increasingly focus on non-routine tasks, such as problem-solving and more creative and complex communications activities. Digital technologies can enable individuals around the world to bring their ideas into the marketplace much more easily, boosting opportunities for entrepreneurship. Digital technologies have also enabled the rise of the “platform economy”, in which companies like Airbnb, Baidu, and Uber have introduced new ways to create value, work and socialise.

New technologies also have the potential to transform education systems and improve learning outcomes. Some new technology-supported, pedagogic models have shown to be effective in boosting collaboration, improving student engagement and motivation, and student skills (OECD, 2016[5]). Similarly, online-based platforms and laboratories facilitate the use of formative assessments and allow for targeted instruction while lowering the cost of access to education services. However, the connections among students, computers and learning are neither simple nor hard-wired (OECD, 2015[6]). Data from PISA show no appreciable improvements, on average, in student achievement in reading, mathematics or science in the countries that had invested heavily in ICT for education. More interestingly, there seems to be a weak connection between the acquisition of relevant digital skills, such as being able to filter relevant and trustworthy sources from among a large amount of information, and the intensity of use of the Internet at schools (OECD, 2015[6]).

At the same time, there are fears about the consequences of digitalisation for labour market opportunities as well as for privacy and personal safety. The nature of many jobs will change, and many jobs may disappear as a result of automation. Digital technologies and media also facilitate the distribution of news of all kinds, including fake news, and expose us to the threat of information and identity theft, and youth across the globe to online bullying and harassment.

Implications of the digital transformation for the skills needed for economic success

OECD work building on PIAAC, suggests that, on average in the countries that participated in the survey, about 14% of workers face a high risk of seeing their jobs automated, and another 32% face significant changes in their job tasks due to automation (Figure 3.2) (Nedelkoska and Quintini, 2018[7]).

Figure 3.2. Cross-country variation in job automatability
Percentage of jobs at risk by the degree of risk
Figure 3.2. Cross-country variation in job automatability

Note: High risk – more than 70% probability of automation; risk of significant change – between 50% and 70% probability.

Source: Nedelkoska, L. and G. Quintini (2018[7]), “Automation, skills use and training”, http://dx.doi.org/10.1787/2e2f4eea-en.

 StatLink https://doi.org/10.1787/888933927742

There are, however, significant uncertainties about the impact that technology will have on the skills needed for future jobs. Recent evidence shows that the gap between what is required at work and what machines can deliver is shrinking. For instance, 62% of workers in OECD Member countries use literacy skills at work on a daily basis, but at a level that computers are already close to reproducing (Elliott, 2017[8]).

Estimates of the number of potentially automatable jobs may not correspond to the number of jobs that will be automated, as the decision to adopt this type of labour-saving technology depends on a variety of factors, including economic, legal, ethical and social considerations, as well as on the availability of the skills needed to work with technology.

If anything, the skills required in emerging jobs are not the same as those demanded in jobs that are disappearing. Recent evidence from the OECD Skills for Jobs database (Box 3.1) (OECD, 2017[9]) shows that the labour market demand for high-cognitive skills such as written and oral expression, reasoning and complex problem solving has increased in the last decade, while demand for routine and physical abilities has dropped significantly (Figure 3.3).

Box 3.1. OECD Skills for Jobs database

The OECD Skills for Jobs database is a key instrument for assessing and anticipating skill needs. It documents the evolution of skills imbalances in terms of shortages and surpluses. To this end, the OECD Skills for Jobs database makes use of detailed performance indicators by occupation and a taxonomy of skill requirements by occupation. The degree of “labour market pressure” for each occupation in each country is assessed by five performance measures, which compare an occupation’s long-term path in terms of wages, working time, employment, unemployment and under-qualification with the country average. Above-average performance on each of these outcomes is interpreted as a signal of occupational shortage whereas below-average performance is interpreted as a signal of occupational surplus. After standardising the five relative performance measures, they are aggregated into a single index of occupational imbalance for each occupation. In a second step, the occupational imbalance index is mapped to the underlying skills requirements associated with each occupation based on a widely-used taxonomy (O*NET) and aggregated to the country level.

Source: OECD (2018[10]), OECD Skills for Jobs (database), www.oecdskillsforjobsdatabase.org.

Figure 3.3. Evolution of skills demand, 2004-17
OECD Skill Needs Indicator (OECD average)
Figure 3.3. Evolution of skills demand, 2004-17

Note: Skills are ordered by the magnitude of imbalance in the final year (unweighted OECD average). The first year is 2004 or closest available year; the final year is 2017 or closest available year. A positive value indicates a skills shortage and a negative value indicates a surplus. A value of positive (negative) 1 corresponds to the maximum skill shortage (surplus) observed across OECD Member countries and skills dimensions.

Source: OECD (2018[10]), OECD Skills for Jobs (database), https://www.oecdskillsforjobsdatabase.org/.

 StatLink https://doi.org/10.1787/888933927761

The changes in skills demand brought about by digitalisation create opportunities for some workers while making others vulnerable. Highly skilled workers are more likely to benefit as their skills complement technology and they can perform non-routine tasks. Conversely, those with low levels of skills are more likely to be employed in jobs that are vulnerable to automation and also face increasing competition from middle-skilled workers whose jobs have been most affected by the digital transformation (Green, forthcoming[11]).

As a result, many countries have experienced labour market polarisation in the past two decades – a situation in which the share of employment in high-skilled, and to some extent in low-skilled, jobs has increased, as the share of employment in middle-skilled jobs has decreased (Figure 3.4) (OECD, 2017[12]).

Figure 3.4. The labour market continues to polarise
Percentage point change in the share of total employment, 1995 to 2015
Figure 3.4. The labour market continues to polarise

Source: OECD (2017[13]), OECD Employment Outlook 2017, Figure 3.A1.1. Job polarisation by country, http://dx.doi.org/10.1787/888933477940.

 StatLink https://doi.org/10.1787/888933927780

The digital transformation may also exacerbate inequalities between cities/regions, as new jobs are not necessarily created in the same places where jobs have been destroyed. Evidence from the United States shows that new jobs making high use of computers since the 1980s have mainly appeared in urban areas, which tend to have a large share of highly skilled workers (Berger and Frey, 2016[14]). At the same time, technology facilitates the adoption of work practices that take advantage of ICT, such as remote working.

Implications of the digital transformation for the skills needed to increase well-being

ICT is more than an infrastructure that can facilitate access to information and to private and public services. It affects the way people interact, communicate, obtain information, learn, buy goods, participate in the democratic process, and spend their leisure time. E-commerce affects consumers’ behaviour and use of time and is changing the retail industry. The time that people spend on their smartphones and the implications that this may have on their social life and well-being have now become crucial questions.

As a result, it is becoming critical that individuals develop adequate skills to access, filter and process information, to perform the tasks that can be done via the Internet and to benefit from the new opportunities offered by the digital era. At the same time, heightened awareness is needed to protect individuals’ privacy by securing their data. If people have the necessary skills, digitalisation offers large potential for knowledge diffusion, and for enhanced engagement in the public good, including political engagement and public services.

Skills are becoming a major determinant of the digital divide. As Internet access has expanded to a large share of the population, the digital divide is increasingly characterised by the type of activities that citizens are able to perform on the Internet and the outcomes of Internet use, for instance in terms of security, privacy and well-being. These outcomes are mainly driven by the skills people have (Scheerder, van Deursen and van Dijk, 2017[15]).

Young people, more than others, lead in the use of digital tools. On average across OECD Member countries in 2015, students were spending more than two hours on line during a typical weekday after school, and more than three hours on line during a typical weekend day (OECD, 2017[16]). Digital technologies can assist youth in developing and expanding their personal relationships and networks. Participating in social networks was found to be the most popular online leisure activity among teens across OECD Member countries, followed by chatting on line (OECD, 2017[16]). More than half of girls and boys aged 15 said they feel bad when no Internet connection is available. While technology can be beneficial, it can also expose youth to dangers such as online bullying and harassment.

Skills policies can help all individuals benefit from digitalisation in their everyday life at a time when the misuse of digital tools can jeopardise human relationships and even hurt democracy.

Globalisation and global value chains

Since the 1990s, the world has entered a new phase of globalisation. Information and communication technology, trade liberalisation and lower transport costs have enabled firms and countries to fragment the production process into global value chains (GVCs), with products designed in one country, manufactured in another, and assembled in yet another. In order to seize the benefits of GVCs, countries have to implement well-designed policies that develop the skills their populations need to thrive in this new era.

The scale of GVC deployment is significant, as is evidenced by trade in value-added terms, which distinguishes the value of exports that is added domestically from that which is added abroad. On average, in OECD Member countries, close to 40% of the value of manufactured exports and 20% of the value of business services exports comes from abroad (Figure 3.5).

Figure 3.5. The incidence of global value chains, 2011
Foreign value-added embodied in exports of manufactured goods and exports of services
Figure 3.5. The incidence of global value chains, 2011

Source: OECD (2015[17]), OECD Trade in Value Added (TiVA) database, https://stats.oecd.org/index.aspx?queryid=66237.

 StatLink https://doi.org/10.1787/888933927799

GVCs provide workers with opportunities to apply their skills internationally and firms with the possibility to engage in production processes they might be unable to undertake on their own. As a consequence, the demand for some skills may decline as certain tasks and activities are offshored, exposing workers to wage moderation, decreases or even unemployment in the short term. In the long term, however, offshoring enables firms to reorganise and achieve productivity gains that can lead to aggregate job creation.

Digitalisation has tended to amplify participation in GVCs and has contributed to shaping skill demands by allowing for the segmentation of tasks facilitating their offshoring. At the same time, the combination of increasing global integration and digitalisation is boosting opportunities for entrepreneurship.

Implications of GVCs for the skills needed for economic success

The costs and benefits of GVCs are complex. GVCs increase the interconnections between countries and thereby the uncertainty surrounding the demand for skills. A country’s competitiveness can be affected by skills policy changes occurring among its trading partners, increasing the uncertainty around how skills demands are evolving. In this context, it is of paramount importance to build responsive skill assessment and anticipation (SAA) systems that enable countries to react to changing labour market and skills demands (OECD, 2016[18]).

Participation in GVCs can lead to productivity gains, but potential gains are dependent on a country’s skills endowment (OECD, 2017[12]). Countries’ skills endowments and skills-related policies can shape their specialisation in GVCs and their opportunities to specialise in sophisticated industries, such as complex business services and high-tech manufacturing industries.

In addition, investing in skills (and in systems to anticipate changing skill demands) can safeguard against the potential negative impact of GVCs on employment and inequality for at least three reasons:

  • High-skilled jobs are less exposed to the risk of offshoring, although this is becoming less and less the case.

  • Using certain types of skills on the job (e.g. those associated with non-routine tasks and tasks involving face-to-face contact) make workers less vulnerable to offshoring.

  • Developing the skills of workers in small and medium-sized enterprises helps these firms to connect with multinationals and benefit from global value chains.

Population ageing

Declining fertility rates and increasing life expectancy are leading to population ageing in many OECD Member countries. Figure 3.6 shows that the old-age dependency ratio (the ratio of older people to the working-age population) is expected to increase significantly by 2050 in most OECD Member countries, shifting the composition of the workforce from young to older workers (OECD, 2017[19]).

Figure 3.6. Population ageing, 1980-2050
Old-age dependency ratio: Population aged 65 and over, relative to population aged 15-64
Figure 3.6. Population ageing, 1980-2050

Source: United Nations (2018[20]), World Population Prospects: The 2017 Revision, https://population.un.org/wpp/Download/Standard/Population/.

 StatLink https://doi.org/10.1787/888933927818

According to recent projections, these demographic developments will reduce living standards in many OECD Member countries (Guillemette and Turner, 2018[21]). First, between 2018 and 2030, increases in the old-age dependency ratio are estimated to subtract about a ¼ percentage point from gross domestic product (GDP) per capita growth in the OECD. Second, population ageing is also a drag on the aggregate employment rate (employment as a percentage of the population of working age) because older people tend to have lower employment rates than middle-aged people. Third, population ageing will also require higher investment in healthcare and pensions systems, creating financial pressure on other policy areas, such as those relating to skills development and use.

These demographic changes will make it important to invest in the skills of the present and future workforce. Replacement demands are likely to be a key source of job opportunities in most OECD Member countries in the next decade as a large cohort of baby boomers will retire, and shortages of qualified labour may arise. At the same time, the decrease in the total size of the labour force will need to be offset by an increase in productivity. This will provide further impetus for ensuring that people develop skills that match the needs of occupations in demand as well as those skills that promote productivity and innovation.

An ageing society may also result in changes in consumer preferences, leading to an important reallocation of labour and resources across sectors and occupations - particularly away from durable goods and towards services. This will have implications, too, for the skills that are in demand in the labour market.

Implications of population ageing for the skills needed for economic success

With an ageing population, economic growth will depend more heavily on productivity growth and on raising labour force participation rates, particularly among women and older workers. Productivity gains, which are a central driver of long-term improvements in living standards, have slowed in many advanced economies over recent decades. More recently, this slowdown has extended to emerging economies (Figure 3.7).

Figure 3.7. Contribution to potential output growth per capita in G20 advanced and G20 emerging countries, 1996-2017
Figure 3.7. Contribution to potential output growth per capita in G20 advanced and G20 emerging countries, 1996-2017

Note: G20 advanced countries include Australia, Canada, France, Germany, Italy, Japan, Korea, United Kingdom and the United States. G20 emerging countries include Argentina, Brazil, People’s Republic of China (hereafter “China”), India, Indonesia, Mexico, Russia, South Africa and Turkey. Decomposition based on a Cobb-Douglas production function, using the population aged 15-74 years. The productive capital stock excludes housing investment.

Source: OECD (2018[22])OECD Economic Outlook (database)http://stats.oecd.org/Index.aspx?DataSetCode=EO and OECD calculations.

 StatLink https://doi.org/10.1787/888933927837

Raising productivity growth is highly dependent on a country’s ability to innovate and adopt new technologies, which requires a supply of highly-skilled talent. More highly skilled workers tend to be more productive and make it easier for firms to introduce and disseminate productivity-enhancing technologies and new ways of working (Hanushek and Woessmann, 2010[23]; OECD, 2011[24]). While the inflow of highly educated workers into the labour market has significantly boosted labour productivity over the past 50 years, the rate of increase in the stock of human capital is projected to slow (Braconier, Nicoletti and Westmore, 2015[25]). In this context, the ability of economies to upgrade the skills of the existing workforce and efficiently deploy the existing stock of human capital will become increasingly important. Longer working lives will also increase the importance of lifelong learning. Skill policies will need to provide equal opportunities for workers to upgrade their skills, especially for low-skilled and older workers, and better recognise skills acquired over the life course.

Aggregate productivity performance depends not only on the level of skills but also on the match between demand and supply of skills, as a worse match leads to a less efficient allocation of resources. Significant gains in labour productivity can be achieved through the more efficient matching of worker skills with the skills needed for jobs (Adalet McGowan and Andrews, 2015[26]). Reducing skills mismatch expands the effective pool of labour that firms can draw workers from, enabling them to innovate and grow (Figure 3.8). Policies to better match skills will be crucial to take full advantage of technological advances and raise productivity growth.

Figure 3.8. Counterfactual productivity gains from reducing skills mismatch in selected countries
Simulated gains to allocative efficiency from lowering skills mismatch to the best practice, %
Figure 3.8. Counterfactual productivity gains from reducing skills mismatch in selected countries

Note: The chart shows the difference between the actual labour productivity and counterfactual labour productivity based on lowering the skills mismatch in each country to the best-practice level. 1-digit industry level mismatch indicators are aggregated using a common set of weights based on the industry employment shares for the United States. The estimated coefficient for the impact of mismatch on productivity is based on a sample of 19 countries for which both firm-level productivity and mismatch data are available.

Source: Adalet Mcgowan, M. and D. Andrews (2015[26]), “Labour Market Mismatch and Labour Productivity: Evidence from PIAAC Data”, https://doi.org/10.1787/5js1pzx1r2kb-en.

 StatLink https://doi.org/10.1787/888933927856

Implications of population ageing for the skills needed to increase well-being

Population ageing will have implications for the skills needed in the economy and the skills the elderly will need to participate effectively in society. The slowing growth of human capital is creating pressure to ensure that more people develop the high levels of skills that are in demand and that will be needed to drive productivity.

An ageing population will increase demand for certain products and services – such as healthcare and personal services – that will facilitate the well-being and social participation of an ageing population. This will, in turn, affect the types of skills that will be needed in the labour market.

Increasing longevity will mean increasing demand among the elderly themselves to develop skills that allow them to participate fully in society, such as digital skills that facilitate social engagement and access to basic public services in a digital world.

Migration

Migration flows have been rising over the past few decades and are unlikely to fall from their current levels, given the large demographic and economic imbalances as well as ongoing conflicts and climate change. In 2017, about 258 million people around the world were living outside their country of birth, and about half of all these migrants were living in OECD Member countries (OECD, 2018[27]). Growth in migration has been rapid. Between 1990 and 2017, the total number of international migrants increased by 69% (Figure 3.9) (OECD, 2019[28]).

Figure 3.9. Estimates of international migrant stock by region of destination, 1990-2017
Figure 3.9. Estimates of international migrant stock by region of destination, 1990-2017

Note: Northern America includes Bermuda, Canada, Greenland, Mexico, Saint Pierre and Miquelon and the United States.

Source: United Nations (2017[29]), International migrant stock (database), Variable POP/DB/MIG/Stock/Rev.2017; published in OECD (2019[28]).

 StatLink https://doi.org/10.1787/888933927875

Within the group of foreign-born, refugees are an important and growing group in many countries. Many are struggling to integrate successfully into the labour market and society.

Migration results in more diverse societies and has important economic implications. Migration typically boosts the working-age populations and migrants can contribute to long-term economic growth and technological progress. A precondition for this to happen is that their skills are well used.

Implications of migration for the skills needed for economic success

Migrants are increasing the supply of skills in many destination countries. The number of migrants with tertiary education in OECD Member countries increased by 70% between 2000 and 2010. This increase is much larger than that for the native-born population (OECD, 2017[12]). On the other hand, there are concerns that some migrants do not have the expected skill levels based on the credentials they hold, and this has been supported by empirical evidence (Sharaf, 2013[30]; Li and Sweetman, 2013[31]).

Migrants can fill important niches in both fast-growing and declining sectors of the economy (OECD, 2014[32]). Migration can help to boost innovation and spur economic growth. Migrants are also found to be more entrepreneurial than native-born citizens. Across the OECD, 12% of employed immigrants are self-employed, a share that is higher than among the native-born (OECD/EU, 2018[33]).

Migrants can also bring new ideas and networks to their new countries. A study from the United Kingdom found that companies with foreign-born owners are more likely to introduce new products and services and to sell to the international market than firms with only UK-born owners (Nathan and Lee, 2013[34]). Furthermore, by removing informational and cultural barriers between their old and new countries, they can create new opportunities for trade and stimulate foreign direct investment (OECD, 2017[12]).

Some countries, especially in Eastern Europe, are losing significant numbers of skilled people to countries with better employment opportunities in Western Europe and elsewhere. This is exacerbating the skills pressures of the rapidly ageing populations in the former countries. As a result, while some countries are experiencing skills deficits exacerbated due to out-migration, other receiving countries are recipients of a skills dividend.

At the same time, many OECD Member countries – especially those in Europe – have been receiving large numbers of relatively unskilled migrants. This is happening at the same time as the skills needs of these economies are generally increasing. Many of the countries that had received many low-skilled labour migrants prior to the global economic crisis – such as Greece, Italy and Spain – now have large numbers of low-skilled adults who are unemployed. Low-skilled immigrants were particularly hard hit, raising questions of employability.

Implications of migration for the skills needed to increase well-being

Well-functioning schools can help young immigrants and refugees to understand, adapt to and embrace their new societies (OECD, 2018[27]). Conversely, without support and leadership, schools can compound divisions and increase marginalisation and alienation. For migrant adults, targeted adult-learning systems are needed to help them acquire new languages and other skills that will allow them to be productive and engaged members of society.

Understanding the impacts of migration is important to shape debates about the role of migration in society in a constructive way. Such debates, in turn, are essential to design policies in areas like education and employment that maximise the benefits of migration, especially by improving migrants’ employment situations (OECD, 2014[32]). For example, structures for assessing and recognising migrants’ skills are important for migrants to find jobs that are well matched with their skills and thereby facilitate their successful integration.

Megatrends have a number of important implications for the skills countries need in the future as well as for how skills are distributed, developed and used

Skills for the future

In a world characterised by rapid change and uncertainty, governments, individuals, firms and trade unions will all need to take greater responsibility for ensuring that people learn and develop their skills throughout life. Greater commitment to learning will safeguard individuals’ employment and participation in society. Developing a broad set of knowledge, skills, attitudes and values will allow individuals to be competent workers and engaged citizens. Governments can play an important role in promoting lifelong learning to reduce the inequalities of opportunities throughout life.

Building effective skills entails the mobilisation of knowledge, competencies, attitudes and values to meet complex demands. Among the knowledge, competencies, attitudes and values that will be increasingly key to success in work and life are:

  • Foundation skills, including literacy, numeracy and digital literacy that will have to be mastered at a high level in order for people to adapt to changes in their jobs and in society. Equipped with strong foundation skills, people will be better positioned to acquire new knowledge and develop other skills, such as analytical, social and emotional skills, and will be prepared to continue learning throughout life.

  • Transversal cognitive and meta-cognitive skills such as critical thinking, complex problem solving, creative thinking, learning to learn and self-regulation are needed not only to respond to the challenges of the future but also to reshape the future for the better.

  • Social and emotional skills such as conscientiousness, responsibility, empathy, self-efficacy and collaboration that help make for kinder, gentler and more tolerant societies.

  • Professional, technical and specialised knowledge and skills needed to meet the demands of specific occupations, but also, with sufficient transfer potential to be applicable in new, yet unknown fields.

Most skills systems – including not only formal education, but also non-formal and informal learning in homes, communities and workplaces – find it difficult to prepare students for the future in a world that is highly unpredictable, especially as routine cognitive skills are becoming easier to automate, yet continue to be widely taught across education systems.

Equipping students with a broad range of competencies necessary for a changing world is another key concern in OECD Member countries. The Education 2030 project highlights current efforts to identify “transformative competencies” that will address the need for young people to be more innovative and responsible in a complex world, as well as ways to embed these competencies in school curricula (OECD, 2018[35]).

The imperative of a lifelong learning approach

The rapid pace at which the world of work and societies are changing is pushing countries to redefine the objectives of skills policies and their contribution to the development of skills of individuals over the life course.

Traditionally, education consisted of one period during childhood and youth in which most skills were acquired and specialisation was achieved. Following this period, people marginally improved their skills in the workplace through formal, non-formal and informal learning. This model is increasingly untenable in a world of rapid technological, economic and societal changes where individuals are required to learn how to learn and adjust to an ever-changing landscape. Adult learning becomes of paramount importance.

Taking part in adult learning provides individuals with the opportunity to upskill and reskill in line with changing labour market demands. Yet, according to data PIAAC, only 41% of adults in the surveyed OECD Member countries participate in formal or non-formal adult learning in any given year. Moreover, those adults who would benefit most from education and training, such as those with low skills, the long-term unemployed and those whose jobs are at high risk of automation are least likely to participate. Another important group often under-represented in adult learning is that of individuals in non-standard forms of employment: own account, temporary as well as part-time workers. Ensuring broad-based participation in adult learning must top the agenda of governments, employers, social partners and adult-learning providers who want to shape a future of work that is both more productive and inclusive.

So far, very few countries have implemented effective lifelong learning policies and de facto most of them have targeted mainly highly skilled adults. Engaging the 59% of adults who currently do not participate in education and training is a major task for all stakeholders involved, as the vast majority of them have no interest or motivation to do so. Across OECD Member countries participating in the PIAAC survey, 48% of adults neither participate nor want to participate in adult learning in any given year. With adult learning being one of the key levers to prepare the workforce for changing skill needs, it will be crucial to find effective ways to motivate this part of the population to take part in education and training. The lack of motivation is particularly strong for the low-skilled and is likely to be due to a mix of poor attitudes to learning, lack of understanding of the benefits that can derive from training and the perception that existing barriers to participation are insurmountable.

Better policies are needed to foster new governance models, information management and funding arrangements that take into account the role of different actors, giving greater consideration to non-traditional institutional providers and learning environments. Policy efforts must also focus on those individuals who want to take up (further) adult learning opportunities, but face a variety of obstacles in doing so. On average, 33% of people who take part in job-related adult learning want to pursue further learning opportunities but do not for different reasons. Equally, 11% of people who do not take part in job-related adult learning would actually want to take part in learning opportunities.

Finally, with much learning taking place in and through the workplace, the engagement of employers in the design, implementation and financing of skill development opportunities is critical to the success of adult-learning systems. Involving small and medium enterprises in these systems is particularly important, as they constitute the vast majority of businesses around the world, but this is also a challenge given their more limited capacity to plan, fund and deliver training.

Turning education systems into lifelong learning systems requires a shift from front-end loaded models of education – i.e. ones that focus mainly on primary, secondary and tertiary education – towards learning models that also invest considerably in early childhood education and care and adult learning.

The importance of and means for adopting a lifelong learning approach is discussed in greater length in Chapter 4 on developing relevant skills over the life course and Chapter 6 on strengthening the governance of skills systems.

The imperative of creating more equitable opportunities and outcomes

Unequal skills outcomes across population groups are an important driver of inequality and undermine social cohesion (OECD, 2015[36]). Evidence from PISA and PIAAC data shows that differences in socio-economic status contribute to the widening of gaps in skill proficiency between ages 15 and 27, particularly among low achievers (Borgonovi et al., 2017[37]).

When poor outcomes are concentrated among certain groups, such as individuals from low socio-economic backgrounds and immigrants, social marginalisation and tensions can result. Having high average levels of skills is not in itself “good enough” as it may hide underlying differences between groups. It is essential to actively pursue equity and quality in education and skills achievement to ensure that everyone can participate fully in the economy and society. As all international surveys show, these goals are not mutually exclusive (OECD, 2013[38]; OECD, 2016[1]).

Reducing gender disparities in skills outcomes

Policies aiming to reduce inequalities in opportunities among children and schools are important to ensure that all young adults are equipped with the skills they need for successful careers, enabling them to embrace the impact of technology in a changing world of work. These policies must target the most vulnerable groups in our societies: early school leavers; those not in employment, education or training (NEETs); unemployed youth; the long-term unemployed; and adults with low levels of skills. Addressing the barriers to adult learning, especially for low-skilled individuals, requires working on various fronts such as increasing incentives for investments in training, developing mechanisms to allow the portability of training rights between employers, fostering motivation and removing time and other constraints.

The gender dimension deserves particular attention. The 2013 OECD Recommendation of the Council on Gender Equality in Education, Employment and Entrepreneurship recommends promoting gender equality in education outcomes by ensuring boys and girls have equal access to good-quality education, equal rights and opportunities to successfully complete schooling, and in making educational choices (OECD, 2017[39]).

Evidence from PISA 2015 highlights that boys and girls now show similar proficiency levels in science. However, gender differences in boys’ favour emerge among the highest achieving students, while girls are generally less likely to appear amongst the lowest achieving students. These differences come on top of gender disparities, once again in favour of boys, in mathematics performance among the highest achieving students, reinforced by the fact that many girls hold negative attitudes about their mathematics abilities and express high levels of mathematics anxiety (OECD, 2015[40]).

This can have serious implications not only for higher education, where young women are already under-represented in the science, technology, engineering and mathematics (STEM) fields of study but also for later on when they enter the labour market. In 2015, women only accounted for 30% of all students graduating in natural sciences, engineering, and ICT fields at tertiary level across OECD Member countries (OECD, 2017[12]). Furthermore, women represent only 20% of tertiary graduates in ICT-related studies – fields that are particularly relevant in the digital era.

Policy makers across the OECD are increasingly aware of gender stereotyping at school and at home, and the effect that it may have on future education and career choices, and many countries have initiated efforts to address these stereotypes and further bridge the divide.

Stemming growing income inequality

Income inequality has been called one of the defining challenges of today, undermining support for globalisation and even trust in our democratic institutions. Income inequality has risen over the last three decades in OECD Member countries, with a broad pattern of rapidly rising incomes at the very top and stagnation at the bottom (OECD, 2017[41]). In OECD Member countries, the top 10% of the income distribution earned about seven times the income of the bottom 10% in the mid-1980s; increasing to almost ten times by the mid-2010s. The Gini coefficient for the area increased over the same period. In emerging economies, the picture is more contrasted: since the 1990s, income inequality has risen in China and South Africa, but it has declined, albeit from high levels, in several large Latin American economies such as Chile and Mexico.

Rising income inequality partly reflects increasing labour demand for highly skilled workers, driven by technological change and globalisation (Card and Dinardo, 2002[42]; Goldin and Katz, 2007[43]; Acemoglu and Autor, 2011[44]). In order to address inequality, skills policies need to support people to develop the skills that are most in demand in the economy. Particular attention needs to be paid to raising the skill levels of low-skilled workers, who need opportunities to develop, maintain and upgrade their skills to reduce the risk of becoming trapped in low-quality jobs and joblessness, and to be able to respond to the rapidly changing demand for skills in existing and new jobs. This is particularly challenging since low-skilled workers tend to participate less in adult-learning activities (OECD, 2016[1]). Low-skilled workers can be encouraged to participate in adult-learning activities through on-the-job training that specifically recruits and targets low-skilled workers, and skills acquired through work experience can be certified.

The importance of, and means for, developing more equitable skills opportunities and outcomes is discussed in greater length in Chapter 4 on developing relevant skills over the life course; Chapter 5 on using skills effectively in work and in life; and Chapter 6 on strengthening the governance of skills systems.

The imperative of making better use of technology as a learning pathway

The OECD Skills Outlook 2019 (OECD, 2019[45]) argues for the importance of making better use of technology as a learning pathway. New technologies can enhance learning and help develop skills for the 21st century. Many new pedagogical approaches make use of new technologies. Digital tools favour personalised instruction, allowing students to progress at their own pace and teachers to spend more time with learners experiencing greater difficulty. Technology changes the content and sources of knowledge: traditional textbooks and curriculum may be supplemented with educational software, online courses or digital textbooks. These expand the opportunities young learners have to both find information and to practice the digital competencies required for sustainable use of new technologies (OECD, 2016[5]). At different levels of education in school, new digital devices allow for the exchange of teaching practices, easier and broader collection of students’ data to facilitate more rapid and better-targeted student feedback, and the real-time dissemination of instruction and teaching, even to isolated areas (OECD, 2019[45]).

More generally, digital tools extend the learning universe outside of the physical premises of educational and training institutions. Workers, in particular, can easily learn on the job through the Internet and employers can propose online training programmes that can be adjusted to work around time constraints. Massive open online courses (MOOCs) offer new learning opportunities and can be used as a way for students or workers to signal or develop specific interests or knowledge.

However, evidence regarding the impact of technology use in schools on student performance has been mixed. Investment in ICT in the form of computers, tablets or Internet connections has failed to translate into higher academic achievement for students, even though such investments did not crowd out resources allocated to other educational inputs (Bulman and Fairlie, 2016[46]). This suggests that the way technology is used matters: both students and teachers need to be motivated and prepared to use technology so that it has a positive impact on learning.

Available data suggest that open education and MOOCs more specifically can facilitate the lifelong learning of workers (OECD, 2019[45]). Open education is mostly used by those who combine work and formal education (Goodman, Melkers and Pallais, 2016[47]). Many MOOC platform providers have started exploring MOOCs for professional development, and there are already some successful examples of MOOCs in this area (Music, 2016[48]). Yet, the potential that MOOCs can offer to firms to train their workers is not yet fully realised. In addition, while open education and MOOCs can generally be accessed for free, patterns of participation seem to reproduce those of participation in standard adult education and training in that highly educated and highly skilled adults are more likely to participate (OECD, 2019[45]).

Finally, people need a range of skills to benefit from the learning opportunities brought about by technology. For example, using MOOCs may require good ICT skills as well as time management skills and an ability to be a self-motivated learner. Online job search may be more effective, particularly for adults who have been away from the labour market for a long time, if it is complemented by effective career guidance skills (OECD, 2019[45]).

The potential to harness technology as a learning pathway is discussed in greater length in Chapter 4 on developing relevant skills over the life course and Chapter 6 on strengthening the governance of skills systems.

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