Well-educated workforce, way towards modern, innovation-driven, export-oriented economy

Times are changing and so are we. While constantly striving to address individual, social, economical, cultural, etc. challenges, we keep changing focuses, acquiring various skills and knowledge, but losing the big picture on the way. When reality checks on us on the labour market the skills we offer may not match the actual market demand.

“Transition and globalization have deeply affected the demand and supply of skills in a rapidly changing labour market in the Western Balkans. Skills are central to productivity increase and employment creation, which in turn leads to economic growth and improved living standards”, says Nand Shani, Expert on Economic and Social Development at the Regional Cooperation Council (RCC) Secretariat.

“Skills development policies have to be an integral part of broader national development goals of economic and social policies. The South East European (SEE) countries have agreed to a common vision towards a single regional market and closer cooperation in investment related issues.” Furthermore, explains Shani, regional cooperation in the areas of higher education reform, qualifications systems, as well as research for innovation is intensive. At the nexus of education and training policies, labour market policies and macroeconomic, investment and innovation policies lie the ground for a regionally coordinated approach to skills and jobs creation in SEE.

“From a policy perspective, the quality of the workforce in the region will become one of the priority issues in light of the future growth prospects and the EU membership“, says Associate Prof. Nikica Mojsoska-Blazevski, Dean and research fellow at the School of Business Economics and Management, the University American College-Skopje. 

„Unfortunately, most of the countries have followed a low-skill and low-productivity growth paths during transition, with considerable informal economy and slow technological progress.“

According to Mojsoska-Blazevski, increasing the productive capacity of the country, including the human capital, can support the establishment of a prosperous environment.

„Due to a long period of underinvestment and negligence, we must improve the two dimensions of the human capital: i) the quantity, given the lower educational attainment of our population relative to the EU citizens; and ii) the quality, that is the relevance and quality of the skills and knowledge of our graduates.“

Croatian labour market, alike the ones in other countries in SEE, suffers from a form of skills mismatch, says Darko Oracic, Head of Analysis Department at the Croatian Employment Service.

“The skill mismatch is the mismatch between the structure of the labour supply and the structure of the labour demand by skill. If we use a difference in the unemployment rate or unemployment duration by skill as a concrete statistical indicator of the skills mismatch, the unemployment rate shows a surplus of labour supply over the labour demand in a particular skill group.”

“In Croatia, there are two main forms of skills mismatch identified, says Oracic: the first is related to different levels of education, and the second is related to different fields or subjects of study at the same level of education. Both forms of mismatch are substantial and they deserve to be addressed.”    

Oracic adds that in an attempt to improve the situation with the unemployment, the Croatian Employment Service will suggest to the Government to establish the register of citizens, the register of the employed and the register of graduates, and to link those three databases among themselves and with the register of the unemployed in order to calculate the unemployment rate by field or subject of education at regional level.

“We are sure that analysis and forecasting based on this new source of data will give much more reliable results”, says Oracic. 

Additionally elaborating on employment situation in Croatia, Predrag Bejakovic, Researcher at the Institute of Public Finance in Zagreb, says that there are insufficient links between the education arena, the economy and employers, while not enough attention is given to the estimation of the future trends and needs of the labour force. This causes problems in providing education and skills programmes compatible with the skills and occupations sought on the labour market.

“Currently, Croatia does not have a system of labour market information on occupational trends. The employers do not have an obligation to inform the employment service about their needs. Thus, it will be necessary to monitor systematically the labour market and occupational trends and ensure better labour market information on occupational trends.”

On top of that, Bejakovic stresses that little connection seems to exist between the number of people who are enrolled in programmes and the labour market demand for graduates of such programmes.

“For example, political science and journalism graduates have average job accession rates of 25% in the year after graduation. However, the number of first-year students enrolled in these programs has grown at a greater-than-average-rate. Even if such individuals find a job, it is likely that it will be outside their field of study.”

“Thoughts on labour market skills are based on several theoretic approaches: human-capital theory; job-competition theory and job-matching theory”, says Galjina Ognjanov, Associate Professor at the Faculty of Economics of the Belgrade University.

“The goal is to explain why job-mismatch between acquired skills of individuals on the labour market and skills required for certain jobs occurs. Understanding of reasons and effects of the mismatch is fundamental for creation of more adequate policies of education and employment.”     

Ognjanov continues to say that conduct of researches is of practical importance for adoption of policies and programmes directed towards decreasing the mismatch between the acquired skills and the ones demanded on the labour market.

“These researches are best directed towards analyzing of vacant/unpopulated jobs and creation of the new ones in the future. Such a research was conducted in Southern Serbia in 2011 amongst the employers, under auspices of the United Nations (UN) joint-programmes financed by the Millennium Development Goals Fund.”

According to Ognjanov, thanks to this research, conditions for creation of education and training programme as well as new active labour market programmes have been created.  

“We cannot afford to lose more time since improving the skills of the workforce is a long-term process. Without well educated workforce, [the Former Yugoslav Republic of] Macedonia cannot become a modern, innovation-driven, export-oriented economy”, says Mojsoska-Blazevski.

“RCC is well positioned to be the platform for sharing experience and promoting joint action towards new skills for new jobs in our region,” highlights Shani.

“RCC strongly advocates that this action focuses on the identification of current skills gaps in the region and how education and training provision can meet current demand for skills, but also on building capacities for future skills market needs anticipation and adaptation to a changing environment.”

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