Employability problems generate poverty in two dimensions. The first is lack of employment, associated with inability to find or keep work. The second is low pay, associated variously with underemployment, lack of skill, and employer market power.
The evidence suggests that labour markets increasingly impair the access of low skilled individuals to well paid employment. The trend is caused by a concatenation of three factors: first, technical change – the diffusion of ICT has been associated with a fall in the relative productivity of less skilled workers; second, international economic integration – the least skilled workers are increasingly unwanted by the producers of traded goods and services, in developing as well as developed countries; and third, institutional change – deregulated labour markets with low social safety nets, à la USA, promote low pay, as competition for scarce work pushes down the price of less skilled labour.
What makes a worker unskilled? Two dimensions are central: basic skills, traditionally termed literacy and numeracy and nowadays expanded to include basic IT skills; and vocational competence, in the sense of knowledge and skills relevant to an occupational area, not simply a particular job. When the former is missing, compulsory general education has failed to achieve its fundamental goal; when the latter is missing, the weakness involves vocational education and occupational training.
To these two potential missing elements may be added an attribute specific primarily to youth: lack of labour market experience. An increased preference by employers for experienced workers has sharpened the established dilemma facing young workers: to get hired you need to show relevant experience, but to gain that experience you have to have been hired in the first place.
Amongst the developed economies, the UK and the US provide prominent examples of these problems. Although both countries enjoy high employment rates, in both a high proportion of adults is either unqualified or unskilled, or both. Both countries also show high rates of youth joblessness, whether as unemployment or out-of-school inactivity. But the problems are widespread. Although Germany had by 1990 driven the shares of young adults who lacked either basic skills or vocational qualification to below ten per cent, since then each share has risen: in the East, in association with bleak employment prospects and social decay; in the West, in association with increased immigration. In that context, the least skilled must climb a double mountain – the first peak comprising the basic school leaving qualification, the second a craft-level vocational qualification – if they are to aspire to more than intermittent employment at low pay.
These difficulties are real but they are often exaggerated in policy debates. The expansion of the service sector's employment share does indeed create many skilled jobs – notably in financial, education and health services. But it also produces a range of additional jobs with low skill requirements – notably in food, retailing and domestic services. Insofar as employability is the issue in these jobs, its content is more the traditional one of the capacity to endure repetitive and non-developmental work rather than the ‘modern' one of increased skills and personal development. Similarly, the problem in East Germany since reunification has not been the educational attainment or vocational qualification of the workforce so much as the simple lack of work, associated with high wage collective agreements and much lower payroll costs in neighbouring countries.
Nevertheless, the need to promote employability remains. Public policy can pursue that objective along several routes. For children, it can seek to raise the mean and reduce the variance of pupil achievements in compulsory general education, so that all learn to read, write and use a computer. For the adults who did not learn those skills when young, it can offer an entitlement to public supported learning – at least to a minimum standard of basic skills. It can offer young people an entitlement to an occupational preparation to some minimum standard of competence. And it can address the vicious circle for youth of ‘no experience, no job, no experience' by promoting the integration of young people into workplaces, whether by labour market programmes (subsidised placements of work experience and on the job training) or apprenticeship training (occupational preparation that combines part-time vocational education with part-time work-based training and experience).
In my own country, all of these routes are currently in use. Unqualified adults are entitled to public funding, including a contribution to living costs, for learning programmes aimed at a basic school leaving qualifications (vocational equivalent). Young people are entitled to similar support for learning aimed at craft level vocational qualifications. Employers are reimbursed by government – in part, whole, and (for small firms) even more than whole – for the payroll costs of training their unqualified adult employees. Internet-based distance learning by adults has grown rapidly. The successes registered in these dimensions have begun to move the lifelong learning agenda beyond the state of empty rhetoric.
More generally, the need is to go beyond piety – calling for more of everything on the skills agenda – and to prioritise the options. This is difficult to do, given that the evidence concerning the links between particular policy options and socio-economic benefit is so limited. Even so, I would question two aspects of the priorities implicit in the current policy mix in various advanced economies, including the UK . First, the greater priority given currently to raising adult basic skills than to the vocational preparation of youth to intermediate (craft plus) level responds more to the political difficulty of engaging employers in the latter task than to the likely potential economic benefit. Second, and closely related, the reliance on mass labour market programmes without institutional underpinning or educational content hampers youth vocational preparation, encouraging moderately talented young people to remain in full-time higher education when they might benefit more from apprenticeship, were that available to them – as is extensively the case in Germany and neighbouring countries, and increasingly in France and Ireland as well.
In terms of methods, the question is the appropriate balance between the public and the private in the provision and finance of learning. The contemporary trend is from public to private in both dimensions, and towards the use of market-like mechanisms for the allocation of public funding. The benefits of private, market-oriented provision are clear, including the adaptation of content to the needs of the buyer and the incentive to cost reduction. The drawbacks must also be recognised. Buyers – particularly the young and the unskilled – may be poorly informed and make bad choices. Profit-seeking training providers may find they win public training contracts with ‘low price/low quality' strategies – resulting in the large scale low quality training programmes for unemployed workers that have featured in the UK and the US, and the concerns generated by a short-lived (Individual Learning Accounts) voucher programme in the UK.
An intermediate option, which may become as important in China as it is already in the UK and Germany , involves non-profit private providers. Charitable organisations can avoid the quality defects of both for-profit provision (by fostering professionalism rather than self-interest) and public provision (by focusing on learners' needs rather than producers' interests or politically inspired targets). In both countries, some of the best services available to unskilled and disadvantaged people are provided by charities.
Trade unions may also increase training. Although unions traditionally used their power to extract high pay and secure employment for their members, in the contemporary global economy most private sector unions pursue similar goals by helping to improve the business performance. They frequently press employers to increase their training efforts. Thus the UK sees many ‘partnership' agreements, in which an employer offers a union increased job security and more training in return for flexible working and general cooperation. The British government has pursued such benefits by adopting a union right to appoint Union Learning Representatives at the workplace.
he difference between these European countries and China remains great, and these issues undoubtedly present themselves differently in the Chinese context. But the difference between the countries is dwindling as the Chinese economy surges forward and Chinese educational achievements rise. The need to go beyond praising employability and determine what kinds of employability should be prioritised and how it is best promoted is as fundamental in China as in the West.