Katherine Mullock , Labour Market Economist at the Organisation of Economic Co-operation and Development (OECD), recently wrote an article about OECD’s new initiative: Adapting to Changing Skills Needs. The organization, with the support of the JPMorgan Chase Foundation through its New Skills at Work initiative is developing a new initiative to build a set of skill needs indicators that may monitor the evolution of skill mismatch and shortages in a comparable way across countries.

The main goal of the project is to generate quality data of the demand and supply of skills, for governments, training providers and employers and social partners. According to Mullock this new data tool shall “make meaningful strides towards addressing skills imbalances and shortages, so that individuals, enterprises and economies can make the most of their skill investment.”

To launch the project, the OECD Directorate for Employment, Labour and Social Affairs hold a meeting of experts from several countries and fields of expertise today to explore novel ways to measure skill needs. Attendants included representatives from national governments, academics and experts from the private sector.

The discussion included significant methodological issues: the pros and cons of different proxies to measure skill shortages; whether the construction of a cross-country indicator is feasible or not; what is the best way to aggregate multiple proxies into a single, composite indicator to simplify analysis?

There are several proxies available to measure the existence and extent of skill shortages. Some of the most commonly used proxies include: wage growth, employment growth by occupation, vacancy duration and job vacancy rates. However, each of these proxies has biases and presents complications and challenges. Therefore, other variables must be included in the analysis.

After debating the strength of these, and other possible proxies of skill shortages, the experts debated about alternative ways to aggregate these measures into a single, composite indicator. Such indicator shall be useful for policy-making as it summarizes complex, multi-dimensional information in a way that facilitates assessments of skills shortages.

Source: OECD Skills and Work