Policy Briefing on European Skills Needs for a GNKS
1. The problem
A global, knowledge-based network society requires that nations and regions (i.e. particularly Europe) should be able to supply sufficient numbers of appropriately skilled workers.
This brings two classes of potential problem the matching of output from education to the skills requirements both in quantity and quality
a problem of potentially insufficient input into the educational system arising from the aging of the population predicted by most demographic analysis. These topics are the subject of Concept Sheet 12 – ‘Skills needs and population change in Europe’.
From projections of population change (including projection of changes in the age balance within the population); from projections of growth in the GNKS; and from projections of growth in per capita consumption, it is possible to make deductions about the likely levels of both demand for, and supply of, human capital in the form of appropriately skilled labour. This leads in turn to estimates of the ‘human capital deficit’ likely to be encountered in Western Europe in the future as demand for skills out-strips supply (subject to varying levels of the four tractable factors below).
2. Elements of Solution
A number of policy options may be available to address these problems, broadly speaking in the regions of
a) Education and training (increases skills)
b) Immigration (increases skills and changes demography)
c) Productivity and innovation (reduces required skill: output ration)
d) Outsourcing (imports skills but not people)
The impacts of policy-led change in each of the four tractable areas above (the operation of policy levers) is described in Insight Primer 12, which offers a summary of the effects of the Dominant Relations Modelling (Dominant Relations Modelling is the subject of Concept Sheet # 4) approach in the following circumstances:
Finally, in order to assess the robustness of the policy options against changes in the initial assumptions, Insight Primer 12 shows the differences arising in outcomes if total consumption rises by 50% rather than 100% over the period.a) Tertiary education is double (from 17% to 34%) over fifty years
b) Total EU immigration of ICT professionals increases up to a peak at 6 million (implying, with families, a total of 30 million immigrants in this specific sector)
c) Labour productivity increases by 200% over 50 years, or alternatively….
d) 20% of all ICT activity is outsourced beyond the EC.
3. Conclusions
It appears that a mix of policies will be required. Unless growth falls very much below expectations over the next 50 years, no single one of the policy options is likely to be sufficient on its own.
Since some of the options are more tractable than others (compare productivity and innovation actions which are slow to operate with outsourcing which is almost instant, for example) it seems appropriate to think in terms of education and labour productivity together operating in the intermediate term (2005-2015) with a combination of immigration and outsourcing closing the gaps. It should be noted that outsourcing is a poor solution in terms of its EU economic effect, whereas immigration is a good solution in terms of its EU economic effect. However, externally (e.g. in India) the effects are reversed; politically, also, outsourcing seems at present less sensitive as an issue than does immigration.
- here is support, therefore, for a mix of policies featuring
- Increased (and linked) efforts in education and productivity in the intermediate term (2005-2015)
the use of a (linked) mix of outsourcing and immigration from now until the benefits in increased efforts in education and productivity show results. (Say until 2025).The cumulative immigration outcome of such a policy mix is shown below
Further development of figures (including upper and lower bounds of total immigration to the EU under different scenarios) are shown in Insight Primer 12.