By the end of this unit, you should be able to:

 1
understand the central importance of identifying current and anticipating future skills needs;
 2
understand global drivers of change and their implications for skills needs anticipation and matching;
 3
distinguish concepts and definitions related to skills needs anticipations and matching;
 4
analyse myths and realities regarding skills needs anticipation and matching;
 5
identify the main principles of skills needs anticipation and matching.

Correct! Skill is an overarching term that refers to the ability to carry out a mental or manual activity and it
included knowledge, competence and experience.
However, competency is the ability to actually apply the knowledge, i.e., actually do what is specified as an
expected training outcome.

Careful! A training needs assessment serves purely training needs and is usually performed at the level of
company, training institution or industry. Skill needs assessment can inform education and training policy,
career counselling and vocational guidance, migration policy, industrial and other sectoral policies,  human
resources management, development and recruitment 

Global drivers of change

Section 3 of 15
A number of factors are influencing the global evolution of skills demand and supply, and if left unaddressed
they are likely to contribute to skills mismatch in the future. We'll take now a closer look at global drivers of
change. The following video will help you to have a first global view.
Key takeaways
  1
The future of demand goes beyond technology-related skills in higher education
It will require deployment skills for those technologies (business-like and leadership skills, management,
project management, marketing) as well as operation and maintenance skills (TVET-training).
 2
There will be no lifetime jobs
We might even have different jobs at the same time and have to become managers of our own career.
 3
Develop core skills
Skills applicable across different occupations and sectors - will also be essential: team work, critical thinking,
problem solving, communication, etc.
 4
There are tools to project jobs in the future
They help to understand how global drivers of change will change the labour market and the way we work.
 5
ILO promotes a more process-oriented, qualitative approach.

Global drivers of change. Demographics

Section 4 of 15
Demographic changes influence labour supply in different ways in developing and developed countries.
In developed countries the population is ageing, while in developing countries large numbers of young
people are entering the labour market every year. These changes require that young people have
appropriate skills which attract investment and create jobs, while older workers continue to learn and
upgrade their skills.
The ILO projects that by 2030  the global economy will need to create 344 million jobs in addition to the
190 million jobs necessary to address the current unemployment.
The ILO's Global Commission Report 
on the Future of Work "Work for a brighter future" 2019   
The ILO projects that by 2030  the global economy will need to create 344 million jobs in addition to the
190 million jobs necessary to address the current unemployment.
The ILO's Global Commission Report 
on the Future of Work "Work for a brighter future" 2019   

 1
 2

SOURCES: CIA World Factbook, Gates Notes, Statista.

SOURCES: CIA World Factbook, Gates Notes, Statista.
According to the UN DESA (World Population Prospects 2019), the overall world population is expected
to grow by 10% by 2030. 60% of this increase is expected to occur in developing countries in particular
Sub-Saharan Africa and Southern Asia where educational attainment is lagging behind. It is a huge
challenge for the access to relevant education and training and creation of jobs for young cohorts.
NEET, a major global challenge

59 million young people worldwide are already unemployed. 

A major global challenge is the phenomenon of young people who are not in education, employment or
training (NEET). Worldwide, 30 percent of young women and 13 percent of young men were classified as
NEET in 2018.
The population increase is not only a challenge but it is also an opportunity for countries, if they manage to
translate  the demographic dividend into growth and development. 

Skills implications
Measure in aging societies
–

Aging societies will need to develop measures targeting retention, utilization and activation of all current and
potential workforce.
Demographic trends also influence demand in certain sectors
–

For instance, demand for healthcare and care for elderly workers is growing as the result of aging; activation
measures for women will increase demand for child minding and care; the composition of workers in some
occupations may be overrepresented by pre-retirement age meaning that the replacement demand will be
growing in these occupations.
Specific measure targeting older workers
–

These measure should focus on flexible work arrangements and training to keep their skills up to date,
especially digital skills.
Investment in social capabilities and diversification of skills
–

Developing countries will need to invest in social capabilities and diversification of skills at all education levels
in order to be able to attract investments and create new jobs for absorbing the growing workforce.

Reflect on the following questions...

 1
What are the key demographic trends in your country? 
 2
What are the implication of these trends for the workforce skill needs and education and training systems? 

Global drivers of change. Educational attainment

Section 5 of 15
The level of educational attainment has increased significantly in recent decades in both developed and
developing countries. This means that more talent is available for employers, but also makes it harder for
lower-skilled workers to find jobs in an increasingly competitive labour market.

Section 6 of 15
Globalization is one of the global mega drivers that shapes skills needs, and the supply of skills is in turn
one of the main factors that impacts the outcomes of trade and globalization. Skills supply shapes the
outcomes of globalization and trade for each country, both at the aggregate level and for individual firms
and workers.
International trade expanded rapidly after 1990, powered by the rise of global value chains (GVCs) as
technological advances – in transportation, information and communication – reduced trade barriers and
caused manufacturers to extend production processes beyond national borders.
Numbered divider 1
Trade induces skills upgrading. 
Evidence and mechanisms

The interaction between skills and trade is inseparable from other interactions including those between

technology, work organization and skills, and between trade and technology. 
In combination, change in international competition and technology together means that skills have to adapt to

the change that becomes a moving target.  e are themselves changing continuously.

There are four main mechanisms through which trade affects the relative demand for skills.
There are four main mechanisms through which trade affects the relative demand for skills.
Trade and demand for products
–

Trade raises demand for products in which countries have a comparative advantage. 
In countries with a comparative advantage in skill-intensive sectors, trade thus increases the demand for skilled
workers. 
Expansion of the most productive firms
–

International trade leads to the expansion of the most productive firms, which tend to employ relatively more
skilled workers.  
Relocation to low-income countries
–

As the costs of offshoring fall, the least complex stages of production tend to relocate from high income to low-
income economies. 
Trade as catalyst for changes in production technology
–

Lower trade costs may be a catalyst for changes in production technology, including automation, which increase
productivity and favour high-skilled labour in exporting and import-competing firms in both developed and
developing countries. 
What today's bottlenecks tell us 
about tomorrow's skills needs

ILO's STED programme

One of the core aspects of how we analyse skills needs in ILO’s STED programme is by looking at bottlenecks

in the capabilities that businesses have now relative to the capabilities they need for future economic success.

After looking at 30 sectors across 20 countries, we see that many of the same gaps appear repeatedly across

sectors and countries.

Skills have an important role to play in addressing each one of these bottlenecks. Even if they do not provide a
complete solution, they are an important part of any practical solution.
Numbered divider 3
Skills matter for efficiency and 
for the social impact of globalization
ECONOMIC EFICIENCYSMOOTH TRANSITIONINCLUSIVE DEVELOPMENT
Globalization and trade are great drivers of productivity and economic opportunity that have lifted many
millions out of poverty in recent decades. They are important both to the ability of firms and workers to benefit
from exporting and trade. 

Skills are one of the principal enablers of trade growth and economic diversification 
ECONOMIC EFICIENCYSMOOTH TRANSITIONINCLUSIVE DEVELOPMENT
Skills are also an important “buffer” facilitating the adjustment to more open trade. While the benefits of change
are spread widely, the costs are often concentrated among workers who lose their jobs or whose employment
becomes less secure. 
Appropriate skills development policies are key to helping firms expand their export activities; they are also key
helping workers who lose their jobs make a smooth and rapid transition to new jobs with equal and higher
wages.

ECONOMIC EFICIENCYSMOOTH TRANSITIONINCLUSIVE DEVELOPMENT

Skills are also important from a wider distributional perspective. Making education and training provision more
responsive to demand for skills from exporting industry can lead to more equal outcomes by enabling firms and
workers to participate in trade and by distributing more evenly the benefits from trade and technology progress.

Globalisation and trade may cause greater vulnerability of labour markets where wages and employment
become more sensitive to economic shocks and are a potentially important source of vulnerability for workers.
This raises the stakes of skills development in ensuring that economies are capable of adjusting efficiently
through structural transitions affecting industries and countries, thereby improving labour market outcomes.

Global drivers of change. Labour mobility

Section 7 of 15
Labour has become more mobile internationally, and large numbers of people migrate to where jobs are
available. Well-governed labour migration can balance labour supply and demand, help develop and
transfer skills at all levels, and contribute to sustainable development for origin, transit and destination
countries (ILC, 2017). Over the past years, the number of migrant workers rose from 150 million in 2013
to 164 million in 2017 (ILO, 2017). Given shrinking labour force in developed countries and growing
workforce in many developing countries the trend is expected to continue.

Competition has globally increased not only for new markets but also for talent: close to 5% of all workers are

migrant workers and the share is growing by around 10% in the last 5 years.

"Ideally if you had the opportunity, would you like to move permanently to another country or would you

prefer to continue living in this country?”

The chart displays the percentage of respondents who said “Like to move to another country”.

Share of a country's nationals with a university education who live in another country
 Source: OECD

To avoid brain waste, good systems of recognition of skills are needed in the receiving countries:
recognition of prior learning (RPL), recognition of qualifications, etc. At the same time, the major
challenge for the origin countries is to retain and create decent work opportunities for their workforce.

Section 8 - 
Global drivers of change. Technology and innovation

Global drivers of change. Technology and innovation

Section 8 of 15
Technology induced demand for skills is manifested in a two-fold trend: relative demand for higher
skilled workers and skills polarization in the composition of employment. However, STEAM (science,
technology, engineering, art and mathematics) and ICT (information and communications technology)
skills are important not only among the most highly skilled, who contribute to innovation, research and
development, but also among skilled workers who are instrumental in the operation and maintenance of
new technologies. Similarly, the influence of technology and innovation is felt beyond high-tech industries
themselves in other areas such as services and customer care.

Beware...robots are coming for your job

Technological change and digitalization are the most disruptive challenges w

Technological change and digitalization are the most disruptive challenges with profound labour market
effects. 

Do you really know what their impact is? 

Answer the following questions to find out.
Numbered divider 1
Will automation destroy occupations?

According to Frey and Osborne (2013), the World Bank (2016), and Chang and Huynh  (2016)  between 10 per
cent to more than 50 per cent of jobs might be automated. However, more recent estimates based on the analysis
of the task composition of jobs suggest that the share of jobs at high risk of automation is fairly modest. The
OECD estimates that 14% of existing jobs could disappear as a result of automation in the next decade or two
(OECD, 2019).
Bear in mind that these numbers refer to jobs that could be automated, rather than jobs that will be automated:
technological adoption depends on economic, legal, ethical and social considerations, as well as on the
availability of the skills needed to work with the new technologies. 
So, will automation destroy occupations?
While automation is unlikely to destroy complete occupations, it will replace some tasks and
fundamentally change the nature of jobs at all levels of skills.
Technological progress is creating many new jobs – either directly (for example big data analyst, cloud service
specialists or digital marketing specialists) or indirectly through its effect on consumer demand (by lowering
prices of goods and services, and increasing their quality).
In addition, the same process innovations that displace workers in the user industries create demand for workers
in the producer industries (Nübler, 2016). 
For instance, while the new learning machines may destroy some jobs in manufacturing, they will need be
developed, designed, built, maintained and repaired. They will require software and the development of
algorithms, and are likely to generate new jobs and occupations in R&D and capital industries.
So, yes, technological change is bringing new opportunities for employment.
Numbered divider 3
How is technological change and digitalization changing jobs and the tasks and skills required?
To ensure that skills development is in line with changes in skill demand, it is important to understand better
how jobs will change in terms of the composition of tasks and hence skills requirements. Which tasks and skills
will be less or more demanded in the new future?

How does automation and skills development relate to lower-skilled work?

A recent study by Accenture confirms that lower-skilled work is more susceptible to automation. It also
highlights that workers in these roles require the widest range of skills development, but tend to participate
less in skills training.  

Global drivers of change. Climate change

Section 9 of 15
Climate change and the transition to the green economy influence skills demand through the introduction
of new green technologies, new market opportunities in green economic activities and the “creative
destruction” of brown jobs, and various policy and regulatory requirements. These processes change the
skills requirements within existing occupations, give rise to new occupations and skills needs, and
increase the need for retraining and skills upgrading, including in environmental awareness.
A changing policy context

The Sustainable Development Goals and Paris 2015 put in place a new paradigm when countries
committed to decrease global temperature by 2 degrees, aiming for 1,5 degrees by the end of the century.
This new policy context has important effects on the labour market and on skills.
Skills implications
 1
It changes the skills requirements within existing occupations. For instance, plumbers need  skills in energy and
water saving technical solutions and capability in customer advice.
 2
It gives rise to new occupations and skills needs. For instance, energy accountant or solar systems technician.   
 3
It increases the need for retraining and skills upgrading, including in environmental awareness.

Global drivers of change. Changes in work organisation

Section 10 of 15
As the workforce and businesses are becoming more mobile, work organization is changing, too. These
changes increase the demand for teamwork, initiative, leadership, management skills, and interpersonal
and intercultural communication skills.

For example, many companies are introducing flatter organizational structures and offering
opportunities for online work from a distance.
 Skills implications

Source: ILO (2016)

Gig economy and new business models

These changes imply also new employment relations: who is responsible for skills development?

New business practices

Productivity and competitiveness challenge calls for adoption of new business practices:
 1
incremental innovation and continuous improvement (Lean, Kaizen);
 2
non-routine skills become a critical source of competitive advantage;
 3
hard and soft innovation ( cognitive skills);
 4
core work / non-cognitive/ soft skills;
 5
high-performance work organisation: learning organisation and related HRD and participative HRM strategies;
 6
workplace learning.

How global drivers impact on skills

Section 11 of 15
Skills for decent work and productive transformation
In general terms, jobs are expected to become more interdisciplinary, skills- and information-intensive,
innovation oriented and short-cycled. Over the next ten years, people will need a new set of core and high
quality skills- foundational skills, transversal skills, social, cognitive and technical (vocational) skills -
which can help workers to move across occupations and from informal to formal economy. It is a
combination of different types of skills that helps workers to keep their employability high, be agile and
resilient in the context of change. You can explore each set of skills on the graph below.
What's next?
We are aware now of the main global factors having an impact on skills demand and supply and likely to cause
skills mismatch. Skills mismatch is a key concept we will be analysing in our next section. We will then turn to
look more closely at skills anticipation and matching as well as labour market information system (LMIS).

Skills mismatch. Types and consequences

Section 12 of 15

A mismatch between skills offered and skills wanted is a major challenge.

2018 Talent Shortage Survey by Manpower Group
43 countries, 39'195 employers
Talent shortages have reached its 12-year high levels at 45% in 2018. 
Therefore, the situation clearly points to skills mismatch: skills are available but jobs require other skills, or the
same skills in other place or time. 

Shortage of skills is as important as shortage of jobs, and employability is as important as recognition

and utilization of available talent.

Types of skills mismatch

Numbered divider 1
Surplus and shortage
Surplus
Click to flip
There are more skilled individuals than available jobs.
Click to flip
Shortage

Surplus and shortage

Surplus
There are more skilled individuals than available jobs.
Shortage
There are not enough skilled workers for available job vacancies.
Consequences of skills mismatch
Poor matching between skills supply and demand has many negative consequences, for individuals and
companies, and can also influence the country’s economy and society more generally.
In the next activity you invite to drag each consequence of skills mismatch to the corresponding category.
0/17 Cards Correct
REPLAY
National competitiveness
Risk of being socially excluded
Lower ROI in public sector
Higher criminality rates
Individual lower ROI
Foreign investments at jeopardy
Difficulties finding a job
Costs of unemployment benefits
Sub-optimal work organization
Lower ROI in private sector
Lower wages
Accept a job other than that you are qualified for
Rising inequality and lack of social coherence
Risk of losing or not finding a job
Loss of motivation
High rate of unemployment
Hiring difficulties
Individuals
Companies
Country's economy and society

Labour Market Information System (LMIS) for matching and anticipating skills
Section 13 of 15
When it comes to skills, is a perfect match even possible? 
Some discrepancies between labour supply and demand may be positive because they enable social mobility
and provide incentives for skills development and innovation. However, the real challenge is to minimise
skills mismatch and its consequences for economy, society, enterprises and individuals.
The essentials components 
of skills needs anticipation
As one component of a broader labour market information system (LMIS), skills needs anticipation can be
broken down into a number of key elements. 

Skills assessment and anticipation in the skills development policy cycle

Section 14 of 15
Skills development is a broad concept composed of 3 pillars: initial TVET and universities, active labour
market policy and workplace learning.
Now, it is important to know the place of skills analysis and anticipation in the skills development policy cycle.
Watch the following video to learn more.