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The EU workforce: under-skilled at hiring!

Monday, April 10, 2017

A pervasive aspect of skills mismatches is that of “under-skilling”. As such, it can be defined as the situation where existing workers find their skills challenged by the work content.[1] 

According to Cedefop’s European Skills and Jobs (ESJ) data presented in the Skills Panorama, about one in five EU employees (22%) considered themselves as being under-skilled at the time of hiring. As the figure below shows this percentage grows up to 40% in a number of Member States.

Figure 1: Under-skilling at hiring (%) across EU Member States

Source: Skills Panorama

At first sight, one may think that this is not worrisome given that training and development of skills may happen at the workplace while individuals who find themselves in this situation have already secured employment. Nevertheless, one needs to consider the implications for both the economy and the individuals. Under-skilling may lower overall productivity for the firm while individuals may see this back-firing on their wages, career development, and even increasing the risk of job-loss.

Triggers of under-skilling

The ESJ survey allows delving into the factors associated with higher levels of under-skilled at hiring.

Different groups of workers may experience different levels of under-skilling while in many cases differences may also be country specific. In general, under-skilling affects mostly female workers and younger cohorts (e.g. 24-39). It is higher in sectors that employ, on average, workers with lower levels of education, such as construction, manufacturing or primary sector and utilities. Figure 2 shows the rates of under-skilling at hiring across such groups of workers.

Figure 2: Under-skilling at hiring across groups of workers

Source: Skills Panorama

The state of the labour market is another significant trigger. In particular, in instances where workers have the “luxury” to turn down job offers, their chances of under-skilling are significantly lower relative to workers who are left with no alternative but to accept the offered job. On a similar vein, entering a job after experiencing a spell of unemployment is also associated with higher chances of under-skilling at hiring. This is particularly promiment for the very long-term unemployed, namely those who had been looking for a job for more than two years prior to taking up their current post.

Finally, training can have a marked impact in terms of avoiding under-skilling of employees. Under-skilling is more evident in firms where training takes place in the form of  learning-by-doing (e.g. learnt from colleagues or a supervisor), which may suggest that companies that hire under-skilled workers are more likely to invest in their further skill development.

Understanding under-skilling

There are three dominant reasons that can be used to explain the under-skilling phenomenon. The first one relates to the insufficient signals that employers may have on the candidates at the time of hiring. For example, a certain educational degree, studies on a specific academic field or even from a particular educational institution do not always provide the perfect signal and employers may only later come to realise that the skills of their preferred candidate are actually lower than those required.

The second reason sees under-skilling as an outcome of the inability/difficulty employers have in attracting workers with adequate skills and capabilities. In other words, under-skilling may reflect skill shortages in the economy, where the existing workforce lacks certain skills when hired but perhaps is able to do the job at a minimum level required. Firms and workers then have to invest in the professional development of their workforce over time to mitigate any such initial under-skilling. Nonetheless, one cannot discount the fact that a situation as such, could also be attributed to bad quality jobs or unattractive working conditions that make it difficult for employers to attract workers with the right skills.

Moreover, the selection of “under-skilled” candidates may be a result of firms’ hiring practices that find it cheaper to hire candidates with lower skills than required, and then invest in certain training programmes and on-the-job training in order to bring their employees’ skills up-to-speed. This situation will, of course, vary depending on the extent that the productive processes of firms rely on the relevance of a specific type and field of education. In other words, firms may prefer to use other mechanisms, such is the adoption of a probationary period of employees’ performance, rather than that of screening at the time of recruitment. On the other hand, however, one cannot exclude the possibility that firms’ hiring practices are insufficient in searching the market.

For more data on Under-skilling at hiring visit the indicator’s page on the Skills Panorama here



[1] Underskilling of employees should not be confused with skill shortages, the inability of employers to find the right skills among job applicants, or a lack of appropriate skills by the unemployed. Being under-skilled is a similar type of mismatch as that of a ‘skill gap’ expressed by employers with regards to how proficient their workforce is in carrying out their job tasks.

Expert, Department for Skills and Labour Market (DSL)
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