Nevertheless, instead of unraveling theories, we let the facts speak for themselves. Many factors affect the total economic compensation, such as demand and supply of a specific skill, experience, location, unions, productivity, and so on, but here we look at the overall impact of education, specific knowledge, skills, and abilities.
The historical data are clearly showing that having less than a high school diploma, results in the highest unemployment rate and the lowest earnings Figure 1. The earnings have increased with an increasingly higher degree. We can also see that the highest degree possessors, professional and doctoral, have the lowest unemployment rate Figure 1.
We can see a similar situation in the European Union, although the figures are not directly comparable due to differences between the EU and the US in taxation and welfare schemes Figure 2.
The progressive taxation schemes and the minimum wages in the EU tend to narrow the gap between low and high incomes. The unemployment figures in the EU tell a similar story as in the US. The highest unemployment rate is among those who had the lowest education levels Figure 3. In the unemployment rate for the lowest education group was three times the unemployment level of tertiary degree holders, The historical data unquestionably show that a degree is essential to obtain a high income and lowers the risk of getting unemployed.
However, "change is the only constant," as Heraclitus, a Greek philosopher put it. Very true still today and likely much faster than during his time. Will the degrees be as valuable in the future as they have been in the past?
We discuss this, but first, we explore the effect of soft skills on income levels. A large number of other factors besides education affects wages.
We look particularly at personal characteristics and requirements for a specific occupation. The list of personal characteristics includes abilities of which many are valid across occupations. These components measure the performance and the ability to gain knowledge and skills that affect productive work execution. Cognitive abilities are the most general ones and required in nearly every occupation. The cognitive capabilities measure an individual's capacity to acquire information and the ability to practice knowledge to solve problems.
Cognitive abilities include, for example, oral and written comprehension, inductive, and deductive reasoning. Occupational requirements include common activities across numerous occupations as well as social and physical constituents that have an impact on a job.
Occupational requirements specify elements required for a specific job and include, for example, a list of mental processes, such as a requirement to update and apply appropriate knowledge, develop objectives and strategies, organize, plan, and prioritize work. Matthew Dey and Mark A. They found the number of years of education alone explained Also, jobs consist of a composite of skills, activities, and working conditions, and the value comes from a particular combination suited for a specific job.
For example, some necessary skills required from bioinformatics scientists are critical thinking and reading comprehension, abilities such as written comprehension and ordering information, and specific domain knowledge in biology. A single skill, a piece of knowledge, or an ability alone is not enough, for a person to do the job satisfactorily. The results show that education only accounts for Over one-third of the variability of wages originates from other factors.
We have already seen that the education level is vital to achieve a good income and to reduce the risk of becoming unemployed Figure 1, 2, 3. However, historical data tells us that a degree alone is not enough. We also need to grow a variety of skills and abilities. Most of them we can learn but are too often not included as subjects in specific educational programs.
A study of , job advertisements in the UK by Calanca et al. We can divide soft skills into two categories: 1. Soft skills that are associated with highly skilled employees 2. Soft skills that are associated with low skill requirements.
These conclusions are further reinforced by WHICH findings that salaries are positively affected by an increasing number of technical skills together with a growing number of soft skills.
Since soft skills are difficult to measure, we must include a certain amount of skepticism in all the results that involve soft skills. The applied vocabulary used to describe soft skills varies, and evaluations are often subjective.
These skills are easy to observe and test for. Non-technical skills would include relational skills, planning, time management and people management.
These skills are equally as important, but harder to test for. Typically, whether a worker has these skills or not will only become apparent over time. In our technology-driven world, most employees are concerned with honing their technical skills.
Over time, this has created a gap in softer, less technical skills. Soft skills topped the list. Both soft and hard skills are valuable in the workplace today, and it is important to understand this when framing how we think about skills. Not all skills are created equal. You should not compensate for all types of skills. If your software developer tells you they can now notarize documents, you can comfortably tell them that this does not make them better at their job, and, therefore, their compensation will stay the same.
If your marketing specialist tells you that Microsoft Word is part of her skill set, you can comfortably tell her that this is assumed for their job and you will not be compensating them extra for possessing that skill.
Of course, you will need to compensate for certain types of skills. But how you do it will depend on if the skill is essential for the role, or just makes your employee better at their job. If the skill is not required for the job, but having that skill makes your employee better at their job, you can reflect this value-add through increased range penetration.
If you have a data analyst who knows how to program in Python, while the rest of the team is working in Excel, you would have to move the data analyst with Python skills further into the range than the rest of the team.
The idea that a skill can be essential for a job is particularly important for broad job titles. Kenya : In Kenya, where youth unemployment is high, the Youth Employment and Opportunities Project is helping an estimated , young Kenyans develop in-demand skills and expand their opportunities.
The project includes results-based contracts conditional on youth placement in internship and then employment, to encourage engagement of training providers with private sector employers. The project also supports self-employment by financing and training micro-enterprises as well as young firms with high growth potential, improves access to labor market information, and strengthens youth policy development. The plan, supported under the Second Afghanistan Skills Development Project , adapted many of the global good practices to the Afghan context — emphasizing simplicity for quick roll out, localized solutions to account for realities on the ground, and provision through multiple modalities to reach and meet the needs of heterogeneous, hard-to-reach student groups.
Liberia : The Youth Opportunities Project helps empower poor and vulnerable youth to improve their income-generating potential. Over 10, youth, half of whom are women, have so far received training in entrepreneurship and life skills such as socioemotional skills, health and hygiene, and money management , improved agriculture techniques, as well as labor subsidies to engage in communal farming.
The beneficiaries are mostly located in hard-to-reach rural parts of the country. This support has allowed these youth to have productive employment, engage in other income-generating activities, and contribute to the development of their communities. Overall, the project aims to benefit close to 60, students, with female students making up at least 30 percent of the enrollment.
More than staff will benefit from industrial attachment programs and over staff will benefit from foreign exchange program. The WBG continues to foster global partnerships to improve skills development around the world.
Some recent examples include:. Building on this effort, the three organizations are currently engaged in an inter-agency initiative to gather evidence on how to build better TVET systems.
The World Bank also engages with the WorldSkills organization, which works to raise the profile and recognition of skilled people, and show how important skills are in achieving economic growth and personal success. Partnership for Economic Inclusion PEI is a global network that includes national governments, policymakers, development partners, and nongovernmental and research organizations.
Economic inclusion programs typically include skills training and coaching components in combination with cash or in-kind transfers, access to finance, and links to market support. PEI partners help develop economic inclusion programs and contribute to evidence-based good practices that can be adapted to local conditions by governments and local or international agencies.
Through their work, each partner is helping build a platform that will refine and enable the sharing of cutting-edge knowledge about what works in economic inclusion. Skills development in the time of COVID Taking stock of the initial responses in technical and vocational education and training.
The skills balancing act in Sub-Saharan Africa: Investing in skills for productivity, inclusivity, and adaptability. This site uses cookies to optimize functionality and give you the best possible experience. If you continue to navigate this website beyond this page, cookies will be placed on your browser. To learn more about cookies, click here.
Understanding Poverty Topics. To succeed in the 21st century labor market, one needs a comprehensive skill set composed of: Cognitive skills , which encompass the ability to understand complex ideas, adapt effectively to the environment, learn from experience, and reason.
Foundational literacy and numeracy as well as creativity, critical thinking, and problem-solving are cognitive skills. Socio-emotional skills , which describe the ability to navigate interpersonal and social situations effectively, and include leadership, teamwork, self-control, and grit.
Technical skills , which refer to the acquired knowledge, expertise, and interactions needed to perform a specific task, including the mastery of required materials, tools, or technologies.
Digital skills , which are cross-cutting and draw on all of the above skills, and describe the ability to access, manage, understand, integrate, communicate, evaluate, and create information safely and appropriately. The key issues countries need to tackle for skills development are: Access and completion. Across the world, investments in education and skills development—from preschool through post-secondary education to vocational training—have high returns.
The wage penalty for low literacy is nine percentage points in Colombia, Georgia and Ukraine, and 19 percentage points in Ghana. And the opposite is also true: in Brazil, graduates of vocational programs earn wages about 10 percent higher than those with a general secondary school education.
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