Promoting Human Capital: Are governments effective? The case of Macedonia Dr. Nikica Mojsoska...

Promoting Human Capital: Are governments effective? The case of

Macedonia

Dr. Nikica Mojsoska BlazevskiUniversity American College-Skopje

Conference "New Skills for New Jobs", Sarajevo, 27-28 October, 2011

Human capital endowment“The level of human capital is still low.”

Without well educated workforce Macedonia cannot become a modern, innovation-driven, export-oriented economy

“The low level of education and … contribute to a low general level of productivity” (EC, Progress Report, p.28)

“ The authorities continued to improve both the physical infrastructure of education and the regulatory framework …”


Growth path: neglected human capital

• Low-skill specialisation, with low-level equilibrium, low growth, high U, informal work, insufficient technological change • Emphasis on school inputs rather than outputs• Education policy was mainly focused on dealing with segmented systems of provision, with limited attention to employability (ETF, 2009)


Education outputs• Poor achievements on international assessment • Low expected years of schooling (12.3)• High share of early school leavers (1.8 p.p. higher than in

the EU-27, 6 p.p. for females) • Only 14.3% of 30-34 years-olds with completed tertiary

education (Europe 2020 targets 40%) • Difficult school-to-work transition

WEF Competitiveness Report

MKD NMS

Quantity of Education 4.6 5.9

Quality of Education 4.1 4.5Conference "New Skills for New Jobs",

Sarajevo, 27-28 October, 2011

Education pays-off

• Much higher employment rates and lower unemployment rate for highly educated persons

• Higher probability of finding a job• Lower incidence of discouraged workers• Wage premiums


Variables 1998 2000 2002A. Estimated coefficients for dependent variable ln(net monthly

wage)constant 7.394 8.26 7.772 (90.826)1 (96.839) (92.262)age 0.031 0.013 0.024 (8.506) (3.583) (6.498)agesquared -0.00034 -0.00017 -0.00027 (-7.919) (-3.960) (-6.276)3-year secondary2 0.234 0.171 0.146 (11.234) (8.194) (6.938)4-year secondary 0.367 0.324 0.317 (22.036) (19.825) (19.357)non-tertiary 0.501 0.509 0.427 (18.473) (20.022) (15.562)university 0.808 0.769 0.725 (35.472) (34.076) (34.280)gender 0.151 0.148 0.179 (11.032) (10.965) (13.489)

B. Returns to experience, education and other personal characteristics3

age 3.1% 1.3% 2.4%agesquared -0.03% -0.02% -0.03%3-year secondary2 26.4% 18.6% 15.8%4-year secondary 44.3% 38.3% 37.3%non-tertiary 65.0% 66.4% 53.2%university 124.3% 115.8% 106.4%gender 16.3% 16.0% 19.6%

Educational reforms• Recent educational reforms:

- introduction of nine-year primary education, - compulsory secondary education, - revised curriculums which promote outcome oriented and interactive teaching and learning, - reform of 4-year VET,- early learning of English language and ICT skills,- implementation of Bologna declaration,- expansion and subsidies to higher education


Improvement of physical capacity at lower education levels and expansion of provision at university education

Report: Skills Not Just Diplomas

“Without adequate information on the skills students acquire and those adults actually have, policies to address skills gaps operate in the dark,” Lars Sondergaard, lead author of the report.


Vertical mismatch - LFS

2007 2008

Q2/2011

E UExcess supply E U

Excess supply E U

Excess supply

University 15.5 7.4 -8 14.2 7.8 -6.5 18.6 13.2 -5.4

Higher 4.4 2.1 -2.3 4 2 -2 3.2 2.0 -1.2

4 years secondary 42.1 39.3 -2.7 42.1 39.4 -2.7 41.4 38.2 -3.2

3 years secondary 12.1 15.3 3.2 12.3 13.4 1.1 11.3 11.7 0.4

Primary and lower secondary 20.7 29.5 8.8 22.3 31.5 9.1 20.5 29.6 9.1Incomplete primary 4.2 4.7 0.4 4.3 4.6 0.3 4.3 3.6 -0.7

Without education 1.1 1.7 0.6 0.7 1.5 0.8 0.6 1.8 1.1


Occupational mismatch - ESA

• Planned demand (vacancies) equal to about 1.5% of current employment (10,060)

• By industry: manufacturing (50%), trade (21.2%), construction (8%) and 5% in transport and communications

• Highest demand for secondary educated workers (62.3%)

• About 10% of total demand for workers with tertiary education

• Focus on experienced workers, foreign languages, IT, and soft skills


Occupational mismatch – ESA (2)• 10% of firms reported that experienced difficulty in

hiring (experience and soft skills)• Mainly in manufacturing industry and for secondary-

educated • Findings are used for designing and implementing

some ALMPs


Findings - ESA• Mismatch problem is driven by specific factors at

different educational levels- at lowest educational level, it is mainly an issue of low qualifications and lack of specific skills of non-qualified workers;- at lower and upper secondary education, the problem is lack of specialization of gymnasium graduates, and lack of additional skills and working experience for the rest;- for highly educated individuals, it is the occupational choice and surplus of degrees in less market-oriented sciences


Skill Demand Survey - WBAbout 30 percent of employers claim that hiring a worker with required skills is difficult


Skill Demand Survey – WB (2)• Modern and dynamic firms are more seriously

harmed by skill shortages – potential constrain to growth

• Newly created jobs differ in the skill content from old destructed jobs: high professional skills, or medium-level non-manual skills

• Demand for advanced technical and professional skills


Skill Demand Survey – WB (3)• The aggregate job vacancy rate is 3% (unmet

demand)• Vacancy duration from 2 weeks (sales worker) to 5

weeks (professional)

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Time needed to fill a vacancy2009


Skill Demand Survey – WB (4)

Top 5 most important skills for employers:1.Sense of work ethics, 2.Overall literacy,3.Communication skills,4.Customer care,5.Motivation.

Foreign language, ICT, technical / vocational skills, problem-solving

Top 5 skills that applicants lack:

1.Responsibility and reliability, 2.Motivation and commitment,3.Communication skills,4.Customer care,5.General literacy skills.

Unemployment seems more related to work ethics and key competencies than with technical/vocational and job specific-skills

Skill Demand Survey – WB (5)• Lessons for educational policy:1. Education system and curricula should be made

more responsive to labour market needs – engage employers

2. More attention should be paid to soft skills – “beyond the traditional function of the educational system “- Soft skills usually acquired outside the school system: Improve and expand early childhood learning programs, especially for children from disadvantaged social background/rural areas.


What do studies show?• Employers value key competencies and soft skills• Greater demand for:

- highly educated individuals and those with secondary education, and - medium and advanced professional and occupational skills

• Occupations in demand? - Sectoral skill committees

• Is it effective to invest heavily in higher education?• The role of institutions


Promoting Human Capital: Are governments effective? The case of Macedonia Dr. Nikica Mojsoska...

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