Skills mismatch is one of the most common topics in newspaper articles, studies, and reports dealing with the current labor market situation, as well as a widespread problem with no apparent solution.
Although it is a phenomenon that affects several countries in Europe, in Italy it is a more pressing issue given the slow growth in labor productivity in our country, especially in the manufacturing sector and compared to Spain, France, and Germany (data: Eurostat; source: Confindustria Research Center analysis of Eurostat data); suffice it to say that the average annual growth rate of labor productivity in Italy in the period 2014-2022 was 0.5%, compared to the European average of 1.3% in the same period (source: Istat).
Clarifying the phenomenon of skills mismatch through data
Skills mismatch is the gap between the skills required by businesses and those possessed by individuals (whether active in the labor market or in training and seeking employment). It currently affects 1.3 billion people worldwide and is estimated to affect 1.4 billion people globally by 2030 (source: Asnor).
The case of Italy: skills shortage or brain drain
The two phenomena contributing to the skills mismatch in the Italian labor market are low educational attainment and brain drain. Essentially, we have few university graduates (only 23.4% of the Italian population has a tertiary education, the lowest figure in Europe after Romania, Eurostat data, source: OCPI calculations and CPI Observatory, Catholic University) and an estimated 5% of these go abroad for better professional opportunities (Almalaurea data).
Business demand and the role of training
Although the demand for graduates represents a smaller percentage of total labor demand (15.1% of total planned jobs, data: Unioncamere), actual hires in this pool account for only 11.9%, a difference of 3 percentage points. However, the greatest mismatch is in the pool of people with vocational training qualifications: 20.3% of total hires have a vocational diploma, compared to a demand from companies for this type of worker and related skills of 36.2% (and related planned jobs), with a gap of almost 16%.
The total gap represented by the two main mismatches is therefore equal to 19%. But who fills this gap?
The answer is easy but not reassuring: those without any educational qualifications (18.9% of total planned jobs compared to 38.1% of actual hires).
This phenomenon is called underskilling or underqualification (part of the qualification mismatch or vertical mismatch), representing a situation in which a worker with lower qualifications and skills performs roles and tasks that would require higher qualifications and skills.
However, there is also a second type of mismatch, known as horizontal mismatch, which mainly concerns the world of graduates (and which could therefore respond to the supply-demand gap in this specific pool). This mismatch is determined by the failure of supply and demand to meet, given the scarcity of graduates/specialists in highly sought-after disciplines and the overabundance of graduates/specialists in less sought-after disciplines. In short, it is the misalignment between university education and market needs. A case in point is the gap between the high demand for graduates in engineering and IT/technology disciplines and the low number of graduates in these fields and, conversely, the low demand for graduates in humanities and communication disciplines and the proportionally much higher number of graduates from these areas.
Possible actions and contributions of consulting to reducing skills mismatch
Given that only adequate reforms of the production and university systems would effectively solve the problem, there are certainly some immediate measures that can help companies prevent the skills mismatch from having a negative effect on their competitiveness:
- Training: structured induction and continuing training programs help to reduce the gap between desired and available skills;
- Direct contact with training schools and universities: bringing these two worlds together encourages companies to share their needs, provides information on professions and increases their attractiveness, while also motivating training institutions to develop highly professional courses.
- Internal company academies for the transfer of specific expertise that is costly to find on the external market already "ready";
- Ad hoc mentoring programs that promote the exchange of skills, even between employees of different seniority levels.