OKUBO, AKEMIE, UBALDO

SKILLS MISMATCH - JUNE 11 2022

Young people around the world are more educated than ever before, but that’s a potential problem.
If markets are flooded with qualified or overqualified job applicants, and if most young people
apply for only a narrow subset of jobs, then recent graduates will not find employment, or they will
be underemployed.

Skills mismatch is a discrepancy between the skills that are sought by employers and the skills that
are possessed by individuals. Simply put, it is a mismatch between skills and jobs. This means that
education and training are not providing the skills demanded in the labour market, or that the
economy does not create jobs that correspond to the skills of individuals. It was a recognized issue
across the world causing poverty and unemployment.
The term skill mismatch is very broad and can relate to many forms of labour market friction,
including vertical mismatch, skill gaps, skill shortages, field of study (horizontal) mismatch and
skill obsolescence.

FORMS OF SKILLS MISMATCH

Skill gaps Skill gaps measure the extent to which workers lack the skills necessary to perform their
current job. Generally speaking, skill gaps are usually measured by collecting information from the
employer on the perceived skill deficiencies of workers; when similar questions are directed at
workers within 8 firms this is usually akin to underskilling, although the form of the question is
likely to differ.
Skill Obsolescence This refers to the process by which workers’ skills become obsolete. Skills can
become obsolete due to ageing which depreciates certain manual skills (physical obsolescence),
through technological or economic change which renders certain skills unnecessary (economic
obsolescence) or through the under utilisation of skills

A skill shortage exists when employers can't fill vacancies in an occupation or in a specialisation of
that occupation. For this definition to hold true, the vacancies must:

 reflect current levels of pay and standard employment conditions

 exist in a location that is easy to access.

Overskilling and underskilling Overskilling describes the situation whereby the worker believes
that they possess more skills than their current job requires, whereas, underskilling describes the
situation whereby the worker believes that their current skills do not meet the demands of the job.

Why is it important to address the skills mismatch challenge?

The consequences of skills mismatch reach all levels of the labour market.

At the individual level there are serious wage penalties especially for overqualification that
eventually affect both job and life satisfaction. For example, you would assume that in developing
countries overqualification should not be a problem because of a lack of sufficient training
opportunities. However, people receive training and are still unable to find a job that corresponds to
their skill level, which means they are not employed at their full productivity potential. In addition,
skill deficiencies decrease chances of landing a job altogether.

For companies skills mismatch has negative consequences for productivity and competitiveness,
which affects their ability to implement new products, services or technologies. What is more,
skills mismatch causes higher staff turnover and sub-optimal work organization. Eventually skills
mismatch leads to the loss of profits and markets.
For countries and regions skills mismatch can increase unemployment, and affect
competitiveness and attractiveness to investors, meaning lost opportunities on the pathway to
productive transformation and job creation. Public or private resources are invested in training with
the assumption that achieved qualifications will yield positive results in terms of employment
insertion or wages. Yet, if skills mismatch is present, these expectations often do not materialize,
leading to returns on investment that are lower than expected.

EDUCATION/SKILLS MISMATCH IN THE PHILIPPINES

The Philippines is also experiencing education-job mismatch and has been a common phenomenon
in the field of employment since then. Colina (2014) stated in his article which talks about the
Educational mismatch that happened and is still happening now. He had stated that according to the
Department of labor and Employment, when the skills required for the job does not fit with the
what the job seeker has, it is considered as job mismatch, saying it is a crucial problem and it does
not happen only in the Philippines. It brings a massive impact on the unemployment rate of a
country. The labor department discusses this with the sector of education namely DepEd, CHEd,
and TESDA, to update their curricula that will enhance the skills of the students to meet the
requirements of the industries.
We know that the structure of the higher education system in a country is strongly linked to career
expectations and the skills gap. In Northern European countries, where the vocational higher
education system is effective and well developed, the skills gap is much smaller. So, elsewhere,
finding creative ways to more closely align educational offerings and society’s needs for economic
development is vital. Just as important, however, is career guidance for young people, which has
never been as important as it is now. There needs to be a symbiotic relationship between industry
and universities to help young people understand job and career options and to develop curricula
that create a smooth transition from formal educational settings into the world of work.
A mismatched worker will experience human capital depreciation which is caused by working in a
different field compared to his/her field of study. While studying, a student is formed and is feed
with learnings and skills that will help him/her in the future. If your field of study does not match
with your current job, those knowledge and skills you have acquired will slowly depreciate because
you are working in an area you are not supposed to. You will be forced to transform the skills you
originally had before having a job, to the skills your current job needs.