Demographic & social challenges

Education, a central formation throughout our lives

Lifelong learning is one of the solutions that will solve the mismatch between supply and demand for skills in developed countries. For a number of reasons, it will become more and more central and will progressively become an economic imperative, not least because of technological changes in the economy but also the aging of the population.

Published on 10 September 2021


The “skills mismatch” issue

Labour market conditions improved over the recent years in developed countries as unemployment has fallen sharply. That said, structural problems remain, such as the mismatch between the supply and demand for skills. Employers struggle to recruit employees with the skills they need. When asked about the most important problem they face, the most frequent answer from companies in the US and Europe1 is neither lack of demand, nor excessive regulation, nor excessive taxation, but the difficulty to recruit employees with the adequate skills.

“In the United States, there are less than 6 million unemployed but more than 7 million open positions.”

One of the reasons for which unemployment does not disappear in such a favorable context is that the unemployed do not have the skills that are sought by employers. This phenomenon is called “skills mismatch“.

Lifelong training is one of the solutions to tackle the “skills mismatch” issue. As we will see in the following, mega-trends will accelerate the need for lifelong training.

Longer life expectancy will increase the demand for lifelong learning

For reasons of funding retirement pensions, the rise of life expectancy will push governments to gradually rise the retirement age. In Japan, Prime Minister Shinzo Abe said that one of his government’s priorities for the coming years would be to allow people to work longer and to defere their pension beyond 70.

The participation rate (part of the population in employment or active job search) of the over-65s has increased by more than 5 points since the end of 2010, to nearly 25% of the population. Overall, the aging of the population will mean that the working life period will be longer. In the United States, for example, there has been a steady increase in the participation rate of people over 70 since the beginning of the 2000s. The International Labour Organization projects that the participation rate of the over-65s will increase significantly in the United States, the United Kingdom or Germany by 2030. Above all, the longer presence on the labor market will imply more transitions during a career: from one job to another in the same company, from one company to another, from one sector to another2. The reconversions will be more frequent and will require in most of the time the acquisition of new skills. The Future of Skills and Lifelong Learning report published by the Government Office for Science, a consultative body of the British government, states: “Economic security will not come from having a job for life but from having the ability maintain and renew the right skills through lifelong learning.”

Technological changes precipitate the “obsolescence of skills,”

Which can be defined as the fact that skills become progressively outdated and less in line with the needs of companies. In the jargon of economists, we could speak of an “human capital erosion”. The CEDEFOP (European Center for the Development of Vocational Training), an agency of the European Union, explains that the “obsolescence of skills” is a consequence of industrial restructuring and changing skills needs in sectors with strong recourse new technologies (for example, information and communication technology, finance, scientific activities), in which skills can be quickly outdated.

« In the European Union, 46% of employed adults believe that it is likely or very likely that many of their skills will be out of date in the next five years. »

In fact, the perception of the obsolescence of skills has been found to increase the demand for training during the career, which is especially true in sectors that rely heavily on computer tools. For long-serving employees, stopping participating in training increases the likelihood of losing one’s job3. In addition, the total or partial replacement of jobs by automation increases and / or will increase the need for training during a career because employees will have to adapt to new functions or even new sectors of activity. The OECD estimates, for example, that 14% of jobs in OECD countries are automatable and another 32% could be substantially modified4.

Globally, jobs will disappear and others will appear with automation and robotics. Above all, the skills of tomorrow will be different from today’s skills. Some estimates suggest that a third of US employees will need to change jobs by 2030 if automation is fast (Mc Kinsey). This will increase the need for lifelong learning and the resumption of studies.

Lifelong learning will become more and more of an economic imperative because of technological change and the aging of the population. Non-formal education is developing rapidly in Europe. Western governments’ awareness of the need for lifelong learning and strong decision-making should encourage further growth.

Juliette Cohen & Bastien Drut, Strategists, CPR AM

1. NFIB survey for the US and the SAFE survey from the ECB for the Eurozone.
2. See for instance the book « The 100-year life » from Lynda Gratton and Andrew Scott.
3. Allen J. et A. De Grip, 2012, « Does skill obsolescence increase the risk of employment loss ? », Applied Economics.
4. « Putting faces to the jobs at risk of automation », OECD, March 2018.

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