Chapter 4. Aligning training to the skills needed in the labour market
In order for Training Funds to work effectively, not only do they need to reach many firms and workers and be inclusive, but they also need to provide training that is useful and aligned to labour market needs. Indeed, Training Funds have the potential to help firms update the skills of their employees, equip workers with the skills needed to adapt to the challenges arising from the mega-trends (technological change, ageing, globalisation), and meet the objectives of recent policy initiatives such as Industry 4.0. This Chapter analyses the mechanisms to ensure that Training Funds promote the development of skills most relevant for the labour market.
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
4.1. Channelling training towards skills most in shortage
Training Funds have a great potential to reduce skills imbalances – such as shortages and surpluses – in the Italian labour market. In fact, if used effectively, Training Funds can equip workers and the unemployed (see Section 6.2) with skills most needed and difficult to find by employers.
Ensuring a high level of alignment between TF-supported training and labour market needs is important from an aggregate point of view, as it could reduce overall skills imbalances, and potentially lead to enhanced firms’ productivity. Moreover, good alignment to skills needs is also important for individual learners, as they can acquire the skills that bring the brightest labour market outlooks in terms of, for example, wage progression, employment, and job quality.
It is possible to analyse the extent to which TF-supported training develops the skills that are most in demand in the Italian labour market, by combining the information on skills shortages/surpluses contained in the OECD Skills for Jobs database (see Box 4.1), with the information on the skills developed through TF-supported training contained in the Nexus database (see Section 5.4).
More specifically, by building a crosswalk between the skills taxonomy used in the Nexus database and the OECD Skills for Jobs database, it is possible to compare the number of TF-supported training programmes that have been completed in each given skill (or thematic area) with the degree by which that skill is in shortage/surplus in the Italian labour market.
It is important to notice, however, that results need to be taken with caution considered the tentative nature, and limitations, of this mapping exercise (see Annex B).
The OECD Skills for Jobs database provides timely information about skills shortages – i.e. when skills sought by employers are not available in the pool of potential recruits – and skills surpluses – i.e. when the supply of certain skills is higher than the demand.
The database has key innovative features compared to existing measures of skills shortages/surpluses. By looking at skills – i.e. the set of competences mobilised to perform the tasks related to a job – rather than occupations or fields of study, the new indicators go beyond the traditional measures of imbalances. Furthermore, unlike the generally subjective information available from employer surveys, the OECD Skills for Jobs database draws from quantitative data derived from household surveys. Finally, the indicator is constructed using a multidimensional set of quantitative signals on skills pressure (i.e. five sub-indices, including wage growth, employment growth and unemployment), which provides a holistic interpretation of skill imbalances in the labour markets.
The skill needs indicator is constructed in two consecutive steps:
(i) in the first step, sub-indices for hourly wage growth, employment growth, unemployment rate, hours worked and under-qualification are used to provide a quantitative indication of the extent of the labour market pressure on each one of the occupations analysed. The result of this analysis returns a ranking of occupations ordered from the one most in shortage to most in surplus.
(ii) in the second step, occupations that are in shortage/surplus are mapped into the underlying skills requirements associated to those occupations, using the occupation-skills taxonomy developed by O*NET.
Information is provided at the 2-digit ISCO occupation level and is disaggregated into three domains of competence – knowledge, skills, and abilities:
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Knowledge refers to the body of information that makes adequate performance on the job possible (e.g. knowledge of plumbing for a plumber; knowledge of mathematics for an economist).
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Skills refer to the proficient manual, verbal or mental manipulation of data or things (e.g. complex problem solving; social skills)
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Ability refer to the competence to perform an observable activity (e.g. ability to plan and organise work; attentiveness; endurance).
The database covers Italy as well as most OECD countries and some emerging economies. For Italy and other selected countries, indicators are available at the regional and occupational level.
Source: OECD (2017[1]), Getting Skills Right: Skills for Jobs Indicators, https://doi.org/10.1787/9789264277878-en.
As shown in Figure 4.1, Training Funds seem to put efforts into developing skills that are not necessarily in high-demand in the Italian labour market. For example, while the knowledge of computers and electronics is in shortage in the labour market in Italy, very few TF-supported training programmes are aimed at developing ICT-related skills. While the knowledge of computers and electronics makes the top of the ranking of skills in demand in Italy, this is a training area that is rarely provided by Training Funds (the 4th least frequently Training Funds-provided type of training).1 Similarly, clerical knowledge (the knowledge of administrative and clerical procedures such as word processing, managing files and records and other office procedures) is in strong demand in the labour market but very few TFs-supported training programmes are aimed at developing these skills: they are the top second skills need in Italy, but the least frequently Training Funds-provided type of training.2 Conversely, many resources seem to be devoted to developing skills whose demand is mild or weak. For example, the knowledge of manufacturing and production is one dimension where shortages are among the lowest in the labour market. Despite that, much of the Training Funds resources are devoted to support training in this area. Indeed, this is the second lowest skills priority, yet it is the third most frequently Training Funds-provided type of training.3
Source: Authors’ elaborations based on the OECD Skills for Jobs database and the Nexus database.
Despite the above-mentioned current misalignment between skill needs and the supply of TF-supported training, the situation has been improving in recent years and things are moving in the right direction. Data for the past decade suggests that Training Funds have followed the direction of the changing dynamics of skill demands, though falling short in some cases as mentioned above.
When looking at the time evolution of skill demands and TF-supported training provision (see Figure 4.2), data show that increases in the shortage of a certain skill has been often accompanied by an increase in the number of TF-supported training aimed at filling those skill gaps. For example, knowledge of administration and management has been increasingly in shortage in the Italian labour market in the period 2008-2015, and the number of TF-supported training aimed at developing these skills have also increased since 2008 (although it reduced slightly in 2015). Similarly, the shortage of knowledge of sales and marketing has been increasing since 2008, and so as the number of TF-supported training programmes aimed at developing that skill (although it reduced in 2014-2015).
Source: Author’s elaborations based on the OECD Skills for Jobs database and the Nexus database.
In terms of alignment to skills needs, Training Funds seem to perform in similar ways regardless of their size (i.e. the number of firms enrolled). All groups of Training Funds seem to under-invest in skills in high shortage (knowledge of computers and electronics; clerical knowledge) to a similar extent, with micro-Training Funds (covering less than 5000 firms) and large Training Funds (covering over 100 000 firms) doing slightly better (on clerical knowledge and knowledge of computers and electronics, respectively). Large and medium-sized Training Funds (i.e. with over 20 000 firms) seem to focus relatively more attention to training programmes that develop knowledge of manufacturing and production (which are not in high shortage in the labour market). On the other hand, small Training Funds (i.e. with between 5 000 and 20 000 firms) tend to more often focus on developing personal skills compared to larger and micro Training Funds (Figure 4.3).
Note: Large Training Funds include Fondimpresa, Fonarcom, Fondo Artigianato Formazione, For.te; Medium Training Funds include: Formazienda, Fonditalia, Fondoprofessioni; small Training Funds include: Fon.Coop, Fondirigenti, Fond.e.r, Fondolavoro; micro Training Funds include: Fondir, Fon.ter, For.Agri, Fondo Formazione Servizi Pubblici, Fondo Banche Assicurazioni.
Source: Author's elaborations based on the OECD Skills for Jobs database and the Nexus database.
Results disaggregated at the regional level show that there is room to improve the ability of Training Funds to respond to regional/local labour market needs. Indeed, in some cases, regions seem to invest most of training programmes to develop skills that are the least demanded in the regional labour market, or even in surplus (see Figure 4.4). In Sardinia, for example, knowledge of sales and marketing is in surplus in the labour market, yet most TF-supported training programmes seem to be targeted on developing these skills. Similarly, in Veneto, administration and management knowledge, as well as manufacturing and production knowledge are in surplus in the labour market, yet taken together they absorb 55% of all training programmes.
Source: Author's elaborations based on the OECD Skills for Jobs database and the Nexus database.
4.2. Strengthening the involvement of social partners
One way to ensure that training is aligned to local skills needs is to ensure that social partners’ views are reflected in the various phases of training provision. Indeed, social partners are more likely to understand firms and workers’ skills and training needs, and are, therefore, best placed to design appropriate training programmes that reflect the interests of workers and firms.
In theory, in Italy social partners are in a very good position to influence the various steps of the training offer financed by the Training Funds. Indeed, by law the management board of Training Funds must be composed by representatives of social partners – in equal number from trade unions and employers’ organisations (see Section 2.2). This should ensure that funding allocation reflects the priorities agreed through social partners’ representation.
Moreover, by law all training proposals must be agreed between social partner representatives, and no plan can be submitted for funding without approval from trade unions’ representatives. This is similar to what happens in other OECD countries – e.g. in Spain – where firms’ applications to the levy scheme need to be reviewed by the firm’s worker representatives before being approved (OECD, 2017[2]).
In a view to ensure that trade unions involvement is close to learners’ needs, trade unions’ approval must take place at the level closest to the beneficiary, i.e. at the firm or territorial level (depending on the type of training plan) or at national level as a last resort option. To further strengthen concertation practices, recently ANPAL guidelines have established that the agreement has to take place between social partners outside of Training Funds management boards.
On top of the above-mentioned legal framework, some Training Funds have also been taking steps to strengthen concertation practices and ensure that both employers’ organisations and trade unions have a say in defining the TF skills agenda. For instance, in Fondimpresa, employers’ organisations (i.e. Confindustria) and trade unions (i.e. CGIL, CISL, UIL) meet at least once a year in a strategic Committee (Comitato di Indirizzo Strategico) with the aim to jointly identify the key skills priorities and determine how to best use the resources of the collective account.
While in theory these rules should pave the way for effective collaboration among social partners, and despite the fact that some Training Funds have been taking steps to strengthen concertation procedures, in practice various observers notice how social dialogue around TF-supported training remains weak and could be improved. Oftentimes, – especially in the context of individual accounts – training plans are developed by firms, employers’ organisations, or training providers, while approval by trade unions is only formal (Casano et al., 2017[3]).
An online survey conducted among firms4 registered in Fondirigenti shows that the role of social partners in the various stages of the TF-supported training offer – from the definition of training needs, through the development of the training plan, to the financing and delivery of training programmes – is virtually inexistent, and much less important than the role played by other actors (e.g. training providers, consulting firms) (Fondirigenti, n.d.[4]). It has to be noted, however, that in Training Funds for employed managers (such as Fondirigenti, but also Fondir and Fondo Dirigenti PMI) social dialogue is weaker than in the other Training Funds, considered that managers often negotiates their training directly with firms. If a similar survey was carried out in other Training Funds, it would probably show less pessimistic results.
There are many reasons behind this lack of social dialogue between employers’ organisations and trade unions around TF-supported training. One relates to the fragmentation of the Italian social partners system.
Italy counts a plethora of employers’ organisations and trade unions compared to what can typically be observed in the OECD area. Indeed, Italy has the 2nd highest number of employers’ organisations (after Israel) and trade unions (after Turkey) in the OECD area (see Figure 4.5). This fragmentation is also reflected in the composition of Training Funds, as some of them count as many as 8 different employers’ organisations or trade unions. Within this fragmented context, coming to an agreement on training priorities can be challenging, especially when social partners within the same TF cover different sectors/industries.5
Source: J. Visser, ICTWSS Data base. version 5.1. Amsterdam: Amsterdam Institute for Advanced Labour Studies (AIAS), University of Amsterdam, September 2016 and OECD Policy Questionnaire.
It is also possible that, in a view to simplify administrative procedures for firms (especially SMEs – see Chapter 2), Training Funds have found ways to make the involvement of social partners much less binding and stringent – effectively weakening their role and engagement. To give one example, several Training Funds consider “tacit consent” as a sufficient proof of approval by trade unions. While some Training Funds penalise the use of tacit consent – Foncoop, for instance, gives a lower score to, and sometimes even forbids the financing of, training plans that have been approved through this simplified procedure – in most cases this practice is widely tolerated.
Moreover, according to many stakeholders, the use of individual accounts – especially by larger firms (see Section 2.2) – tends to weaken the role of social partners by reducing Training Funds to a mere “cash dispenser” (Casano et al., 2017[3]). Some Training Funds have decided to forbid the use of this financing channel specifically to give social partners (rather than individual firms) more voice in Training Funds training decisions (e.g. Fondo Banche e Assicurazioni)6.
But much of the challenge of weak social dialogue around continuous learning relates to the inability of trade unions to appropriately identify and represent workers’ training needs. Because Training Funds’ budgets are financed through employer-based contributions, trade unions’ representatives often struggle to make their voice heard by firms and sometimes feel that their views are not adequately taken into account in firms’ training decisions.
Another possible explanation, often quoted by stakeholders, behind the weak role played by trade unions in shaping social dialogue around TF-supported training is the pressure on union members from the other (non-learning related) issues in members’ working lives such as redundancies, pay freezes, employment contracts, which have grown importance especially in the context of the economic crisis.7
Lack of involvement by trade unions in TF-supported training decisions may also reflect the lack of trade unionists’ ability to understand workers’ skills needs. Some stakeholders, in fact, argue that trade unionists are often far from the productive structure of firms, they lack a deep understanding of firms’ development strategies, and as such they are ill-prepared to understand the training needs of the workers they represent.
Isolated good practice examples – to ensure that trade unions understand well the skills needs of workers – do exist, however. The national collective agreement of the chemistry industry appointed a “training delegate” (delegato alla formazione), a trade union representative whose main role is to develop a deep understanding of the workers’ skills needs within the sector, and help shape training plans accordingly. This is a very good practice example that could be extended to trade unionists in other industries/sectors.
Going forward, trade unions need to continue engaging much more in the development of the skills of the workforce. Perhaps Italy could learn from the experience of OECD countries that have taken steps to better involve social partners in adult learning, which span from efforts to train trade unionists; include skills issues into the collective bargaining agenda; develop networks on adult learning; and create dedicated positions for trade union specialists on training (see Box 4.2) (OECD, 2019[5]).
In Belgium, training of workers’ representatives at the company level is an important element of adult learning. Several branches have specific agreements between the social partners, whereby employers pay for the training of workers’ representatives and allow their participation to training during working hours.
In Germany, the discussion of training opportunities is part of works council rights and duties, as specified in the Works Council Constitution Act (TUAC, 2016[36]). Skills issues are consistently included in the bargaining agenda. For example in the 2014 bargaining round many national agreements included issues such as the continued employment of apprentices after the completion of their training, incentives for lifelong learning, and periods of paid educational leave.
In Switzerland since 2017, Movendo, the institute for the training of trade unions (Institut de formation des syndicats) has developed a network of ambassadors for continuous learning.
In the United Kingdom, over the past 10 years there has been a major change in union engagement with skills. The great majority of unions now include Union Learning Representatives (ULRs) in their management structures. Many unions have established learning committees at regional and/or national level. For example, 25% of all the motions and amendments to the 2014 TUC annual Congress were related in some way to education. There are around 450 jobs within Unions that relate to supporting skills, around 15-20% of all union employment (TUAC, 2016[6]).
4.3. Making use of existing skills assessment and anticipation (SAA) exercises to establish training priorities
Skills assessment and anticipation (SAA) exercises – i.e. tools used to generate information on current and future skills needs – are fundamental to understand what are the skills most demanded in the labour market (OECD, 2016[7]).
In Italy, there is a plethora of SAA exercises. They are developed by different institutions, produce various types of skill needs information, provide data at different levels of aggregation, and cover a number of time spans (current, short- and medium-term forecasts) (OECD, 2017[8]).
SAA information can represent a very useful tool for Training Funds. It can orient Training Funds’ training strategies, and help Training Funds prioritise and channel resources towards the programmes that develop the skills most demanded in the labour market.
For example, some Training Funds develop thematic public calls (avvisi) drawing from the results of SAA exercises. In some Training Funds (e.g. Fondir), there is a dedicated committee – whose components are nominated by social partners – that uses existing SAA information to develop public calls in line with skills demanded in the labour market. Other Training Funds (e.g. Fondimpresa) have developed a research centre that – among other activities – uses available SAA information to select training priorities and develop public calls accordingly.
Oftentimes, however, in the views of many Training Funds, available SAA information to Training Funds is not fit for purpose. Sometimes the information collected is not sufficiently up-to-date to measure the pulse of the labour market in real time. Sometimes, data sources are not sufficiently disaggregated at the regional level, and/or do not use nomenclatures (e.g. on skills and competences) comparable to what the Training Funds typically use. Another key challenge is that SAA information is often scattered across different sources, potentially making use and interpretation by Training Funds difficult (OECD, 2017[8]).
When SAA information is lacking in certain sectors, occupations, regions, or is not detailed or specific enough, some Training Funds have been taking steps to carry out their own SAA exercises. To give one example, the largest TF for (employed) managers (Fondirigenti) conducts foresight exercises through a series of focus groups engaging over 400 different stakeholders throughout the territory. The focus groups have the intent to open a dialogue with member partners – including enterprises, social partners, and training providers that work with Fondirigenti – to understand emerging training needs among managers.
4.4. Assisting firms and workers to better understand their skills and training needs
In order to make good training decisions, firms and workers need to be aware of their skill needs, the value of training and up-skilling, and the training opportunities available. Oftentimes, however, Italian firms – especially SMEs – and workers are not aware of their skill and training needs. As a result, TF-supported training is still too often supply-oriented, i.e. it reflects what training providers are able to offer, rather than what firms and workers actually need (Valsega, 2017[9]).8
Training Funds can play a great role in assisting firms and workers to identify their skill and training needs, and many are already taking steps in this direction. For example, some Training Funds are:
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Financing firms to conduct SAA exercises: for example, “Grant n.40” promoted by Foncoop is structured in two phases: in the first phase, firms are financed to carry out an SAA exercise among their employees; in the second phase, Foncoop finances the training course based on the skill needs emerged in the SAA exercise. Similarly, “Grant n.35” requires that at least 30% of funding is devoted to activities other than training, such as skills assessment within the firms. This approach is systematically adopted in some OECD countries. For example, in Poland, employers can use National Training Fund resources to finance the diagnosis of training needs (UNESCO, 2016[10]).
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Assigning a higher score to training plans that draw on high-quality SAA information. This practice is currently undertaken by some Training Funds (e.g. Fondimpresa, Fondoprofessioni). The specificity, relevance, methodology of the SAA exercises, as well as the alignment of the objectives of the proposed training plan to SAA results, are factors that are evaluated in the selection process and which contribute to the determination of the training plan’s final score and thus its likelihood of being financed.
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Providing career guidance to workers. Fondirigenti, for instance, has developed an on-line skills assessment tool for managers, which, after completion, returns a snapshot of the strengths and weaknesses of the respondent compared to benchmark workers in other Italian firms. This information can then be used to identify training programmes that are tailored to the respondent’s needs. Similarly, Forma.temp has developed an app where individuals can take a test to better understand the skills they need. These on-line tools or apps, if extended and used by all Training Funds, may be particularly useful for SMEs where it is particularly challenging to carry out skills analysis at the firm level.
Despite these many innovative and interesting examples – however – Training Funds efforts to help firms/workers to assess their skill and training needs tend to remain quite limited and could be expanded. Indeed, the vast majority (93.7%) of all training programmes financed by the Training Funds are not integrated by any career guidance or skills assessment activity (see Table 4.1) (ANPAL, 2018[11]). Assistance/support activities are not systematic and structured enough and remain only at the margins of Training Funds’ core activities, probably reflecting the fact that there is no obligation for Training Funds to assist firms in the analysis of their skills needs, nor are Training Funds required to link funding to firms’ skills assessment/anticipation analysis.
Perhaps Italy could benefit from the experience of OECD countries that have a training levy in place and have taken steps to help firms (especially SMEs) to articulate their skill needs. In Belgium, Sectoral Training Funds provide firms with advice and support around issues such as developing training plans or corporate training policies (Eurofound, 2016[14]). In the Netherlands, some of the sectoral funds have advisors visiting and supporting small firms to identify and formulate their training needs (OECD, 2017[2]). Other sectoral funds have developed online platforms to provide targeted support. For example, OTIB – the sectoral training fund related to building services engineering – supports SMEs by offering a platform with online HR-tools: the OTIB-skillsmanager. The platform provides SMEs with a framework for defining job profiles, scanning employees’ skills in relation to job requirements, and addressing skills development in line with the organisation’s need for innovation (OECD, 2017[7]).
4.5. Reacting quickly to firms’ changing skill needs
In the context of rapidly changing labour markets, one key prerequisite to ensure that training is aligned to firms’ skill needs is to make sure that Training Funds react quickly to the needs expressed by firms and workers. Lengthy administrative procedures to access funding, for example, may lead to a deferral of enterprise training and persistent skill gaps during the waiting period.
Training Funds have already taken various steps to ensure that they are able to finance training as rapidly as possible. Indeed, administrative procedures and paperwork to access funds are already kept to a minimum by virtually all Training Funds (see Chapter 2). Moreover – both of the financing channels made available by Training Funds (individual and collective accounts) can be accessed quite rapidly by firms.9
Despite these positive steps, however, there are challenges that could hamper the ability of Training Funds to respond quickly to firms and workers’ changing skill needs. Similarly to levy-grant schemes in other countries, Training Funds involve many case-by-case decisions and management competences, which can be demanding and time-consuming in administrative terms (UNESCO, 2018[12]). 10 Moreover, the Law on State Aids has burdened Training Funds with onerous administrative procedures which have likely made them less agile and responsive to changing firms’ skill needs (see Chapter 1).
4.6. Equipping workers with ICT skills needed for the digital transformation
The Italian workforce seems to be ill-equipped with ICT skills. A survey conducted by ISTAT shows that 71.7% of the Italian population reports having no (3.3%), low (33.3%) or only basic (35.1%) ICT skills (ISTAT, 2016[13]).
In the international context, Italy is lagging behind. According to the Survey of Adult Skills (PIAAC), almost 40% of Italian adults (aged 15-65) lack computer skills, the second highest share across the OECD only preceded by Poland (see Figure 4.6) (OECD, 2017[14]; OECD, 2013[15]).
These results are corroborated by the Europe’s Digital Progress Report (EDPR) – which tracks the progress made by Member States in terms of their digitisation and shows how in the Human Capital dimension Italy is performing well below the average and is making little progress (European Commission, 2017[16]).
While equipping adults with adequate ICT skills could potentially contribute to economic progress, firms’ innovativeness, and productivity, it could also translate into better career options for workers with these skills. A recent study conducted in the Lombardy region shows that, within the same occupations, workers with digital (and in particular, Industry 4.0) skills benefit from a wage premium of 2%; a premium that increases to 16% when age-related wage progression is accounted for (Fioni, 2018[17]).
Source: OECD Skills Outlook 2013 Database.
In this context, Training Funds have a great role to play to ensure that workers are equipped with the skills needed for the digital transformation. Some Training Funds have already started investing resources in this direction. To give just few illustrative examples among many:
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Fondimpresa, since 2011, has established a dedicated budget line to technological innovation, and regularly promotes thematic grants (the so-called “Avvisi Competitività”) that exclusively finance training programmes related to technological innovation, digitalisation, e-commerce, and so forth. Since 2007, Fondimpresa has spent EUR 346 million for competitiveness and innovation alone (Fondimpresa, 2017[18]).
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Even smaller Training Funds are taking steps in this direction. For example, Fondo Formazione PMI (FAPI) proposes training focussed on cybersecurity and cybercrime (ANPAL, 2018[11]).
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Some TF (e.g. Fondo Banche e Assicurazioni) give a higher score to training plans which include an Industry 4.0 component/dimension, thereby increasing the likelihood of these training plans to receive funding.
Despite these positive initiatives, going forward more systematic efforts by all Training Funds will be needed. While overall Training Funds’ investments in ICT skills – as measured by the number of projects, the number of training hours, and the financial resources (in EUR) destined to this thematic area – have increased over the past decade in absolute terms (reflecting overall expansion of the activities of Training Funds), they have decreased compared to other thematic areas.
Indeed, while in 2008 the number of TF-supported training programmes aimed at developing ICT skills represented 6.3% of all programmes, this share has decreased to 3.2% in 2016; the number of training hours devoted to ICT skills also decreased from 7.4% to 4.3% in the same period, similarly to the share of EUR devoted to ICT skills which fell from 7% to 3.6% (see Table 4.2).
Decreasing Training Funds investments in ICT skills – relative to other skills areas – may partly reflect a weak demand by firms. Indeed, several Training Funds observe how take up by firms on this particular thematic area remains low. Indeed, anecdotal evidence gathered through stakeholders’ interviews show that thematic grants devoted to ICT (or Industry 4.0) skills often remain underused with considerable unspent surpluses being accrued by the Training Funds. This is in stark contrast with what can generally be observed for training aimed at developing other types of skills – for which funding is often exhausted well-before the deadline, requiring subsequent re-funding (ANPAL, 2018[11]).
The low demand for “Industry 4.0” skills partly reflects the productive structure of the Italian economy, characterised by many small, often family-led, businesses, which are often concentrated in traditional sectors (see Chapter 2).11
In this context, it is unlikely that greater efforts on the supply-side by the Training Funds – alone – will be sufficient to raise “Industry 4.0” skills. Accompanying actions on the demand side, through effective industrial policy, will be essential.
The previous government took important steps in this direction. In 2016, the Ministry of Economic Development (hereafter MISE) developed an “Industry 4.0” plan which included a set of ambitious industrial policies aimed at shifting the Italian productive system towards the use of new and high value-added technologies (OECD, 2017[19]).12 13
In a view to complement the Industry 4.0 plan and equip workers with the competences needed for the digital transformation, the 2018 Budget Law introduces – on a pilot basis and for the period of one year – the Tax Credit 4.0 (Credito di Imposta Formazione 4.0). The Tax Credit is designed to cover 40% of labour costs, for the entire duration of the training, for a maximum of EUR 300 thousand per firm per year. In order to be able to benefit from the measure, firms need to provide training on “Industry 4.0 skills” – including ICT and production techniques (MISE & MEF, 2017[20]).
While the Tax Credit 4.0 came with some delay with respect to the initial Industry 4.0 plan, it has great potential to increase the demand for “Industry 4.0” skills by firms and potentially encourage firms to make better use of Training Funds. Indeed, the way the Tax Credit 4.0 is designed – the fact that it focusses on reimbursing the sunk costs associated with training (time), rather than the cost of the training itself – makes the instrument not only compatible, but also complementary, to the activities of the Training Funds.
4.7. Shifting the focus away from compulsory training, such as occupational health and safety
Some training courses are compulsory for all Italian workers, for example training on occupational health and safety (OHS)14. Other training courses are mandatory for certain categories of workers. For instance, professionals enrolled in a professional register (e.g. engineers, architects, lawyers) are obliged to participate in training aimed at an ongoing updating of their professional skills 15 (Socci and Principi, 2014[21]).
One of the most controversial aspects of the Training Funds is the significant use of resources to financing compulsory training, particularly OHS. Indeed, despite improvements in recent years,16 this remains by far the most common type of training programmes financed by the Training Funds, representing over 30% of all training programmes concluded. Wide differences exist across regions, with OHS representing less than 15% of all training programmes in some regions (i.e. Lazio) and reaching over 40% in others (e.g. Friuli Venezia Giulia; Sardinia) (see Figure 4.7).
Note:
1. The question provides multiple answer choices. Therefore the sum of the answers is higher than the total of programmes approved. For the calculation of % the sum of the individual answers is used.
2. Data refers to training plans concluded.
3. Data refers to the period January 2016-December 2016.
4. For the nomenclatures originally used in the Nexus database (in Italian), see Annex A.
Source: ANPAL’s elaborations of the Nexus database.
Overall, investments in compulsory training are higher in Italy compared to other countries. Indeed, in Italy compulsory training accounts for 32.8% of all training hours among firms (with at least 10 employees), the second highest share across European OECD countries after the Czech Republic (39.3%), well above the average of 20.6% and much greater than Denmark where it accounts for less than 10% of all training (Figure 4.8). 17
Source: CVTS 2015.
According to several stakeholders, there are at least four reasons as to why Training Funds often channel resources to this type of training. (i) Firms – especially SMEs – are often unaware of their training needs (see section 4.4) and are unprepared to conceive training proposals to apply for Training Funds funding, which may push them to finance the training that is most easily and readily available to them, including OHS. (ii) Given the high cost of labour in Italy, firms – especially SMEs – may use TF to recover at least some of these costs.18 (iii) In the context of the crisis, the private resources available to firms to finance obligatory training (including OHS) have reduced, pushing firms to use TF funding to comply to training obligations (Casano et al., 2017[3]). (iv) The limited amount of time firms have to use funding through their individual account (two years) before resources feed back into collective accounts may give little time to firms to prepare well-developed and innovative training plans, and may push firms to quickly use available resources to finance OHS training courses instead.19
On the one hand, allowing firms to use Training Funds for compulsory training can have positive spillover effects, as it can bring firms closer to training programmes more generally. Indeed, for many firms – especially SMEs – it is the need to meet training obligations that pushes them to enrol in a TF in the first place. Once enrolled in a TF, these firms end up using funding not only for compulsory training but also to help their workers develop skills that are useful (e.g. ICT).
On the other hand, however, using Training Funds to finance training that is compulsory is questionable for several reasons. First of all, it risks generating large deadweight losses, i.e. financing training that would have taken place even in the absence of the subsidy, and therefore may represent a waste of resources. While some element of deadweight is inevitable, efforts should be taken to minimise its scale, so that the funding coming from the training levy can substantially add to the volume and quality of training.
Moreover, in a context where Italian workers lack ICT skills (see section 4.6) and have low proficiency in literacy and numeracy (see Chapter 1), the allocation of a large share of Training Funds resources to training on OHS frustrates the original objectives of the Training Funds, which relate to providing workers with the skills needed to adapt to the future challenges in the labour market (OECD, 2017[8]; Valsega, 2017[9]).
Last but not least, extensive use of funding for OHS training can generate an unhealthy competitive environment by creating perverse incentives for TF to attract firms – especially SMEs – that are not interested in other types of training (Casano et al., 2017[3]). Indeed, some of the “newest” TF attempt to attract SMEs by giving them flexibility on how to use funding – e.g. establishing “aggregated” enterprise accounts – so that they can easily use resources to carry training on OHS (see Section 5.3).
Some steps in the right direction have already been undertaken. The Law on State Aids – which today applies to the resources directly managed by the Training Funds (i.e. the collective accounts) (see Section 2.3.2) – limits the use of funds for compulsory training, including OHS.20
Legislation aside, some of the Training Funds have also taken good steps to channel resources for financing training other than OHS. Fondoprofessioni, for instance, has made an agreement with the National Bilateral Body for Professional Firms (Ente Bilaterale Nazionale per gli Studi Professionali, E.BI.PRO.). According to the agreement, (i) E.BI.PRO reimburses 60% of the costs associated with training on OHS to its partner firms, under the condition that training is delivered by training providers accredited by Fondoprofessioni (E.Bi.Pro, 2017[22]); and (ii) a higher reimbursement rate (80% of the cost) is allowed if the firm is registered in Fondoprofessioni.
Going forward, it could be envisaged to forbid the use of Training Funds for training on OHS altogether. This would reduce deadweight losses, favour the development of a healthier competitive environment across all Training Funds, and potentially steer resources towards the development of more relevant skills.
This prohibition, however, would need to be accompanied with complementary policies aimed at strengthening the monitoring system to ensure that firms continue providing compulsory training even in the absence of TF funding.
There is also a need to change the mentality of firms to ensure that OHS is perceived as civic obligation for the firm and a right for the worker, rather than an obligation that firms need to comply to and that subtracts time and resources to firms’ activities (Casano et al., 2017[3]).
Finally, Italy could envisage to increase the time available to firms to use the resources available in their individual accounts, before resources feed back into collective accounts. This would allow firms to have sufficient time to conceive training programmes that are suited to the need of the company, with an aim to steer resources away from OHS and towards achieving firms’ innovation and productivity.
References
[11] ANPAL (2018), “XVIII Rapporto sulla Formazione Continua”, http://www.anpal.gov.it/Dati-e-pubblicazioni/Documents/XVIII-Rapporto-formazione-continua.pdf (accessed on 28 March 2018).
[3] Casano, L. et al. (2017), “Bilateralità e formazione”, https://moodle.adaptland.it/mod/book/view.php?id=21892 (accessed on 7 February 2018).
[22] E.Bi.Pro (2017), “Regolament rimborso delle spese sostenute per la formazione in materia di salute e sicurezza nel luogo di lavoro”, http://www.ebipro.it/wp-content/uploads/2017/06/Regolamento-CSS.pdf (accessed on 27 March 2018).
[16] European Commission (2017), Europe’s Digital Progress Report (EDPR) 2017, Country Profile Italy, http://www.agid.gov.it/notizie/2015/03/24/approvati-i-piani-nazionali-.
[17] Fioni, A. (2018), Quanto valgono le competenze digitali? Gli stipendi ai tempi di industria 4.0.
[18] Fondimpresa (2017), “Audizione parlamentare”, https://www.senato.it/application/xmanager/projects/leg17/attachments/documento_evento_procedura_commissione/files/000/005/416/Memorie_Fondimpresa.pdf (accessed on 29 March 2018).
[4] Fondirigenti (n.d.), “Web survey presso aziende attive”, http://www.fondirigenti.it/wp-content/uploads/2015/12/indagineffb7.pdf (accessed on 29 March 2018).
[13] ISTAT (2016), “Cittadini, imprese e ICT”, http://www.istat.it/it/files/2016/12/Cittadini-Imprese-e-nuove-tecnologie.pdf?title=Cittadini%2C+imprese+e+ICT+-+21%2Fdic%2F2016+-+Testo+integrale+e+nota+metodologica.pdf (accessed on 10 April 2018).
[20] MISE & MEF (2017), “Piano Nazionale Impresa 4.0”, http://www.sviluppoeconomico.gov.it/images/stories/documenti/impresa_40_risultati_2017_azioni_2018.pdf (accessed on 29 March 2018).
[23] Müller, N. and F. Behringer (2012), “Subsidies and Levies as Policy Instruments to Encourage Employer-Provided Training”, OECD Education Working Papers, No. 80, OECD Publishing, Paris, https://dx.doi.org/10.1787/5k97b083v1vb-en.
[5] OECD (2019), Getting Skills Right: Making adult learning work in social partnership, OECD Publishing, Paris.
[2] OECD (2017), Financial Incentives for Steering Education and Training, Getting Skills Right, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264272415-en.
[25] OECD (2017), Getting Skills Right: Good Practice in Adapting to Changing Skill Needs: A Perspective on France, Italy, Spain, South Africa and the United Kingdom, Getting Skills Right, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264277892-en.
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[7] OECD (2016), Getting Skills Right: Assessing and Anticipating Changing Skill Needs, OECD Publishing, Paris, https://doi.org/10.1787/9789264252073-en.
[15] OECD (2013), OECD Skills Outlook 2013: First Results from the Survey of Adult Skills, OECD Publishing, Paris, https://doi.org/10.1787/9789264204256-en (accessed on 29 March 2018).
[24] Osservatorio (2017), Industria 4.0: la grande occasione per l’Italia, https://www.osservatori.net/it_it/osservatori/comunicati-stampa/industria-4.0-la-grande-occasione-per-l-italia (accessed on 5 February 2019).
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Notes
← 1. Data are limited to those skills analysed in the chart (see Annex B). For the full skills in shortage /surpluses in Italy, see the OECD skills for jobs database.
← 2. Ibidem.
← 3. Ibidem.
← 4. The research was conducted among “active” firms, i.e. firms that have adhered to at least one training plan financed by Fondirigenti. In total, 655 firms responded to the survey, representing 14% of all potential respondents. Results need to be taken with caution due to the possibility of a selection bias effect.
← 5. It was anecdotally communicated to the OECD that communication among social partners is typically smoother among Training Funds composed by only 1 trade union and 1 employers’ organisation. These include: Fonarcom; Fondirigenti; Fondo Dirigenti PMI; Formazienda; Fonditalia; Fondo Lavoro; Fondo Conoscenza.
← 6. Despite covering mainly very large firms, Fondo Banche e Assicurazioni does not use this financing channel (typically used by larger firms). On average, this TF counts firms with over 300 employees, compared to an average of 10.6 employees among all Training Funds (ANPAL, 2018[11])
← 7. Indeed, over the past years, trade unionists have focused their attention to the unemployed, their income protection, and redundancy packages, while far less attention was put into workers’ training and re-skilling. Moreover, according to some stakeholders, the lack of attention paid by trade unions to training issues also reflects workers’ own priorities and attitudes towards training. Italian workers’ main concerns have lately been focussed on securing a stable job, receiving decent wages, and benefiting from well-protected employment contracts – priorities which have likely contributed to shaping trade unions’ priority agenda.
← 8. This is partly due to the fact that in most cases training providers are allowed to submit training programmes to Training Funds for funding (via collective accounts).
← 9. The individual accounts by definition provide firms with direct and quick access to funding, and some Training Funds apply “first-come-first-served” procedures (avvisi a sportello) to finance training plans through the collective account, which provides firms with a faster access to funding compared to other grant procedures (see Section 5.2.2).
← 10. This is true especially compared to other types of levy schemes available in other countries (e.g. France).
← 11. Indeed, in Italy, the vast majority of enterprises (95%) are micro-businesses, i.e. enterprises with fewer than ten persons employed - a high share compared to OECD countries like Canada, New Zealand, Switzerland, and the United States, and where only 80% of less of firms are micro-businesses (see OECD SDBS database).
← 12. These measures include, among others, incentives to acquire new technological equipment. For instance, a “hyper and super-depreciation” tax benefit scheme has been designed for firms investing in new tangible assets, devices and technologies enabling companies’ transformation to “Industry 4.0” standards (OECD, 2017[19]).
← 13. The reforms are already showing results. For example, over 60% of manufacturing firms that benefit from super-depreciation schemes find the measure useful to promote new investments (MISE & MEF, 2017[20]). The Industry 4.0 plan also managed to raise awareness about 4.0 technologies. While in 2016, 38% of firms did not know about “Industry 4.0”, the figure has drastically dropped to 8% in 2017 (Osservatorio, 2017[24]).
← 14. In 2012, the State/Regions Agreement has made training for workers in the field of health and safety at the workplace mandatory, in a view to fulfil training obligations of employees in this field (Legislative Decree 81/2008).
← 15. This mandatory training of professionals is regulated by the Professions Reform Act (Decree of the President of the Republic 137/2012). Law 81/2017 establishes that 100% of the costs of mandatory continuous training (including travel expenses) of professionals enrolled in a professional register, or the self-employed, are deductible for a maximum of EUR 10 000 per year.
← 16. Since 2014 the share of programmes financed (and workers involved) in OHS has halved (ANPAL, 2018[11]).
← 17. Using training levies to fund mandatory training is a challenge that Italy shares with other countries. In Spain, for example, the State Foundation for Professional Training (Fundación Estatal para la Formación en el Empleo) places no restrictions on the type of training that can be covered by levy funds. As a result, most firms use them to pay for mandatory workplace training, like OHS, rather than addressing skill needs (OECD, 2017[25]). Similarly, in the United Kingdom, the vast majority of participants of the Small Firm Development Accounts scheme used the programme to provide training that they had already planned on carrying out, and would have done even if the scheme had not been in place (UNESCO, 2018[12]; Müller and Behringer, 2012[23]).
← 18. Employers’ social security contributions (SSCs) represent 24.17% of total labour costs – the highest share in the OECD only after France (26.77%), and around 10 percentage points above the OECD average of 14.38%. Data refer to a single person without children, earning the average wage.
← 19. The fact that the government – in the past years – has withdrawn resources from the TF – e.g. to finance welfare measures (see Section 2.3.1) – may have exacerbated the sense of urgency among firms to use available resources rapidly.
← 20. Training Funds cannot finance OHS training through the collective account, above a certain amount referred to as “de minimis”.