6. Improving the responsiveness of adult learning to changing labour market needs
This chapter looks at the responsiveness of adult learning policies to changing labour market needs. Adult learning policies to foster a better alignment between adult learning and labour market needs are discussed. Building on good practice examples from other OECD countries, recommendations are provided to improve the responsiveness of the Japanese adult learning system.
For training to be able to assist workers in adapting to changing skill needs, it should be well aligned with the needs of the labour market. The provision of public vocational training in Japan is built on a strong system of skills assessment and anticipation to ensure that the training provided is relevant. This type of information on skill needs should be used more extensively and transparently in the design of adult learning policies. Employers also benefit from a sound analysis of their skill needs to plan their training activities, and existing tools should be promoted and integrated better.
An adult learning system that is well aligned with the needs of the labour market also ensures that adults at risk of skills obsolescence have access to targeted upskilling and reskilling opportunities. However, in Japan, workers who are in jobs with a high risk of automation participate much less in training than workers in jobs that have a low exposure to automation risk. Similarly, adults with low digital skills have lower access to training and could therefore be at risk of being left behind. More efforts should be made to support these workers by facilitating essential skills development and smoothing transitions to other tasks or jobs.
To ensure that training reaches the goal of preparing adults for the structural changes discussed in Chapter 1, the provision of training and its content needs to be aligned with the needs of employers and the labour market more broadly. Moreover, workers who are likely to be impacted most strongly by structural changes should receive targeted support. The existence of substantial skills imbalances in Japan, with employers having difficulties finding workers with the right skills and many workers reporting that they need more training to cope with the duties in their job, points towards the need of investing in the right skills.
Responsive adult learning systems are crucially built on high-quality information about current and expected skill needs. OECD (2016[1]) shows that countries use a range of tools to assess and anticipate their skill needs. However, the output from these skills assessment and anticipation (SAA) exercises is not always fully exploited by stakeholders in the relevant policy areas, including education and training, employment and migration. Governments and social partners face several barriers when it comes to using more effectively the available information. In general, the identified barriers are twofold: i) involving and co-ordinating with stakeholders; and ii) bringing the skills assessment and anticipation exercises closer to the needs and requirements of policy-makers.
In Japan, skills assessment and anticipation (SAA) exercises are carried out at the national and the prefectural level. The exercises generally involve a range of stakeholders, including relevant ministries, the social partners and education and training providers. At the national level, the Ministry of Health, Labour and Welfare leads the work of a Central Training Council which assesses on an annual basis the priority areas and the scale of the public vocational training offer in order to contribute to the effective development of vocational training, based on the skills needs of industries. The Council’s members include several ministries (MHLW; Ministry of Education, Culture, Sports, Science and Technology; Ministry of Agriculture, Forestry and Fisheries; Ministry of Economy, Trade and Industry; Ministry of Land, Infrastructure, Transport and Tourism; Japan Tourism Agency), JEED, local governments, the social partners, education and training providers, and academics. To assess public vocational training needs, the council uses information such the employment rate by field of vocational training and data from the Public Employment Service on job openings and job seekers by industry and occupation. Additionally, on an ad hoc basis, more specific SAA exercises are carried out to better understand the skill needs in certain industries or occupations. For example, a council for the promotion of human resource development for the fourth industrial revolution was established in 2016 to discuss skill needs for the fourth industrial revolution and related measures to foster skills development, with a particular focus on IT skills. The council brought together relevant ministries, the social partners, education and training providers, and the academic sector. Several data sources were analysed by the council, including a survey on the actual needs of industry conducted by the Ministry of Economy, Trade and Industry. The discussion contributed to the Growth Strategy 2017 in the form of an Intensified Emergency Plan on Enhancement of IT Capacity.
At the prefectural level, prefectural labour bureaus1 organise regional training councils, which bring together the social partners, education and training providers, academics, and local governments. The purpose of these regional training councils are very similar as that of the central training council, with a focus on the public vocational training needs in the respective Prefecture. In a similar vein as the central council, the regional councils analyse relevant data, such as trends in job vacancies and job seekers, the number of applications for training courses and the outcomes of training. Additionally, information from employers is collected through questionnaires, meetings organised by local industry groups, and discussions with employers engaging with Hello Work officials.
SAA exercises are important to understand skill needs at the aggregate level but it is also key that employers understand their own skill needs. European data show that 66% of firms in the European Union regularly assess their future skill needs.2 Large firms more frequently engage in this type of assessment than SMEs. However, the data also show that even when firms assess their skill needs, the training they provide is often not well aligned with the skill they identify as priorities for the development of the firm (OECD, 2019[2]). While similar data are not available for Japan, it could be expected that Japanese firms, and especially the smaller ones, experience similar issues in carrying out skill needs assessment and using the information in developing their training strategies. To assist employers in their skill needs assessment, two tools have been developed. The first is the Internal Occupational Skills Development Plan, which can be developed by an employer to encourage the development and improvement of its employees’ occupational abilities in a step-by-step and systematic manner. Employers detail in this plan their management policies, their policies regarding the allocation of employees, and the different jobs and tasks within the firm. While the establishment of such a plan is part of the Human Resources Development Promotion Law, it is not mandatory and no fixed format or content has been put in place. The use of Internal Occupational Skills Development Plans is not widespread among firms in Japan: only 24% of employers have created such a plan in at least one of its branches. In most cases, the plan was developed by the headquarters, and only 21% of firms say that all branches create their own plan.
The second tool is the Employment Skill Evaluation Standards, which describe the skills required by industry, occupation, and job type. These standards have been jointly developed by the government and industry associations. To help employers use these standards, the Ministry of Health, Labour and Welfare has developed Vocational Ability Evaluation sheets that serve as checklist against which employers can check the competency level of their workers. In addition to these standards, some employers and employer organisations have developed their own standards. In 2017, 57% of firms said that they use a type of standard to evaluate the skills of their workers.3
To support employers with their skill need assessment, JEED provides a Counselling on Skills Development for Employees programme to employers. Under this programme, employers receive support in identifying the skills needed for certain jobs or tasks, understanding the skills of their workers, setting training goals, and developing a training plan. Based on this training plan, JEED proposes relevant training activities from their own training catalogue.
Based on the information from SAA exercises, adult learning policies or initiatives can be implemented that specifically target the development of in-demand or shortage skills. Individuals and employers can be steered towards investment in more in-demand fields by: i) focusing on training programmes that are in line with skill needs; and ii) providing financial or non-financial incentives to invest in-certain in-demand skills. Career guidance can also be a tool to guide individuals’ training choices towards in-demand fields, and this will be discussed in detail in the next chapter.
Using the information from SAA exercises, training providers, both public and private, can adapt their training offer and/or the content of training to the needs of the labour market. In Japan, the provision of public vocational training is guided by training plans developed by the central training council and the regional training councils. All providers of public vocational training, i.e. national government, prefectures, and private educational and training institutions, use these plans as a guideline to determine their public vocational training offer. At the national level, the central training council is in charge of maintaining and improving training standards for public vocational training.
Even when the training offer does not entirely correspond with identified skill needs, adults can be guided in their choice of training options by targeting certain financial or nonfinancial incentives to training programmes that address skill needs in the labour market. The availability of financial incentives for individuals, such as vouchers or grants, can be limited to certain training programmes that correspond with labour market needs (see Box 6.1 for an example of subsidies that employers and workers can receive when investing in training in in-demand fields in Estonia). Alternatively, incentives that have a wider coverage can be made more generous for those specific training programmes. The latter option has been taken in the Japanese Training Benefit system, which provides subsidies for adults who take up training. Adults can benefit from Specified General Education Training benefits for training courses that are deemed to have a strong career improvement effect as they develop in-demand skills and have a proven track record of strong labour market outcomes of training participants. These benefits are more generous than the general education training benefits (40% versus 20% of tuition fees, see Annex 5.B for details). Moreover, under the Professional Practice component of the Training Benefit system, in order to incentivise job-seekers to find a job, adults get an additional part of their training expenses covered if they find employment within one year after completing the training (20% on top of the already covered 50%). This benefit system therefore aims at providing an incentive for adults to enrol in training that corresponds with labour market needs as well as an incentive to look for jobs immediately upon end of the training – although the benefit is not conditional on finding a job linked to the content of the training. Also under the subsidy scheme for employers (i.e. the Human Resource Development Grant), higher subsidy rates apply to off-the-job training programmes that are deemed by the Ministry of Health, Labour and Welfare to be highly effective. However, this concept is interpreted relatively broadly, and does not only refer to training programmes that develop skills that are in demand by employers, but also to training for specific groups of workers (e.g. young workers).
Training providers can also be steered toward the delivery of training that corresponds with in-demand skills. Several OECD countries are including a performance-based component in the funding formula for training providers (OECD, 2017[3]; OECD, 2019[4]). This is also the case in Japan for private providers that deliver public vocational training, as the financial incentives these providers receive from the government depend on the employment rate of those who have completed the training.4 The financial incentives for providers are therefore more generous for training that corresponds with labour market needs and is of high quality.
One particular area in which countries are actively developing adult learning programmes and encouraging participation is digital skills, both at the basic and the more specialised level. These skills are expected to become increasingly important over the next years, and several countries are already experiencing digital skill shortages (OECD, 2017[5]). In line with the Intensified Emergency Plan on Enhancement of IT Capacity, the Japanese Ministry of Health, Labour and Welfare and other Ministries have been expanding opportunities for workers to develop IT skills. Moreover, training programmes related to certain specialised IT tools, such as artificial intelligence (AI), Internet of Things (IoT), cloud computing and data science, are now covered by the training benefit system, meaning that adults who take part in such training programmes receive subsidies to cover part of their tuition fees.
In addition, industry-university collaboration is also effective to align training with labour market needs. Traditionally, as Japanese fresh graduates were periodically hired in batches immediately after school (see Chapter 2 for more details on this practice), universities lack the incentive to align their programmes to the actual skill requirements of the labour market. Nowadays, however, due to a gradual decline of mass hiring practices, it is paramount for firms and universities to share a common vision and develop human capital through comprehensive cooperation not only in research but also in education. For instance, Shiga University’s Faculty of Data Science has contracted comprehensive cooperation agreements with around 70 companies (Industry-University Council on Recruitment and the Future of University Education, 2020[6]). From the perspective of making effective use of the university’s intellectual resources to solve problems faced by companies, students in Shiga University can participate in joint research and internships with companies and solve problems by utilising data provided by the companies, thereby improving the quality of education for students. Initiatives of this type are still scarce but should be expanded, as they facilitate the alignment of adult training to the needs of the labour market. It is also desirable for companies to work more closely with universities to establish a cycle in which collaborative research and internships are embedded in their daily practices and the results of these collaborations are further fed back into the university’s educational curriculum.
In Estonia, registered jobseekers can access training opportunities through a system of training vouchers (Koolituskaart). These training vouchers have recently also been made available for certain groups of employees under specific conditions. In the case of low-wage older workers and low-skilled workers, the condition to use the training vouchers is that the training has to be related to ICT skills or prepare for occupations that are identified by the Estonian Qualifications Authority as growing or that have excess demand. Workers who are eligible for the training voucher need to develop a training plan with the public employment service. The training can last for at most one year. The vouchers compensate the training costs to the extent of EUR 2 500 over three years.
Estonian employers hiring jobseekers for certain occupations that are in shortage and of growing importance in the labour market can receive training grants (Recruitment Training Grant -Koolitustoetus töötajate värbamiseks) to partially compensate for the cost of training the new hires. A larger share of the costs (80% instead of 50%) are refunded in the case of low-educated workers, workers with limited Estonian language skills, older workers and workers with health problems. Training needs to last at least 80 hours and at most one year. Employer who recruit a job-seeker through the public employment service and those who hire someone in long-term unemployment (i.e. at least 12 months unemployed) can get fully compensated for the training costs (up to EUR 2 500).
Source: Eesti Töötukassa (2017[7]); “Labour market training with a training card”, https://www.tootukassa.ee/eng/content/prevention-unemployment/labour-market-training-training-card: Eesti Töötukassa (2017[8]), “Recruitment training grant”, https://www.tootukassa.ee/eng/content/prevention-unemployment/recruitment-training-grant.
Responsive adult learning systems not only ensure that training provision and content corresponds with the needs of the labour market, but also that those adults who are at risk of having obsolete skills or skills gaps due to structural changes have access to training opportunities. To ensure that these workers can adapt to changes in their occupation or move into different occupations, targeted measures are needed.
One group of worker that is at particular risk of skills obsolescence are workers in jobs at significant risk of automation. As discussed in Chapter 1, 15% of jobs in Japan have a high risk of automation, in line with the OECD average, but another 39% of jobs could face significant changes due to automation (i.e. they are at medium risk of automation). Figure 6.1 shows that in all OECD countries workers in jobs at high or medium risk of automation participate less in formal and non-formal training than workers in low-risk jobs. The gap between workers in high-risk and low-risk jobs is particularly large in Japan: 54% of workers in jobs with a low risk of automation participate in training, while only 24% of workers in high-risk jobs do so. This gap observed in Japan is the largest among OECD countries, although it is only slightly larger than in Germany, Lithuania, Singapore, Australia and Finland. Notwithstanding, in those countries, except Lithuania, training participation among workers in the high-risk category remains substantially higher than in Japan. Even when controlling for personal and work characteristics, workers in high-risk jobs are found to have significantly lower training participation in Japan (see Chapter 5, Annex Table 5.A.2).
Note: High risk is defined as having an automation probability of at least 70%, medium-risk as a risk between 50 and 70%, and low-risk as below 50%.
Source: Survey of Adult Skills (PIAAC).
Similarly, OECD (2019[2]) showed that workers in surplus occupations, i.e. occupations for which supply exceeds demand, participate less in training than workers in shortage occupations. Since the demand for these workers is low (relative to supply), this might mean that they possess outdated skills and are therefore in need of upskilling or reskilling opportunities. The results of the Skills for Jobs analysis for Japan (see Chapter 1), show that workers in Japan employed in industries that are facing surpluses also have on average slightly lower participation in formal or non-formal training than workers in industries that face shortages (Figure 6.2).5
Note: Every dot represents an industry (ISIC). See Chapter 1 for more details on the Skills for Jobs indicators.
Source: Survey of Adult Skills (PIAAC) (2011/12), Human Resource Development Survey (2018).
Another group of workers who are at risk of being left behind because of structural changes are those with no or weak digital skills. As discussed in Chapter 1, many jobs today require the use of digital tools, and this is expected to increase with technological progress and falling prices of digital technology. However, a substantial share of adults in Japan lack the necessary digital skills and might therefore find it increasingly difficult to remain employed or find a job. Only 21% of adults without basic computer skills participate in formal or non-formal training in Japan, compared to 49% of adults with relatively strong digital problem-solving skills. Also when controlling for other personal characteristics, including education level, adults without basic ICT skills are found to have a lower probability to train (see Chapter 5, Annex Table 5.A.1). Moreover, if training is increasingly delivered online, these adults risk having even more difficulty accessing training opportunities.
These findings suggest that workers who are most at risk of being impacted by structural changes in the labour market are not the ones benefiting the most from upskilling or reskilling opportunities. The Basic Survey of Human Resource Development shows that employers in Japan mostly focus their off-the-job training activities on training of their new employees and management training, suggesting that they are not actively identifying those workers who need upskilling or reskilling to prepare them for changing or new roles in light of structural changes.
Several OECD countries have put in place specific adult learning policies to support workers in sectors or regions that are undergoing structural changes. This often happens in cooperation with social partners. Box 6.2 describes how Australia, France and Austria are providing support to workers at risk of structural changes. Many OECD countries have also taken steps to address digital skills gaps. In Luxembourg, for example, a basic digital skills programme (Internetführerschein) has been set up for adults with very low literacy skills to develop their knowledge and skills on how to use ICT in a conscious and responsible way. In the United Kingdom, the Digital Skills Partnership brings together government and national and local employers and charities in an effort to address digital skill gaps in a more collaborative way. Since 2020 low-skilled adults in the United Kingdom have access to fully funded ICT skills programmes, in line with the already existing maths and English programmes.
Australian Structural Adjustment Packages
In Australia, Structural Adjustment Packages (SAPs) are provided to assist employees in areas where expectations of future employment opportunities for workers in the industry are low or where large scale closures may impact on the local labour market. Targeted employment assistance under SAPs can involve skills and training components for adult learners. A Stronger Transitions Package was introduced to support individuals in five regions impacted by structural change to transition to new jobs and prepare for the jobs of the future in 2018. The package includes a Pre-retrenchment Skills and Training Support measure, which can provide targeted services such as comprehensive skills assessments; job search preparation; resilience training; language, literacy and numeracy support; digital literacy training; financial management information; exploring self-employment options; health and well-being support, and industry awareness experiences.
Development and Skills Commitment in France
The French Government can sign an agreement with employer organisations from one or more economic sectors to implement projects to help workers tackle issues related to projected structural changes and avoid disruptions in their career path. Trade unions can co-sign the agreements. The agreement builds on a thorough assessment of changing skill needs in the sector(s). The government can subsidise part of the costs related to the use of an external expert to carry out the assessment. The projects that are carried out as part of the agreement are meant to help workers avoid career disruptions, and usually include training, recognition of prior learning and career guidance. Workers who are directly at risk of difficulties in adapting to structural changes should be the main beneficiaries of the projects. The government provides subsidies to cover part of the costs related to the implementation and the management of the projects.
Austrian Outplacement Labour Foundation programmes
In Austria, Outplacement Labour Foundation (Arbeitsstiftung) programmes were introduced by social partners to support workers in the case of structural changes through appropriate labour market policies. These Foundations can be formed by one or multiple employers, but also at the sector and regional level when specific regions or sectors are affected by major staff cuts. The programmes are co-financed by local labour market actors, including the Public Employment Services (PES) and the affected employers. Funding is available to cover training costs, allowances for course-related additional costs, and active job-search assistance and career guidance costs.
Source: Ministère du Travail (2019[9]), Engagement développement et compétences – EDEC, https://travail-emploi.gouv.fr/emploi/accompagnement-des-mutations-economiques/appui-aux-mutations-economiques/edec; OECD (2019[2]) Getting Skills Right: Future-Ready Adult Learning Systems, https://dx.doi.org/10.1787/9789264311756-en.
Assessing skills and training needs
Challenge: Some adult learning stakeholders and employers have a limited understanding of skill needs.
Disseminate the results from skills assessment and anticipation (SAA) exercises to all relevant stakeholders in the adult learning field, including different Ministries and government agencies, the social partners and public and private training providers. This will facilitate the alignment of adult learning policies, as well as training offers and training content, to skill needs.
Facilitate the take-up of the Internal Occupational Skills Development Plan by developing a standardised format that employers can use the design their plan (on a voluntary basis). Link the plan to the Employment Skill Evaluation Standards to assist employers in their understanding of skill requirements.
Aligning training with labour market needs
Challenge: The use of SAA information in the design of adult learning policies is limited.
Regularly review the training programmes eligible for subsidies under the Training Benefits system to ensure that they remain consistent with the skill needs identified in SAA exercises. Consider allowing for the list of eligible training programmes to vary by prefecture if there are large differences in skill needs.
Provide more generous subsidies for paid education and training leave for training that develops in-demand skills. This is especially important for long-term leave that can help workers re-skill to prepare for structural changes.
Make better use of SAA information in the selection of training programmes eligible for subsidies under the specific training course subcomponent of the Human Resource Development Grant.
Promote comprehensive cooperation agreements between companies and higher education institutions to align training to the actual needs of the labour market.
Targeting works at risk of being impacted by structural change
Challenge: Training participation remains weak for workers who are most at risk of being affected by structural changes, such as workers in jobs with a high risk of automation and adults with low digital skills.
Assist employers with the identification of workers at risk of structural change and encourage them to provide guidance and training. This can be done in cooperation with labour unions.
Develop support packages that can be deployed in industries or regions that are expected to be strongly impacted by structural changes. These packages can be managed by Hello Work in cooperation with social partners.
Provide basic digital skills development programmes to adults who lack the digital skills needed in the labour market.
References
[7] Eesti Töötukassa (2017), Labour market training with a training card, https://www.tootukassa.ee/eng/content/prevention-unemployment/labour-market-training-training-card (accessed on 26 March 2020).
[8] Eesti Töötukassa (2017), Recruitment training grant, https://www.tootukassa.ee/eng/content/prevention-unemployment/recruitment-training-grant (accessed on 26 March 2020).
[6] Industry-University Council on Recruitment and the Future of University Education (2020), Report on Higher Education and Recruitment Approach to Society 5.0.
[9] Ministère du Travail (2019), Engagement développement et compétences - EDEC, https://travail-emploi.gouv.fr/emploi/accompagnement-des-mutations-economiques/appui-aux-mutations-economiques/edec (accessed on 25 March 2020).
[4] OECD (2019), Community Education and Training in South Africa, Getting Skills Right, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264312302-en.
[2] OECD (2019), Getting Skills Right: Future-Ready Adult Learning Systems, Getting Skills Right, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264311756-en.
[3] OECD (2017), Financial Incentives for Steering Education and Training, Getting Skills Right, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264272415-en.
[5] OECD (2017), Getting Skills Right: Skills for Jobs Indicators, Getting Skills Right, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264277878-en.
[1] OECD (2016), Getting Skills Right: Assessing and Anticipating Changing Skill Needs, Getting Skills Right, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264252073-en.
Notes
← 1. Prefectural labour bureaus are labour-related branches of Ministry of Health, Labour and Welfare by prefecture.
← 2. Data from the 2015 Continuing Vocational Training Survey. The data refer to enterprises with at least 10 employees.
← 3. This information comes from the 2018 Basic Survey on Human Resource Development, and refers to any type of standards, including Employment Skill Evaluation Standards, standards developed by employers or employer organisations, and standards based on existing qualifications or certifications.
← 4. The incentive amount depends on the employment rate only in the case of practical courses, where the amount can range between JPY 50 000 and 70 000 per student (per month). For general courses a flat-rate incentive is allocated based on the number of students (JYN 60 000 per student per month).
← 5. A similar pattern is observed when looking at the link between imbalances and the share of workers engaged in self-development activities (from the Human Resource Development Survey).