Job Creation and Local Economic Development 2016

OECD

• Publisher: OECD
• Year: 2016
• eBook ISBN: 9789264261969
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

Chapter 1. Creating the right conditions for job creation and local development

This chapter summarises the key messages from this publication by taking stock of how local areas are performing in the marketplace for skills and jobs; discussing how to improve the local delivery of vocational education and training, including apprenticeships; and examining how to tailor entrepreneurship and SME policies to specific places and populations. In particular, this chapter shows that with the right conditions in place, working locally can be a key component of promoting inclusive growth nationally. Additionally, it provides a snapshot of recent reforms across OECD countries related to empowering regional and local actors; building local resilience; taking innovative approaches to designing, delivering and financing local services; and engaging employers in employment and skills policies.

The marketplace for skills and jobs has become increasingly competitive, and some local areas risk being left behind as highly productive workers and the employers who seek them become concentrated in fewer places. Even in places that are benefiting from these shifts, people without the right skills or who face other challenges may be disconnected from quality jobs. Local development is a key tool for addressing these challenges. It is a means of supporting quality job creation from within and ensuring that all residents can benefit from and contribute to growth. With the right conditions in place, working locally can be a key component of promoting inclusive growth nationally.

This edition of Job Creation and Local Economic Development looks more closely at these conditions, and the specific actions local and national actors can take. It includes national and international comparisons of how local areas are performing in the marketplace for skills and jobs, and considers how vocational education and training (VET) and small and medium-sized enterprise (SME) and entrepreneurship policies can better meet the needs of specific places and populations. This introductory chapter reviews the key findings on these issues, and provides examples of recent reforms1 that policy makers have put in place to boost local economic development and job creation. These examples range from locally driven initiatives, developed, designed and implemented by individual regions and localities, to broader changes in national or regional policy frameworks that enhance the ability of local actors to tailor programmes and policies to specific local conditions.

Following this chapter, Chapter 2 shows how both the supply of skills as well as employer demand for skills can be taken into account to assess the strengths and weaknesses of local labour markets. Chapter 3 then looks at VET, identifying the tools countries are using to adapt training to local conditions. Within the framework of VET, Chapter 4 considers apprenticeships and other types of work-based learning more specifically. As more countries are seeking to strengthen apprenticeship systems, this chapter examines how local actions can be decisive in implementation success or failure. Chapter 5 turns to entrepreneurship and SME policy, specifically considering policy co‐ordination and tailoring. Finally, Chapter 6 takes on the issue of consistently high rates of youth unemployment – a key challenge for many communities – examining the role that entrepreneurship programmes can play in bringing young people closer to the labour market. These narrative chapters are followed by 36 country profiles, which include local data on employment growth, skills supply and demand, and employment rates.

Setting the context: Places are being left behind in the global marketplace for skills and jobs

Skills are a key driver of economic growth, but local economies differ considerably in their ability to develop, attract and retain a skilled workforce. Likewise, not all employers take full advantage of the skills the local workforce has to offer, with considerable local variation in the demand for skills. As the marketplace for skills and jobs becomes increasingly globalised, some local areas risk being left behind as highly productive workers and employers who seek them become concentrated in fewer places. Measuring the supply of and demand for skills, as well as benchmarking local performance against national and international peers, can help local areas better understand the challenges and opportunities they face.

Gaps between local areas in terms of skills and jobs persist, and in some cases are worsening

Chapter 2 of this publication examines the concentration of skilled workers and jobs at the local level,2 and changes over the period of 2000-14.3 Across OECD countries, there has been an overall increase in the education level of workers, but the share of the population with post-secondary education increased faster in some local areas than in others. Namely, education levels in the highest performing local areas grew more than education levels in the lowest performing local areas. For this reason, in most OECD countries, the gaps between the skills of the workforce in the leading and trailing local areas have increased, potentially contributing to growing inequality.

Looking at the concentration of medium- and high-skilled jobs at the local level, the picture is more mixed. For one, there is no overarching trend in terms of loss or gains in the share of medium- and high-skilled jobs. Some countries enjoyed an overall gain in the share of medium- and high-skilled jobs (e.g. Canada, Finland, France, Italy, Japan, Norway, Slovenia, and the United Kingdom) and an increase in the gap between leading and trailing local areas. In six countries, the gap between the leading and trailing local areas has decreased, with Greece and Korea showing the most marked changes. In four other countries (e.g. Czech Republic, the Netherlands, Sweden and the United States) the gap between local areas at the top and at the bottom of the distribution was relatively stable over time.

Local areas characterised by a low supply of and demand for skills risk falling into a low skills trap. In such places, a preponderance of employers rely on low-skilled, low-wage labour, focusing their competitive advantage on cost rather than quality of goods and services. Breaking out of this “trap” can be difficult for local communities. Workers have few incentives to invest in developing a higher level of skills knowing that few commensurate job opportunities are available in the local labour market. At the same time, employers are unlikely to upgrade to production processes or service models that use a higher level of skills, knowing they will be unable to find the workers they need in the local labour market. Thus, in developing local skills strategies, local actors should consider how to take a comprehensive approach that is based on the “high road” to economic development built around skilled workers, high performance workplaces, innovation, and quality jobs, rather than just seeking to fill short-term employer demands.

Box 1.1. How governments are empowering regional and local actors to deliver for their communities

In recognition that local actors are often best positioned to develop holistic strategies for boosting economic development and building social inclusion, a number of countries are empowering regional and local actors to set out and deliver on their visions for their communities’ future. In the United Kingdom, the national government is in the process of devolving a number of administrative and institutional powers to eight core areas, including Greater Manchester, the West Midlands, the North East, Sheffield, Cornwall, Tees Valley, Liverpool and Aberdeen. This will give local government the ability to exert greater control over transport, health, skills, planning and job support functions. For example, the “Greater Manchester City Deal” was established in 2013 and allows the city region to establish an investment framework, a city apprenticeship and skills hub, a business growth hub, a low carbon hub and a new housing and investment fund.

The Government of Canada understands the importance of helping Canadians get the training they need to find and keep good jobs. Under the current Canada Job Fund (CJF) Agreements, the Government of Canada provides CAD 500 million each year (2014-15 to 2019-20) to provinces and territories to support programmes and services for all Canadians, regardless of employment status, to access the training and supports they need to fully participate in the labour market. Budget 2016 has committed to invest an additional CAD 50 million in 2016–17 for the CJF Agreements. The Government of Canada has also committed to conducting broad-based consultations with provinces, territories and stakeholders in 2016-17 to identify ways to improve these agreements and guide future investments to strengthen labour market programming.

Since 2012, Ireland has been undertaking a process of rationalising the system of public sector bodies. The goal of the reforms is to reduce the number of local authorities from 244 in 2007 to 102 bodies by the end of the reform process. This involves merging and centralising a number of local functions. The Irish government’s steering group on administrative reform noted that “the existing arrangements for local development are administratively burdensome and do not lend themselves to joined-up, integrated service delivery” (Department of Environment, Community and Local Government, 2011). In order to deliver more “joined-up” local planning bodies for local economic development, including County Development Boards, Social Inclusion Measures groups, County Enterprise Boards, Enterprise Ireland and the Rural Development Programme, are being merged or co-ordinated to ensure greater alignment along local authority boundaries. Local governments have also assumed responsibility for the co-ordination of funding for the community and voluntary sector. The Irish government has also instated mandatory local community development committees (LCDC). Under the “Local Government Reform Act 2014”, each local authority must establish an LCDC consisting of representative of local authorities, public bodies that provide services in the area and local community interests that must prepare and implement a six year local economic and community plan (OECD, 2016a).

In Belgium, Flemish sub-regional policy will shift towards a more bottom-up and results-oriented approach in 2016. As Flanders aims to create a new impetus for its regional policy, it is opening up a call for local (or sub-regional) partnerships. This call is directed to broad partnerships between municipalities, sub-regional and local stakeholders in order to strengthen a shared vision and initiate common policies and actions. The partnership allows stakeholders to define the geographic remit of their work. Moreover, the call provides a three year trial period during which the partnership can consolidate their policies. Finally, stakeholders are encouraged to define their priorities in regional and local employment policies, in co-operation with the regional (Flemish) level. The co-financing principle aims to stimulate greater local involvement and engagement. At least 50% of the running costs of...

Table of contents

• Title page
• Legal and rights
• Preface
• Foreword
• Reader’s guide
• Executive summary
• Chapter 1. Creating the right conditions for job creation and local development
• Part I. Thematic chapters
• Part II. Country profiles
• About the OECD