Explaining that policy strands need to be well coordinated and adapted to meet local challenges, Aart de Geus, OECD Deputy Secretary General, said “It can take 2 or 3 years for the employment and training system to adapt to new skills needs. By that time business is gone elsewhere. So employment agencies need to look to the future - the most competitive labour force will be one that keeps pace with emerging local and regional economic opportunities. Essentially, this requires a new framework for the management of workforce development.”
Some of these issues have caused analysts and politicians to press for a greater decentralisation of labour market policy and, in particular, for devolution. However, Ministers at a high level conference in Venice last year agreed that the formal distribution of power is less important than the actual flexibility available to local officials as they confront unemployed people and local businesses day to day.
Amongst OECD countries, flexibility to co-ordinate and adapt policies locally is currently greatest in Denmark, Switzerland, the United States, Finland and the Czech Republic. While some of these countries have traditionally offered significant autonomies to the local level (for example, Switzerland), changes to the management structure for employment services over recent years in other countries (particularly Denmark and Finland) have yielded positive results in terms of greater flexibility on the ground. Conversely, in countries where labour market policy has been devolved, flexibility has yet to filter down to the local level.
The findings are supported by new evidence that local flexibility is conducive to better employment outcomes. Flexible Policy for More and Better Jobs shows a correlation between flexibility in the management of labour market policy at local level and employment rates in OECD countries.
Flexibility is not the only factor important to bringing about change at the local level: capacities, intelligence, and local governance mechanisms are complementary factors that can play a powerful role in helping localities, and countries, to successfully address the opportunities and challenges which arise from today’s economic context. Flexible Policy for More and Better Jobs demonstrates the benefits of integrating skills and employment decisions locally and the need to implement various policy strands on the basis of a common strategy which is forward-looking.
It is clear that employment and training organisations today have a great deal of promise for shaping economic development, particularly at the local level, where new economic opportunities and threats are most clearly felt. It is government responsibility to unleash their potential.
