Differing skill requirements across countries and over time

This report comes from a three-year program of research, Securing their future: older workers and the role of VET. Previous work from the program looked at how well workers were matched to their jobs, based on their literacy and numeracy skills and the use of these skills in the workplace. In a continuation of that work, the research reported here investigates the relationship between skills and skills use at work in four Organisation for Economic Co-operation and Development (OECD) countries: Australia, New Zealand, the United States and Canada.

This research takes advantage of two international surveys coordinated by Statistics Canada and the OECD: the International Adult Literacy Survey (IALS) and the Adult Literacy and Life Skills (ALLS) survey. These two surveys, conducted ten years apart, contain unique information about the literacy skills of workers and the frequency with which they undertake a range of literacy- and numeracy-related tasks. These data allow the authors to investigate skill matches to job requirements for workers in the four countries noted above.

Key findings

• While it might be expected that factors such as economic growth, technological innovation and structural change in the labour markets of these different countries have led to differences in the use of skills over time, the broad match of workers to jobs that use their skills was quite similar across the four countries.

• The relationship between individual skills and skill requirements at work was positive for all four countries. High-skilled workers indicated that they use their skills more often at work than less-skilled workers.

• Despite the fact that these countries have probably experienced similar developments and adoption of new technology, they do not exhibit the same patterns of change in skill use over time.

  • The use of literacy skills at work increased more in Australia than in the other countries, although the starting levels were substantially lower in Australia to begin with. While the authors do not speculate on the reason for this, it is possibly due to structural changes in the economy and the labour market specific to Australia over that time period.
  • The use of numeracy skills also increased substantially in Australia, while it decreased in the other countries over the same time period. The authors speculate that this might be due to the introduction of the goods and services tax in Australia and the associated additional record-keeping requirements for businesses.

Earlier reports coming from this three-year program of research are available from the NCVER website.

Tom Karmel
Managing Director, NCVER

Do workers in different countries use their skills differently? How has the way skills are used in jobs changed over time in different countries? A variety of social and economic histories of countries has produced institutions that govern key aspects of the operation of their labour markets. These include minimum wage arrangements; the degree of centralisation in wage determination arrangements; the role of trade unions and the structures that guide how productivity improvements are negotiated in workplaces; the existence of formal vocational training structures, such as the operation of apprenticeship systems; and the way that observed or practised skills can be rewarded through increased wages. Differences in the effectiveness of the institutions that help workers to develop their skills and the extent to which these skills are utilised across countries may contribute to differences in worker productivity and, hence, national incomes.

This study aims to inform consideration of these issues by looking at evidence on the relationship between the skills of workers and the tasks they undertake in their jobs across countries and over time. We are interested in the relationship between skills and skill use at work, because we expect differences in the way workers from Australia, New Zealand, the United States and Canada are matched to their jobs.

We utilise two cross-sections surveyed about ten years apart as part of international studies coordinated by Statistics Canada and the Organisation for Economic Co-operation and Development (OECD). The data contain comparable measures of worker skills — notably their literacy skills — as well as information on the frequency with which they undertake a range of literacy- and numeracy-related tasks. These measures are typically not available for analysis in most studies, where educational attainment is used as a proxy for skills. Moreover, the data allow us to employ information on the use of skills at work to construct measures of job requirements; that is, job requirements are measured by self-reports of individuals about their literacy use and numeracy use at work.

By comparing individual skills and skill use measures, we provide a comprehensive descriptive analysis of skill matches to job requirements for workers in these OECD countries. As a starting point, we examine the relationship between individual skills and skill requirements at work by estimating a ‘matching’ function that relates the skill characteristics of workers to jobs involving specific tasks.

Despite the potential for the skill levels of workers and the way they use their skills in their jobs to differ substantially across countries, we find the broad match of workers with skills to jobs that use them to be quite similar across the four predominantly English-speaking countries studied here.

While these countries have probably been subject to the same broad developments in the adoption of new technologies, they do not exhibit the same patterns of change over time. The use of literacy skills at work increased more in Australia than other countries between the two surveys studies here, although the starting levels were substantially lower in Australia and the change amounted to Australia catching up to the other countries. The experience with numeracy skills was a little different. The use of numeracy skills increased substantially between the surveys in Australia, but fell even more substantially in the other countries. An analysis of the types of tasks captured in the numeracy skills suggested that these were tasks associated with the processes of running the business, involving account-keeping and invoicing procedures, for example. It is possible that the introduction of a consumption tax in Australia from 2000, with additional record-keeping requirements for businesses, induced this departure from the experience of the other countries.

Other empirical findings include:

Literacy use:

• Literacy skill levels changed in the same direction as literacy requirements in all countries.
• Higher levels of education are associated with higher skill requirements at work, even though the way in which educational attainment translates into literacy use is slightly different across countries.
• Workers in occupations that typically require high skills and a high level of education are those with high levels of average literacy use at work, indicating that our measure of literacy use picks up variations in skill requirements across occupations quite well.
• Full-time jobs provide a greater opportunity to apply literacy skills at work than part-time jobs.
• Employment in larger establishments is positively associated with increased literacy use, suggesting that large companies tend to require workers to undertake more complex tasks in their jobs.
• Older workers report considerably higher levels of literacy use at work than the youngest age group; the decline in literacy use for the older aged is rather moderate.

Numeracy use:

• While workers with relatively high numeracy skills use numeracy more often in their jobs than workers with relatively low numeracy skills, the positive relationship between numeracy skills and their use is less pronounced than the relationship between literacy skills and their use in all countries.
• Further, while the average level of numeracy use increases with education for both male and female workers, the relationship between the two variables seems to be non-linear, as demonstrated by a slight decline for the highest educational levels.
• While managers and administrators make more use of their skills than low-skilled workers, other groups of high-skilled workers do not.
• Full-time employment is positively associated with increased skill requirements at work, while employer size has a significantly negative effect on numeracy use in all countries.
• Finally, the numeracy use levels of younger workers increase as they get older, while the numeracy use levels of older workers typically decline after the age of 45 years.