1. Occupational Demand Survey An Introduction
Jan Rutkowski
Washington, DC; February 2, 2016

2. Objective
To present an instrument to collect information on demand for skills
Occupational Demand Survey
Piloted by the World Bank in Georgia in 2015

3. Outline Introduction Survey design and implementation Sample results
Motivation: why studying demand for skills is important
Different approaches to determining future demand for skills
Skills anticipation
Trend extrapolation
Survey design and implementation
Main issues
Product vision
Sample results

4. Introduction

5. Motivation & context Two main questions asked by policymakers:
How to determine future demand for skills
How to effectively match supply of skills with demand for skills?

6. Answers to these two questions are needed to improve labor market performance
Reduce structural unemployment
Excess supply of certain skills
Remove obstacles to firm growth
Skill shortages

7. Different approaches to answering the two questions
Question 1: How to determine demand for skills
Occupational projections (forecasts)
Time-series extrapolation
Question 2: How to address skills mismatch
Manpower planning
Administrative regulation of labor supply to match expected future occupational profile of labor demand
Information on demand for skills provided to stakeholders

8. Analysis of recent trends is an efficient alternative to occupational projections
Trend extrapolations
Occupational projections
Assumption: recent trends representative of future developments
No major shocks to the economy
Time series data on employment & wages by occupation
Results refer to narrowly-defined occupations
Relatively accurate in short- to medium-run
Numerous assumptions
Input data availability and quality
Sophisticated modelling techniques
Results refer to broad activities & occupations
Not necessary reliable and accurate
Efficient = simpler & less costly
Trend extrapolation can be complemented by expert opinion

9. Information is more effective in adjusting supply to demand than manpower planning
Information about returns to different fields of study helps students make informed choices
Employment prospects (easy/difficult to find a job)
Expected wage
Manpower planning proved ineffective and went out of fashion
Unsuccessful administrative regulation of labor supply
People have right to make free careers choices
Restriction on access to fields of study incompatible with market economy
Fast changes in skills demand due to technological progress
Increasing occupational mobility
People switch career fields
Informed – not necessarily optimal from the macroeconomic perspective
The assumption that once policymakers know the future demand for skills then can adjust supply and thus solve the unemployment problem proved to be an illusion.

10. Survey design and implementation

11. Survey objective & Main questions
Objective: To determine demand for different occupations & job prospects associated with different career choices
What are the shortage occupations?
What are the hiring prospects for different occupations?
Number of firms hiring
Job openings & wage offers
How difficult is it to fill a vacancy?
If difficult, why?
How is the demand for skills evolving?
Which occupations are growing?
Which are declining?

12. Users of survey’s results
Students – to choose field of study
Jobseekers – to learn about job prospects in different occupations
Educational & training institutions – to know what are skills demanded by the market and to adjust program offerings accordingly
Career Advisory Services – to provide effective job counseling and career guidance
Public Employment Services – to provide effective job search assistance and counseling
Government ministries – to formulate education and employment policies

13. Main indicators of occupational demand
Employment
Employment growth points to growing demand
But lack of employment growth can indicate labor shortage despite demand growth
Wages
Wage growth points to growing demand
But possibly also to skills shortage
Job vacancies
Unmet demand for labor
Vacancy duration matters
But can be high in high job turnover occupations
Subjective assessment by employers
Shortage occupations
Reasons for difficulty filling job vanacies
Lack of applicants vs. lack of skills
Lack of applicants = occupational shortage
Lack of required skills = skills gap

14. Survey design: key decisions
Occupational coding (ISCO 08) – level of detail
2–digit – 40 occupations
3-digit – 120
4-digit
Sample size – the more detailed occupational coding the larger the sample
Sample size drives survey cost
Sampling method
Booster sample of large firms
Large firms are more likely to hire
Weights to make results nationally representative
Risk of assigning high weights to small number of observations
Questions
Temptation to ask employers about future employment
But prospective questions difficult to answer (“don’t know” is the most frequent answer)

15. Survey implementation: numerous pitfalls
High implementation capacity is prerequisite for quality results
Well trained enumerators familiar with ISCO
Mapping job descriptions to ISCO is difficult
High risk of mis-coding
Errors during data entry
Logical and consistency checks are important
Intensive guidance for implementing firm to ensure survey quality

16. Product vision: Occupational Outlook
For every occupation information available in regional break-down on:
Firms indicating occupational shortage
Number of firms hiring
Number of vacancies & vacancy rate
Wages offered
Change in employment (absolute and percentage) over last 12 months
Planned change in employment in next 12 months
Input into LMIS & Jobs Portal

17. Occupational Outlook: Example
Top 5 occupations where most job were created (net employment increase)
Employment change, persons
Employment change, %
Vacancies
Vacancy rate
Wage offers (median)
Health professionals
5,801 8%
473
0.5%
400
Teaching professionals
3,354 3%
818
0.7%
300
Health associate professionals
2,117
20% 45
0.4%
Sales workers
2,007 6%
899
2.3%
250
Customer service clerks
1,394 5%
292
0.9%
Ranking occupations by number of jobs created

18. Georgia
Results: Examples

19. Labor demand varies by region
Firms experiencing labor shortage, %
Firms having job vacancies, %

20. Shortage occupations

21. 10 Occupations hiring the most

22. The top 10 hardest jobs to fill

23. Lack of required skills is predominant reason hiring is difficult
Occupation
Lack of applicants
Applicants lack required skills
Applicants demanded higher wages
Applicants did not like working conditions 1
Sales workers 96 2
Personal service workers 3
Refuse workers and other elementary workers 85 6 4
Health professionals 8 90 5
Teaching professionals 25 73
Legal, social and cultural professionals 30 62 7
Food processing, wood working, and garment workers 23 67
Business and administration associate professionals 12 87 9
Administrative and commercial managers 10
Business and administration professionals
Lack of applicants = occupational shortage
Lack of required skills = skills shortage/gap

24. Job openings

25. Shortage occupations

26. Wages offered

27. Fastest growing occupations: net job creation

28. Fastest growing occupations: Highest % change in employment
Karolina: Street sales workers? How many of them are there?

29. Fastest declining occupations: Net job destruction

30. Interpreting the results
Employment growth vs. vacancy rate
Interpreting the results

31. Employment growth and vacancy rate are not necessarily correlated
Employment growth rate
Vacancy rate
Low
High
Dynamic equilibrium
Demand driven shortage
Static equilibrium
Supply driven shortage
Dynamic equilibrium: supply keeps pace with demand, g(D) = g(S)
Static equilibrium: D = S & g(D) = g(S) = 0
Demand driven shortage: demand outpaces supply, g(D) > g(S)
Supply driven shortage: S < D
D = E + V
S = E