Investing in skills pays off:
The economic and social cost of low
skilled adults in the EU
11 October 2016, Rome
Head of Department: Antonio Ranieri
[email protected]
Low-qualified adults in EU-28 (.000; population=100%)
100000
In spite of the shrinking
population of low skilled,
their labour market
performance is worsening
90000
80000
70000
39.5 %
60000
37.4 %
36.4 %
Population
50000
6.1 %
(non active)
6.1 %
40000
11.0 %
Active not in
Employment
52.6 %
Employment
30000
20000
54.8 %
56.5 %
More likely:
•self-employed
•part-time work
•temporary contract
10000
0
02 03 04 05 06 07 08 09 10 11 12 13 14 15
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Economic and social consequences of low skills:
foregone benefits
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Antonio Ranieri
up-skilling scenario
0,0%
zero low-skilled
2050
7,4%
2049
2048
2047
2046
2045
2044
2043
2042
14,7%
2041
2040
2039
2038
2037
2036
UPSKILLING
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
PAST TREND
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Share of low skilled adults: scenarios assumptions
STEADY STATE
current (2015)
baseline scenario
4
Aggregated costs and benefits for individual agents
Scenarios 2015-2025
Main components
Up-skilling
scenario (7.4%)
Zero low-skilled
scenario (0.0%)
(+) Aggregated gross earnings
903.618
1.614.877
(-) Opportunity costs of education/training
287.936
453.946
(+) Surplus/compensation ratio
523.330
986.792
1.139.012
2.147.724
1.030.044
1.725.841
156.267
345.010
2.012.789
3.528.554
Net VGA benefits
(+) Health and crime benefits
(-) Net public spending (costs and savings)
TOTAL (+/-)
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GDP growth rates in the three scenarios
index number 2015=100
AVERAGE YEARLY GDP GAIN:
€ 200 BILLION (UPSKILLING)
€ 410 BILLION (‘ZERO’)
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Conclusions:
 Low skilled a vulnerable segment of the population
 Empowering low skilled adults promoting their upskilling
and/or re-skilling is associated with large social and economic
incentives
 Return to investment: much higher for low skilled; decrease
with the age; very diverse in MSs
 Heterogeneous group  Effective policy actions need to
recognise and target the different needs and characteristics of
the low skilled
 Integration of policies is key
By-product: reducing inequalities in the LM is per se a factor in
economic growth – at least in time of high unemployment
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Thank you
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