White Paper

The Netherlands today is prosperous, but its future success is not assured. The Netherlands owes its success in no small part to actions it has taken in the past to develop a highly skilled population. Given the profound economic and social transformation that the Netherlands is currently undergoing, skills will be even more important for success in the future. The Dutch education system and the skills of the Dutch population are strong overall. Therefore, many of the opportunities for further improving the skills outcomes of the Netherlands are to be found in areas of society where the government has more limited influence, such as the workplace and community. As a consequence, achieving the Netherlands’ skills ambitions will require a whole-of-society approach. The OECD Skills Strategy Diagnostic Report: Netherlands identifies the following three skills priorities for the Netherlands - fostering more equitable skills outcomes, creating skills-intensive workplaces, and promoting a learning culture. These priorities were identified through the analysis of common themes that emerged from stakeholder perspectives on the most important skills challenges facing the Netherlands, and through the OECD’s analysis of the nine skills challenges identified and examined in the report.

The capacity to manage information and solve problems using computers is becoming a necessity as ICT applications permeate the workplace, the classroom and lecture hall, the home, and social interaction more generally. The Survey of Adult Skills, a product of the OECD Programme for the International Assessment of Adult Competencies (PIAAC), was designed to measure adults’ proficiency in several key information-processing skills, namely literacy, numeracy and problem solving in technology-rich environments. Adults who are highly proficient in the skills measured by the survey are likely to be able to make the most of the opportunities created by the technological and structural changes modern societies are going through. Those who struggle to use new technologies are at greater risk of losing out. The results from the first round of the survey, covering 24 countries and economies, were reported in the OECD Skills Outlook 2013: First Results from the Survey of Adult Skills. Another nine countries and economies collected data during 2014-15. This report presents the main findings for all 33 countries and economies that participated in the study over the two rounds. It finds substantial variation across countries/economies in adults’ average proficiency in the three domains assessed. More than 80 score points separate the highest- and lowest-scoring countries in literacy and numeracy, although many countries and economies score within a relatively close range of each other. Within countries and economies, proficiency scores in literacy and numeracy vary considerably: on average, 62 score points separate the 25% of adults who attained the highest and lowest scores in literacy; in numeracy, 68 score points separate those two groups. In almost all countries/economies, a sizeable proportion of adults (18.5% of adults, on average) has poor reading skills and poor numeracy skills (22.7% of adults, on average). Around one in four adults has no or only limited experience with computers or lacks confidence in their ability to use computers. In addition, nearly one in two adults is proficient only at or below Level 1 in problem solving in technology-rich environments. This adult can only use familiar applications to solve problems that involve few steps and explicit criteria, such as sorting e-mails into pre-existing folders.

Ambitious green policies that improve environmental quality while maintaining economic growth do not have to harm overall employment—if they are well implemented. Green policies can achieve job creation in a number of ‘green’ economic sectors and through a transition of the economy towards more labour-intensive services sectors, while job destruction especially occurs in ‘brown’ sectors whose activities get replaced by green sectors. The knock-on effects on employment in other sectors can also be significant. The use of government revenues from environmental tax reform for lowering labour taxes, mitigating undesirable distributional consequences and funding education and training programs can be crucial in achieving positive overall employment outcomes from green policies. Well-functioning labour markets are important to achieve a smooth transition and reintegrate workers who lose their jobs. Existing labour market policy tools are largely sufficient but can be applied more effectively. Education and training systems that prepare workers for future labour demand needs are especially important to smooth the transition. Special attention should also be paid to regions with a high share of workers in ‘brown’ sectors. Further research is required to quantify all employment dimensions of green policies, not least with respect to within-sector firm level effects, circular economy policies and the broad interactions with socioeconomic trends.

Information and communication technologies (ICT) are profoundly changing the skill profile of jobs. Skill development policies need to be overhauled to reduce the risk of increased unemployment and growing inequality. To thrive in the digital economy, ICT skills will not be enough and other complementary skills will be needed, ranging from good literacy and numeracy skills through to the right socio-emotional skills to work collaboratively and flexibly. 56% of the adult population have no ICT skills or have only the skills necessary to fulfil the simplest set of tasks in a technology-rich environment. Young people, however, are much more ICT proficient than older generations. Skills policies should seek to: strengthen initial learning; anticipate and respond better to changing skill needs; increase the use of workers’ skills; and improve incentives for further learning.

Measuring R&D – in a way that makes the data internationally comparable – is not an easy task; that’s why the OECD Frascati Manual was first developed in 1963. Nowadays, this international standard is the basis of R&D statistics in OECD countries and beyond. It also underpins the definition of R&D used in accounting standards and in the UN System of National Accounts. The Frascati definition of R&D is widely used for policy purposes, too. The OECD National Experts on Science and Technology Indicators (NESTI) recently oversaw the 6th revision of the Frascati Manual – improving its clarity and enhancing its relevance through greater compatibility with other statistics and new statistical guidance on R&D tax incentives and globalisation.

This report examines the effects of investments in Information and Communication Technologies (ICTs) on i) total labour demand; ii) labour demand by skill level; and iii) labour demand by industry in selected OECD countries over the period 1990-2012. ICT investments are estimated to have raised total labour demand in most countries over the period 1990-2007 but to have reduced it after 2007. In the latter period, the decrease in total labour demand has been accompanied by polarisation in favour of high and low skills and against medium skills. Yet, the effects on both total labour demand and polarisation are estimated to disappear in the long run. These changes have occurred through a process of labour reallocation across industries, away from manufacturing and towards some services, including care, culture and recreation.

Job displacement (involuntary job loss due to firm closure or downsizing) affects many workers over their lifetime. Displaced workers may face long periods of unemployment and, even when they find new jobs, tend to be paid less and have fewer benefits than in their prior jobs. Helping them get back into good jobs quickly should be a key goal of labour market policy. This report is part of a series of nine reports looking at how this challenge is being tackled in a number of OECD countries. It shows that the United States has a relatively high rate of job displacement and that only one in two affected workers find a new job within one year. Older displaced workers and those with a low level of education fare worst. Contrary to most other OECD countries, displaced workers have long been a target group for policy intervention, and a number of system features, like rapid response services, are promising. But the success of US policies is limited because overall funding for the workforce development system is insufficient and because only trade-related job displacement comes with generous entitlement for training and better benefits.

Demographic shifts, globalisation and new technologies are changing the nature of work and careers. Digitalisation is seen as a key influence on the future of work over the next decades. Ever-increasing computing power, Big Data, the penetration of the Internet, Artificial Intelligence (AI), the Internet-of-Things and online platforms are among developments radically changing prospects for the type of jobs that will be needed in the future and how, where and by whom they will be done. This has sparked a debate about the risk of greater job insecurity, growing inequality and even mass “technological” unemployment.

Productivity growth slowed in many OECD countries even before the crisis, which amplified the phenomenon. The slowdown in knowledge-based capital accumulation and decline in business start-ups over this period also raises concerns of a structural slowing in productivity growth. The economic forces shaping productivity developments can be better understood by focusing on three types of firms: the globally most productive (i.e. global frontier firms), the most advanced firms nationally and laggard firms. • Productivity growth at the global frontier has remained relatively robust in the 21st century, despite the slowdown in average productivity growth. For example, labour productivity at the global frontier increased at an average annual rate of 3½ per cent in the manufacturing sector over the 2000s, compared to an average growth in labour productivity of just ½ per cent for nonfrontier firms, and this gap is even more pronounced in the services sector. However, firms at the global frontier have become older, which may foreshadow a slowdown in the arrival of radical innovations and productivity growth. • The rising gap in productivity growth between the global frontier and other firms raises questions about: i) the ability of the most advanced firms nationally to adopt new technologies and knowledge developed at the global frontier; ii) diffusion of existing technologies and knowledge from national frontier firms to laggards; and iii) the rise of tacit knowledge as a source of competitive advantage for global frontier firms. The aggregate gains from the diffusion of global frontier technologies and knowledge will be magnified by policies that facilitate the reallocation of scarce resources to the most productive firms. • The most advanced national firms in some economies have productivity levels close to the global frontier, but their impact on aggregate productivity is muted, to the extent that they are undersized. • Relatively high rates of skill mismatch imply rigidities in labour market matching and constrains the growth of innovative firms and influences wage inequality. Tackling skill mismatch is particularly important in light of the projected slowdown in human capital accumulation and evidence that mismatch has increased over time (EC, 2013a). Moreover, addressing policies to reduce skill mismatch can help improve equality by incentivising firms to pay for better-matched skills. • It is important that young firms either grow rapidly or exit but not linger and become small-old firms. Three policy areas appear to be of key importance to sustain productivity growth: i) foster innovation at the global frontier and facilitate the diffusion of new technologies to firms at the national frontier; ii) create a market environment where the most productive firms are allowed to thrive, thereby facilitating the more widespread penetration of available technologies; and iii) reduce resource misallocation, particularly skill mismatches. Reviving diffusion and improving resource allocation has the potential to not only sustain and accelerate productivity growth but also to make this growth more inclusive, by allowing more firms and workers to reap the benefits of the knowledge economy.