Skills will drive inclusive economic growth in Portugal

Skills and human capital are the bedrock upon which Portugal is building a new bridge to growth.

Portugal is recovering from the most serious economic and financial crisis the country has experienced in recent history. The reform agenda over the past few years has been ambitious, comprehensive and challenging.

Awareness is now growing among policy makers, employers and households that Portugal’s future economic and social well-being will depend upon securing equitable and high-quality education and jobs while promoting innovation and entrepreneurship.

Portugal is on the road to recovery

Signs of Portugal’s recovery can be seen across the board. Youth unemployment and long-term joblessness rates are falling, even if levels remain too high. Job creation is picking up, and the majority of new jobs created in 2014 were on permanent contracts, which is a good indication that Portugal’s longstanding labour market dualism has been reduced by recent reforms. Educational attainment levels and learning outcomes are rising steadily, as reflected in Portugal’s PISA scores which now approach the OECD average. Measures have been introduced to stimulate entrepreneurship, and in 2014 Lisbon was selected as one of the European Entrepreneurial Regions (EER), in recognition of its strategies to promote entrepreneurship and spread innovation among small and medium enterprises (SMEs).

Building a shared diagnosis of Portugal’s skills challenges 

We know that in countries where a significant proportion of adults have poor skills, it is difficult to introduce productivity-enhancing technologies and new ways of working. This, in turn, stalls innovation and improvements in living standards.

Yet skills affect more than just earnings and employment. Data from the Survey of Adult Skills (PIAAC) show that in all countries, adults with lower literacy proficiency are far more likely than those with better literacy skills to report poor health, to perceive themselves as objects rather than actors in political processes, and to have less trust in others.

Put simply, a lack of proficiency in foundation skills prevents people from fully participating in society and democracy.

In the course of 2014, we have worked closely with Portugal on a collaborative project to build a more effective skills strategy. Throughout this initial diagnostic phase, we have witnessed strong commitment to improving Portugal’s skills outcomes across central and local governments, employers and trade unions, as well as education and training providers.

Today, the results of this work are published as the OECD Skills Strategy Diagnostic Report: Portugal. The Prime Minister of Portugal, Mr Pedro Passos Coelho, will be officially launching the report in Lisbon together with the OECD Secretary-General, Mr Ángel Gurría. This is a strong signal of the importance afforded to skills policies in Portugal.

Portugal’s 12 skills challenges

The diagnostic report applies the framework of the OECD Skills Strategy to identify 12 skills challenges for Portugal as it seeks to maximise its future skills potential. These skills challenges were distilled from a series of four interactive workshops held in Lisbon and Porto in 2014, which engaged a wide range of stakeholders. The report includes a rich set of evidence from OECD and other sources, and offers concrete examples of how other countries are tackling similar skills challenges.

So what are the main skills challenges facing Portugal today?

With regard to developing relevant skills, the report concludes that Portugal should focus its efforts on:
– Improving equity and quality in education
– Strengthening the responsiveness of VET to labour market demands
– Targeting adult education and lifelong learning towards the low-skilled

When it comes to activating its skills supply, Portugal will need to tackle the challenges of:
– Reducing youth unemployment and NEETs
– Increasing labour market re-entry for the long-term unemployed
– Reducing barriers to employment

Furthermore, Portugal could make more effective use of the skills it has by: 
– Promoting entrepreneurship
– Stimulating innovation and creating high-skilled jobs
– Providing employers with incentives to engage in skills development, especially SMEs

Finally, Portugal could improve the overall governance of the skills system by: 
– Financing a more equitable and efficient skills system
– Adjusting decision-making power to meet local needs
– Building capacity and partnerships for evidence-based skills policy

Moving from diagnosis to action 

Taken individually, these challenges may not be new or surprising to the people of Portugal. Yet by laying them out side by side, the need for a more systemic approach to skills policies emerges clearly.

As the diagnostic report demonstrates, skills policies are not just a matter for one ministry. Tackling skills challenges requires a whole of government approach. Moreover, skills are everybody’s business. Stakeholders and civil society need to play an active role in developing and implementing skills policies that are sustainable over the long term. 

By bringing together stakeholders, ministries and agencies to map out Portugal’s skills challenges, this project has built shared insights and deeper mutual understanding. The next step for Portugal will be to decide which challenges should be tackled as a priority and to develop concrete plans for action. This will mean building on the many reforms already underway and the continued engagement of all skills stakeholders.

Skills and human capital are the bridge to a more inclusive and prosperous future for the people of Portugal. The OECD stands ready to support Portugal as it designs and implements better skills policies for better jobs and better lives.