Friday, December 25, 2015

Low wages not education to blame for skills gap

There is also the fact that people have become aware of the severe age discrimination in IT.

Public Release: 9-Dec-2015
Low wages not education to blame for skills gap
University of Warwick

Research indicates low wages are to blame for the STEM skills gap
Wages must reflect the supply and demand for skills across occupations
Reform of schools and universities isn't the answer

Low wages rather than inadequate training are to blame for the STEM skills gap, according to research from the University of Warwick.

A new briefing paper suggests that the lack of workers with skills in science, maths, engineering and technology (STEM) and 'soft' communications skills is not due to problems with the education system, but to employers being unwilling to offer higher wages to suitably skilled workers.


"Businesses complain about the lack of workers with STEM skills but are unwilling to raise wages for these workers - or reduce wages for workers with skills that are less in demand."


Concern is growing in advanced economies, and in particular in the UK, about the skills gap: the growing gulf between the skills workers possess today and the skills businesses say they need. The concerns are often focused on shortages of workers with skills in STEM subjects but increasingly also on 'soft skills' like problem solving, team working and communication.

Dr Thijs van Rens will set out his analysis, based on US data, which shows that the source of labour market mismatch is that market wages do not reflect the relative demand for different types of skills. He will argue that the position often taken for granted in the public debate - that the skills gap is a supply problem - is incorrect.

In his research Dr van Rens used data on job finding rates, earnings and profits across states, industries and occupations to measure the extent of skills mismatch or gap on the US labour market, and the underlying frictions that gave rise to it.

Dr van Rens suggests that the labour market can adjust to a skills mismatch in two ways. The workforce may adapt to the demand for skills, for instance by acquiring training or changing occupation, or firms may adapt to the supply of skills.

However for one or both of these to happen, wages must reflect the relative supply and demand for various skills.


He added: "While firms complain about a shortage of qualified physicists and engineers on the labour market, a very large number of graduates in these fields work in the financial sector, where they only use their STEM skills to a very limited degree.

"Encouraging universities to educate more physicists and engineers will not make any difference if these additional STEM graduates look for jobs in investment banks."

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