Skills obsolescence: causes and cures

Abstract

Until now there has been surprisingly little research on the causes of and the remedies for skills obsolescence. This study tries to fill that gap to some extent by analysing the relation between risk factors and skills obsolescence. Moreover, the role remedies play to counter skills obsolescence is analysed. Four empirical analyses that relate skills obsolescence to risk factors and remedies are presented. We find that most risk factors identified in the literature can be validated empirically. The remedies for skills obsolescence are not effective in all situations: the results show that there is considerable variation in the effectiveness of the remedies across different types of skills obsolescence. Although current available data do not allow a comprehensive analysis, which also takes account of relations between the various types of skills obsolescence, the results obtained are plausible and offer a starting point for further research.

Employers’ View on Problems Related to Workforce Skills and Qualification

“…An obvious example is the use of information technologies which has changed demands on workforce skills almost in all professions (Mertaugh & Hanushek, 2005, Planas et al, 2001van Loo et al, 2001, etc.). Another significant trend in companies that alters skills demands is a growth of international competition (van Loo et al, 2001;Matoušková, 2007). Last but not least, demographic changes can also play a significant role.…”

“…Job-specific human capital obsolescence is closely linked to developments in a society. Organizational changes such as reorganization and changing system of management can significantly affect the work content and increase a risk of skills obsolescence for a specific job (van Loo, de Grip, and de Steur, 2001). Organizational changes are, in fact, often initiated by changes in a production process.…”

“…Last but not least, demographic changes can also play a significant role. A risk of human capital obsolescence regards especially older workers who underwent their initial education many years ago and who do not participate in further education in enterprises as widely as their younger colleagues (van Loo et al, 2001;Matoušková & Žáčková, 2008, etc.). Job specific human capital obsolescence, therefore, requires the development of company training and educational courses responsive to the changing demands on human capital.…”

“…This obsolescence is more problematic if knowledge and skills are highly sector or firm specialized (specific human capital). Factors increasing a risk of occurrence of this obsolescence are changes in labour market demand in specific sector / industry, occupation and/or the type of education (van Loo et al, 2001). Retraining for jobs in another sector is the solution to the sector specific human capital obsolescence.…”

Does skill obsolescence increase the risk of employment loss?

“…Weiss and Garloff, 2009). Compared to the initial situation, the employer has a greater incentive to dismiss the current worker, and replace him or her by a worker with more appropriate skills (Van Loo, De Grip and De Steur, 2001). Obviously, the worker's prospects of obtaining a similar or better position after dismissal will be bad.…”