Portugal's 12 skills challenges
Developing its relevant skills
PISA mean performances between 2006 and 2012
Source: OECD (2013b), Education at A Glance, http://dx.doi.org/10.1787/eag-2013-en.
1. Improving equity and quality in education: Portugal has taken significant steps to improve both access to basic education and the quality of the education system. Most recently, compulsory education has been extended to cover 12 years from age 6 to age 18. PISA scores show that students’ outcomes in Portugal have steadily improved in all subjects measured, and Portugal is one of the few OECD countries to see a simultaneous reduction in the share of low-performers and an increase in the share of high-performers in mathematics.
However, Portugal’s results in PISA 2012 are around the OECD average in mathematics and below the OECD average in reading and science, and it is one of the OECD countries where students’ socio-economic background has an above average impact on their results. Portugal also registers a high number of early school leavers and a higher rate of grade repetition than the OECD average. The best performing education systems achieve high quality and equity at the same time, and Portugal should ensure that future policy measures are designed to improve both.
2. Strengthening the responsiveness of VET to labour market demands: Graduates from vocational education and training (VET) have better employment prospects in countries where work-based learning is a strong component of the programmes. Portugal has made significant efforts to improve the quality and flexibility of its VET system, especially by increasing the involvement of businesses and other relevant stakeholders to make sure labour market needs are better met.
Further improvements, including a stronger component of work-based learning, would help to ensure that the VET system is coherent, well communicated and aligned to the needs of the labour market. This will not only help meet the need for employees with up-to-date and relevant skills, but will also contribute to reducing the high dropout rates from school and boost youth employability.
3. Targeting adult education and lifelong learning towards the low skilled: In Portugal, 62% of 25-64 year-olds have not completed upper secondary education, which is the third largest share in the OECD area. Most of these adults will be in the workforce for many years to come, so it is essential that adults are provided with opportunities to participate in lifelong learning and improve their foundation skills.
Increasing the supply and quality of adult education in Portugal – particularly for low-skilled adults – will contribute to raising productivity and boosting the employability and adaptability to rapidly changing workplaces. Without such investment, Portugal will not be able to rely upon a skilled and flexible labour force that is equipped to meet emerging new labour market demands.
Activating skills supply
Youth unemployment rates at ages 15-24, in percentages
Source: OECD (2014c), OECD Statistics, Unemployment Rates by Age and Gender, http://stats.oecd.org.
4. Reducing youth unemployment and NEETs: Portugal has the fourth highest youth unemployment rate among OECD countries and a large number of young people who are not employed or in education and training (NEET). This has large negative effects for the individuals concerned and for society as a whole. Job creation is the biggest challenge for Portuguese society in order to address unsustainably high levels of youth unemployment. Major investment has targeted supporting young unemployed people, including the EU Youth Guarantee Programme.
Making sure that programmes supporting young people are well designed and coherent, along with well-developed systems for career guidance and information is essential for improving the activation of skills in Portugal’s young population.
5. Increasing labour market re-entry for the long-term unemployed: Portugal has a high share of long-term unemployed, defined as people who have been out of the labour market for more than one year. The level of long-term unemployment was high in Portugal even before the financial crisis, which is a sign of deeper structural issues in the labour market that pre-date the crisis.
Targeted measures for retraining and job-search assistance are essential to ensure that the long-term unemployed do not become completely disconnected from the labour market.
6. Reducing barriers to employment: Barriers to employment include both barriers for people to look for jobs and barriers for employers to hire. In Portugal, high unemployment benefits for some groups of people can act as a disincentive to seek jobs. At the same time, companies wanting to hire people in Portugal face a tax rate that is above the OECD average, which may have a negative effect on companies’ ability to hire workers.
Furthermore, Portugal has a dual labour market where a large share of workers – young people, in particular – is employed on temporary contracts. These workers face higher job insecurity, lower job quality and fewer opportunities for participating in adult education and training provided by employers.
Several recent labour market reforms have addressed these issues in Portugal, and some improvement can be seen: in 2014, the majority of jobs created were on permanent contracts. Further efforts to reduce barriers to employment will contribute to increase employment rates and the quality of new jobs.
Using skills effectively
Researchers (per thousand employed)
Source: OECD (2014f) Factbook 2014: Economic, Environmental and Social Statistics, http://dx.doi.org/10.1787/factbook-2014-en.
7. Promoting entrepreneurship: Entrepreneurs are an important source of economic growth and job creation and play an important role in innovation by helping to bring ideas to the market. About a quarter of Portuguese exports today come from firms younger than 10 years old, and young firms generated almost half the jobs created in Portugal. Entrepreneurship has been high on Portugal’s political agenda in recent years, and some encouraging progress can be seen.
Continued efforts are needed to strengthen entrepreneurship in Portugal by increasing access to finance, further administrative simplification, systematic promotion of entrepreneurship throughout the education system, and providing targeted training for entrepreneurs.
8. Stimulating innovation and creating high-skilled jobs: Research and development (R&D) performed by business is important for innovation as it can have a large positive impact on long-term economic productivity, and is often closely linked to the creation of new products and techniques. Business R&D expenditure in Portugal is among the lowest in the OECD area, and compared with other OECD countries, large companies in Portugal spend relatively little on R&D, and account for comparatively few new patents and trademarks.
Taking further steps to improve the links between university research and business is vital to make full use of Portugal’s highly-skilled workers, create good quality jobs, and improve competitiveness in the global economy.
9. Providing employers with incentives to engage in skills development, especially SMEs: Employers need to see investment in skills development as strategically important for their competitiveness, productivity and ability to attract talent. Small and medium-sized enterprises (SMEs) need support and incentives to invest in their employees’ skills and targeted measures are necessary to ensure that training and development opportunities reach low-skilled as well as high-skilled adults.
Stronger employer engagement is needed if lifelong learning is to become a reality for all Portuguese adults.
Strengthening Portugal’s skills system
10. Financing a more equitable and efficient skills system: Balancing Portugal’s budget in the short and long term will require close attention to the allocation of scarce resources between sectors. Currently, Portugal devotes more budgetary resources to the elderly and to pensions than to the young and to education. The education budget has experienced large cuts several years in a row, which makes it imperative to ensure that scarce resources are spent in an efficient and equitable way.
Raising skills levels for all – through targeted support for disadvantaged schools and students and the promotion of lifelong learning – constitutes an investment in Portugal’s future skills assets that will also have positive effects on equity.
11. Adjusting decision-making power to meet local needs: Effective collaboration across different levels of government is needed to achieve better skills outcomes through coherent and harmonised education, training and employment policies. Portugal has a centralised governance structure that leaves little room for adjustments at the sub-national level; however unemployment rates, skills gaps and shortages, economic growth and socio-economic challenges show large differences across the country. The level of budget decentralisation in Portugal is one of the lowest in the OECD area.
A higher degree of flexibility would allow regional and local actors to adjust national policies to meet local needs, and would also encourage greater engagement among stakeholders when designing and implementing projects at the local level. While horizontal co-ordination has improved between government ministries and agencies at the national level, vertical co-ordination across different levels of government is weak and local administrative capacity is limited.
12. Building capacity and partnerships for evidence-based skills policy: Systematic evaluation of programmes and measures improves both resource allocation and the quality of policy design and implementation. Establishing sound structures and processes for monitoring skills policy implementation and evaluating impact is especially important in Portugal, given its limited financial resources and the risk of policy fragmentation engendered by an ambitious and comprehensive reform agenda.
Successful implementation of policy depends on timely information on outcomes and the ability to adjust activities as needed. This may require adjustments in timelines, introducing support for implementation if needed (such as information and communication, training and capacity building) and adjusting the content of programmes to achieve intended results. Such processes may require formal stakeholder engagement, for example through formal consultations; or benefit from more informal stakeholder involvement.
Systematic data collection at the national and regional level – in collaboration with local stakeholders – would enable Portugal’s government, employers and stakeholders to map current skills needs, anticipate future skills demand and keep track of how the economy and specific sectors are evolving over time.
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