The “Reskilling Revolution” is stalling – This is why

Source: Vecteezy

Over the past few years, there has been a growing recognition that upskilling and reskilling are key for firms and workers to cope with rapidly changing skill requirements in highly dynamic economies and labor markets. However, smaller firms and vulnerable workers are often left out of upskilling and reskilling, reinforcing existing inequalities in the labor market. While governments are trying to promote up-/reskilling with financial subsidies to firms and learners, such subsidies are unable to address the deeply rooted behavioral barriers to up- and reskilling. Future efforts should therefore adopt a broader set of behaviorally-informed strategies to make the “reskilling revolution” a reality.

By Kevin Hempel | November 2024

The world of work is changing faster and faster

The world of work is changing. Technological progress, globalization, demographic shifts, and climate change are creating new opportunities and risks for firms and workers across the globe. While some jobs are lost, new ones are emerging, and many existing jobs are evolving (e.g., in terms of tasks and skills required). The fact that labor markets are changing is not new. That said, the pace of change is increasing, as innovation cycles have shortened. Moreover, while technological progress used to affect mostly lower-skilled workers in the past, today it also uproots the jobs of many high-skilled professionals in areas such as IT, marketing, and research.

Up- and reskilling are key to adapt, but many firms and workers are being left behind

In light of these rapid changes, up-/reskilling is becoming a necessity for firms and workers to adapt. The World Economic Forum called for nothing short of a “Reskilling Revolution” already back in 2018. Since then, the topic of up-/ and reskilling has garnered increasing attention by policymakers, business leaders and workers across the globe. For instance, according to the 2023 Future of Jobs report, employers estimate that 44% of workers’ skills will be disrupted in the next five years. Policymakers are also aware that up-/reskilling is key for their countries. For instance, the European Skills Agenda includes ambitious goals to increase adult participation in learning and skills development.

While there is widespread agreement about the importance of up-/reskilling, many firms and workers are not engaging in skilling efforts.

• Larger firms train more than smaller firms. Across the globe, larger firms, exporting firms, firms that have more experienced managers, and that make greater use of modern technology, have been found to be more likely to provide training to their workers. For instance, in Southeast Asia, about 49% of large firms, 36% of medium-sized firms, and only 17% of small firms offer formal training to employees.
• Vulnerable workers, including women, are less likely to have access to up-/reskilling. Younger, higher skilled, higher paid employees and those with more stable contracts are typically the recipients of training opportunities. In general, unless firms have to offer training to comply with legal requirements (e.g., related to health, safety, and security in the workplace), they select those employees who they think are most likely to translate the acquired skills into benefits for the firm. In practice, this means that they favor employees with higher skills and “potential” and those expected to stay with the firm for a long time. The risk of exclusion from up-/reskilling is particularly high when workers combine several elements of disadvantage (e.g., older worker, women, ethnic minority).

Multiple behavioral barriers hold back the provision and take-up of up-/reskilling

While there is a common focus on financial costs as an impediment to up-/reskilling, there are many additional barriers that can affect workers, firms, and training providers (see figure below). Based on our global review of the literature and extensive interviews with workers, firms and training providers in the ASEAN region, we identified the most common behavioral barriers that can prevent the provision and use of (inclusive) up-/reskilling.

Figure 1: Overview of behavioral barriers to up-/reskilling

Let’s discuss a few examples…

Barriers for individuals

“The most challenging part of the training is how to achieve a sense of balance. How to manage time and achieve balance between the training and family life” (female trainee)

Contrary to common belief, not all workers want to engage in up-/reskilling. For instance, pursuing training opportunities takes time and energy that not all people have, especially those with a higher share of household and care responsibilities (typically women). Social dynamics often create additional obstacles, as training-related decisions are influenced by family members (e.g., parents, spouses) who may not be supportive. When jobseekers and workers explore training in a non-traditional field (e.g., women in the energy sector), they must also navigate concerns about an unwelcoming environment, such as feeling “alone”, discrimination, and harassment. When workers internalize prevailing social norms in their own identity (e.g., gender identity), it can also reduce their aspirations related to skilling, employment, and career progression.

Firm-level barriers

“The first obstacle is the lack of information about the training, we have to find out for ourselves. Sometimes we also don’t know what training we need […]. So, we only rely on Google.” (small business owner)

Firms, too, can find it challenging to offer up-/reskilling, and when they do, they often do not give the same opportunities to everyone. Many firms, especially smaller ones that do not have proper Human Resource and training departments, face fundamental barriers to offer (any) up-/reskilling due to limited attention and time, the lack of information about quality providers, and concerns about employee loyalty. When companies do offer training, they often favor (consciously and subconsciously) certain employees over others. For instance, men tend to occupy middle and senior management positions in charge of making training related decisions. This “male gatekeeper” role can create a disadvantage for female employees. Employers are also often afraid that workers may leave the firm after they received training, thus preventing them from investing in worker skills.

Barriers for training providers

“When dividing into study groups, men and women are assigned appropriate tasks: women write reports and programs, and men take some operation tasks.” (male trainer)

Training providers play an important role in offering an environment that meets the needs of different learners, but they often struggle to offer such an “inclusive” training environment. For example, meeting the needs of learners with different sociodemographic profiles (e.g., in terms of age, gender, etc.) typically requires some adaptations in service delivery. However, operating with limited resources, (public) training providers are often concerned with more salient issues such as core infrastructure and equipment (e.g., repair of buildings, availability of tools and materials for training) than the inclusiveness of their training offer. Moreover, making training more inclusive can be perceived as complex and daunting (i.e., not knowing where to start), leading to inaction. There can be considerable stereotypes by administrators and trainers, such as dissuading female students from pursuing certain jobs, because they do not think that the women can handle the work.

Conclusion

Around the globe, government efforts to promote up-/reskilling focus largely on financial incentives (to learners and/or firms). However, financial incentives cannot address the many behavioral barriers to up-/reskilling highlighted above. Policymakers and firms must therefore adopt a broader set of behaviorally-informed strategies to make the “reskilling revolution” a reality. In doing so, they must not only try to enhance the provision and take-up of up-/reskilling in general, but also make up-/reskilling more equitable and inclusive. Indeed, unless the existing inequalities in up-/reskilling are addressed, only a small share of (large) firms and (better off) workers will be able to adjust fast enough to successfully cope with ongoing transformations, while smaller firms and more vulnerable workers will be left behind…

If you would like to learn more about our work, including behaviorally informed intervention areas to promote up-/reskilling, send us an email.

Are you working on up-/reskilling? What are the behavioral barriers you have found to be most prominent in your work? Get in touch, we would love to hear from you…

About the author:

Kevin Hempel is the Founder and Managing Director of Prospera Consulting, a boutique consulting firm working towards stronger policies and programs to facilitate the labor market integration of disadvantaged groups. You can follow him on LinkedIn.