OECD Skills Studies

Understanding Skill Gaps

in Firms
RESULTS OF THE PIAAC EMPLOYER MODULE
 OECD Skills Studies

Understanding Skill Gaps

in Firms

RESULTS OF THE PIAAC EMPLOYER MODULE

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 3

Foreword

The Programme for the International Assessment of Adult Competencies (PIAAC), co-ordinated by the
Organisation for Economic Co-operation and Development (OECD), is a major initiative to assess the skills
of adults worldwide. PIAAC plays a crucial role in informing policy decisions, supporting research and
assisting stakeholders in the field of education and employment through evidence-based insights.
This report focuses on a specific component of PIAAC – the PIAAC Employer Survey Module on Skill
Gaps. The Employer Module is designed to provide insights into employers’ perspectives on current and
future skill needs and the human resource practices used to meet these challenges. By collecting
information in a consistent and standardised manner across OECD countries, the Module provides a
comparative view of employer practices, enriching existing national employer skills surveys and the
insights on skill mismatches gained from the PIAAC household survey.
This first iteration of the Employer Module was implemented in five European countries – Hungary, Italy,
the Netherlands, Portugal and the Slovak Republic – in 2021 and 2022 as part of the European Continuing
Vocational Training Survey (CVTS). The reference year for the survey is 2020. The OECD is grateful to
the European Commission, DG Employment, for its financial support for the development and
implementation of the Employer Module, with special thanks to Manuela Vahovska. Thanks are also due
to the ministries, statistical offices and other relevant national authorities of the participating countries for
their commitment and contributions, notably: Katalin Dudás (Hungarian Central Statistical Office), Manuela
Nicosia and Alessandro Faramondi (Italian National Institute of Statistics), Fabio Roma (Italian National
Institute for Public Policies Analysis), Jesper van Thor and Astrid Pleijers (Statistics Netherlands), Luís
Rothes and João Queirós (PIAAC Project Group – Portuguese Agency for Qualification and Vocational
Education and Training) and Ildikó Pathóová (Ministry of Education, Research, Development and Youth of
the Slovak Republic).
This report was written by Elif Bahar and Anja Meierkord (Project Lead) under the supervision of Stijn
Broecke (Senior Economist) and Glenda Quintini (Head of the Skills and Future Readiness Division) of the
OECD Directorate for Employment, Labour and Social Affairs. The authors would like to thank colleagues
from the Skills and Future Readiness Division of the Directorate for Employment, Labour and Social Affairs
and the PIAAC team of the Directorate for Education and Skills for their helpful comments and support
during the preparation of the report. Special thanks are given to Luca Marcolin from the Economics
Department for his earlier involvement in the development and implementation of the survey and his helpful
comments.
This document was produced with the financial assistance of the European Union. The views expressed
herein can in no way be taken to reflect the official opinion of the European Union.

UNDERSTANDING SKILL GAPS IN FIRMS © OECD 2024

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Table of contents

Foreword 3
Executive summary 6
1 How firms experience skill gaps 8
In Brief 9
Introduction 10
How widespread are skill gaps in firms? 11
In what areas do firms experience skill gaps? 16
Do employers and employees have different views on skill gaps? 18
Do skill gaps influence firm performance? 20
References 23
Notes 24

2 How firms address skill gaps 25

In Brief 26
Introduction 27
Overview of firm practices to address skill gaps 27
The role of assessing skill needs in addressing skill gaps 31
The role of recruitment in addressing skill gaps 35
The role of training in addressing skill gaps 38
References 42

Annex A. Design, development and implementation of the PIAAC Employer Module 44

References 54

Annex B. Data availability and use 55

Annex C. Employer Module Questionnaire 63
Annex D. List of international experts participating in the development of the
questionnaire design 70
Annex E. Sample characteristics 71

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 5

FIGURES
Figure 1.1. Changes affecting firms are widespread 10
Figure 1.2. A sizeable share of firms reports skill gaps in their organisation 12
Figure 1.3. Large firms are more likely to experience skill gaps 13
Figure 1.4. Manufacturing firms most frequently experience skill gaps 14
Figure 1.5. Key skill gaps are reported for technical, problem-solving, and people-oriented skills 17
Figure 1.6. Skill gaps impart a range of impacts on firms 21
Figure 2.1. Most firms use training and development to tackle skill gaps 28
Figure 2.2. Smaller firms more frequently change work practices to address skill gaps 29
Figure 2.3. Across industries, firms use similar strategies to tackle skill gaps 30
Figure 2.4. Few firms regularly assess their skill needs 32
Figure 2.5. Larger firms everywhere are more likely to assess skill needs 33
Figure 2.6. Firms with skill gaps are more likely to assess and anticipate skill needs 34
Figure 2.7. Employers struggle more to recruit for jobs requiring a vocational qualification 36
Figure 2.8. Employers attribute recruitment difficulties to employees’ lack of interest and commitment 37
Figure 2.9. Firms offer a variety of training opportunities to their workers 39
Figure 2.10. Larger firms are more likely to offer training 39
Figure 2.11. Firms with skill gaps are more likely to offer training 41

TABLES
Table 1.1. Relationship between skill gaps and firm characteristics 15
Table 1.2. Relationship between skill gaps and frontier firms 16
Table 1.3. Employer and employee perceptions on the extent of skill gaps are not aligned 19
Table 1.4. Employer and employee perceptions on the most important skill gaps diverge 19
Table 1.5. Relationship between skill gaps and firm performance 22
Table 2.1. Relationship between skill needs assessments and firm characteristics 34
Table 2.2. Relationship between skill gaps and skill needs assessments 35
Table 2.3. Relationship between training and firm characteristics 40
Table 2.4. Relationship between skill gaps and training 41

Table A A.1. Statistical target population, sample sizes and final number of respondents 48
Table A A.2. Optional and desirable questions selected by participating countries 49
Table A A.3. Missing data and changes made to variables by countries 52
Table A A.4. Example of logical consistencies checked by OECD researchers 54
Table A B.1. Employer Module: International codebook 57
Table A E.1. Counts by country and firm size 71
Table A E.2. Counts by country and industry 71
Table A E.3. Counts by country and firm age 71
Table A E.4. Counts by country and market sector 71

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6

Executive summary

In a global economy reshaped by rapid technological advances, ageing populations, changing global
supply chains, shifting consumer preferences and efforts to achieve net-zero emissions, firms are under
pressure to ensure that their workforce have the right skills. Skill gaps – defined as mismatches between
the skills available in a firm and those required to meet current and future business needs – are a major
challenge for firms adapting to this new landscape. This report, based on the PIAAC Employer Survey
Module, examines the incidence of skill gaps in five European countries – Hungary, Italy, the Netherlands,
Portugal and the Slovak Republic – and explores how firms are addressing these gaps through different
strategies, such as skill anticipation, training, and recruitment.

How do firms experience skill gaps?

Skill gaps are a widespread problem across the countries surveyed, with more than one in three firms
reporting a mismatch between the skills they need and those their employees possess. The highest share
of enterprises reporting skill gaps is in the Slovak Republic (54%), followed by Italy (37%), Portugal (32%),
the Netherlands (31%) and Hungary (27%). These differences across countries reflect both different
economic conditions, as well as the unique challenges each country faces in adapting to technological
change and evolving workforce demands.
Across countries, skill gaps are most frequently identified in technical skills (46% of firms facing
skill gaps), problem-solving skills (34%) and teamworking skills (33%). They are least frequently identified
in reading (2%) and mathematics (4%). However, there are some notable differences between countries.
For instance, firms in the Slovak Republic and the Netherlands rank customer handling skills as one of the
top three gaps, while firms in the Netherlands also frequently highlight management skills as a key skill
gap.
Skill gaps typically pertain to only a small share of employees. While many firms report skill gaps,
only a small proportion (<5%) say that most of their workforce lacks the necessary skills. This suggests
that skill gaps are more likely to affect specific groups of employees rather than being a firm-wide problem
and suggests they could be addressed through targeted interventions. A significant share of firms is
uncertain whether they face skill gaps. The highest share of firms reporting that they do not know if they
have skill gaps is in the Netherlands (18%) and Hungary (15%). This suggests a lack of robust skills
assessment mechanisms.
Larger firms are more likely to report skill gaps than smaller ones (59% versus 34% on average
across countries). This may be due to greater organisational complexity and decentralised decision-
making, but also to the fact that larger firms are more likely to have formal skills assessment processes
and hence a greater awareness of gaps. Smaller firms, on the other hand, may under-report skill gaps due
to limited capacity for regular skills assessment. This highlights the importance of improving skill needs
assessment within firms, particularly for smaller firms that may not have formal HR functions. Larger firms,

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 7

particularly in the services sector, are more likely to report gaps in IT and management skills, while smaller
firms are more likely to have problems with customer service and problem-solving skills.
Skill gaps are most common in manufacturing, where 41% of firms report gaps on average (compared
to 32% in the communications and finance sector), reflecting both the rapid pace of technological change
and the sector’s heavy reliance on specific technical skills. Sectors with the lowest shares of firms with skill
gaps vary between countries and are communications and financial services in Hungary (20%), the
Netherlands (25%) and the Slovak Republic (45%), construction in Italy (32%), and real estate, business
services and arts in Portugal (25%). There are notable differences in the types of skills employers seem to
be lacking between sectors: firms in communications and financial services report gaps in IT and
management skills, while those in manufacturing and construction face shortages mainly in technical skills.
Skill gaps reportedly result in a range of negative consequences for firms. The most reported
consequence is an increased workload for existing staff (63% of firms reporting skill gaps). This is followed
by: increased operating costs (50%) and difficulties in implementing new working practices (46%). One in
three firms say that skill gaps limit their ability to adopt new technologies. This highlights the significant
economic risks posed by skill gaps and reinforces the need for firms to address these challenges.

How do firms tackle skill gaps?

Recognising skill gaps is essential to addressing them. Firms with skill gaps are more likely to be
those that proactively assess their skill needs (73% versus 63% for firms with no gap, on average across
countries). The difference between firms with and without gaps is particularly high in the Netherlands the
Slovak Republic (21 and 12 percentage points respectively). In contrast, firms that are unaware of whether
they have skill gaps are often those that do not regularly assess their skill needs (45%). The share is as
low as 15% in Hungary. This finding underscores the need for policies that support firms – particularly
small and medium sized enterprises – in developing robust skills assessment practices.
Training and development of existing staff is the most common strategy used by firms to address
skill gaps. Nine out of ten enterprises facing skill gaps use this approach. Fewer enterprises rely on
recruitment (49% on average across countries) and changes in working practices (39%). Only a small
proportion of enterprises address skill gaps by outsourcing or discontinuing activities (5%), with small
enterprises in the Slovak Republic most likely to do so (10%). Larger firms are generally more likely to rely
on training as a solution, while smaller firms are more likely to adapt working practices, such as
redistributing tasks between employees. Sectoral differences are modest, but firms in the service sectors
are more likely to invest in training than those in manufacturing.
Recruitment is another key strategy used by companies to address skill gaps, particularly when they
need to acquire specific skills quickly to meet immediate operational needs. However, many companies
find it difficult to recruit for the skills they lack internally, particularly in tight labour markets. There is a
strong overlap between the skill areas for which employers report gaps in their workforce and the skill
areas for which they find it difficult to recruit externally. This suggests that relying on recruitment alone
cannot be a sufficient strategy in a competitive labour market where certain technical and professional
skills are in short supply.
Firms with skill gaps are less likely to adopt modern working practices such as teamwork, regular
meetings to improve work processes and the maintenance of databases of best practice. For example,
data from Portugal show that firms with skill gaps have a lower proportion of employees working in teams
(46% vs. 48% for firms with no gap), are less likely to hold meetings to improve working practices than
firms without skill gaps (25% vs. 27%) and less likely to update databases of good practices (23% vs. 31%).
This suggests that skill gaps not only hinder operational efficiency but may also limit a firm’s ability to foster
collaboration and innovation.

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8

1 How firms experience skill gaps

The global economy is transforming rapidly, driven by technological

advances, the move towards net-zero emissions, ageing populations,
changing consumer preferences, and evolving business practices. These
changes are reshaping skill needs, often creating gaps between the skills
available in the workforce and those needed by firms. This chapter explores
the extent of these skill gaps across countries, sectors, and firm sizes using
new data from the PIAAC Employer Module. It examines the types of skills
for which gaps are reported and their impact on firm performance. It
provides insights for policy makers to better understand and address these
challenges.

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 9

In Brief
How firms experience skill gaps

• Firms are navigating a changing global economy that is being reshaped by AI, shifting consumer
preferences, the reorganisation of supply chains, the drive for climate sustainability and broader
demographic changes. As firms adapt, skill gaps – mismatches between the skills needed by
firms and those available in their current workforce – are becoming more critical. On average
across countries, 36% of firms experience some extent of skill gaps, with the biggest incidence
of gaps occurring in the Slovak Republic (54%), followed by Italy (37%), Portugal (32%), the
Netherlands (31%) and Hungary (27%).
• When firms identify skill gaps, they often pertain to only some of their employees. Very few firms
(<5%) indicate that most or all their workforce lacks the necessary skills for their roles.
• Some firms are unaware of potential skill gaps, with the highest levels of uncertainty reported in
the Netherlands (18%) and Hungary (15%). This lack of awareness likely stems from inadequate
skills assessment and planning, particularly in smaller companies.
• Larger firms are more likely to report skill gaps than smaller ones (59% on average vs. 34%).
This may reflect real differences in skill gaps due to greater organisational complexity and more
decentralised decision-making in larger firms, as well as greater awareness of these gaps due
to more systematic skill needs assessment (see also Chapter 2).
• Skill gaps are most prevalent in the manufacturing sector (41% on average vs. 32% in the
communications and finance sector, for example). Differences between sectors can reflect
differences in underlying skill needs but may also arise from the different ways and speeds at
which technological progress transforms industries and subsequently changes the skills
required.
• According to firms, employees most often lack technical, problem-solving and teamwork skills.
Across all countries, large firms report shortages in IT and management skills, while small firms
are more likely to identify gaps in customer service and problem-solving skills. Firms in the
communication and financial sectors are more likely to have gaps in IT and management skills,
while firms in the manufacturing and construction sectors face gaps in technical skills. These
reported skill gaps likely reflect the different needs of firms of different sizes and in different
industries.
• There is a clear divergence in perceptions of skill gaps between employers and employees,
particularly when it comes to digital skills, where employees are more likely to report gaps in this
area. This highlights the importance of a skill needs assessment that draws on insights from
management and HR, employees, and their representatives.
• Almost all firms reporting skill gaps acknowledge that these gaps have a negative impact on
performance. The main concerns are an increased workload for existing staff, difficulties in
implementing new working practices and rising operating costs. Although not the main concern,
around one in five firms in all countries report losing business to competitors or not being able
to take on as much work as they would like, while almost one-third cannot introduce new
technologies.

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10 

Introduction

The global economy is undergoing profound transformations, driven by technological advances such as
artificial intelligence (AI), the reshaping of global supply chains, changes in consumer preferences and
behaviour, and the need for business models to be environmentally sustainable. These forces present
significant opportunities for firms to improve their productivity and competitiveness. They also present
complex challenges, particularly in recruiting, developing and retaining a workforce with the skills needed
to thrive in this evolving landscape.
As firms strive to adapt to a rapidly evolving landscape, the need for workers with new and more advanced
skill sets is growing. Skill gaps – defined as the mismatch between the skills available in a workforce and
those required to meet current and future business needs – are becoming a critical challenge for firms
(Box 1.1). Organisations increasingly require employees who can combine technical expertise with
advanced cognitive and socio-emotional skills and work effectively alongside AI and autonomous systems.
Addressing these skill gaps is essential, as they directly impact an organisation’s ability to innovate, stay
competitive and achieve sustainable growth (McGuinness, Pouliakas and Redmond, 2018[1]; McGuinness
and Ortiz, 2016[2]).
To better understand these changes, the PIAAC Employer Module surveyed firms with ten or more
employees on the changes they had been affected by in the last three years.1 The share of firms that were
significantly affected by some kind of change is 88% in Italy, 73% in Portugal, 61% in Hungary, 49% in the
Slovak Republic and 43% in the Netherlands. On average across countries, changes to ICT and
processes, working methods and organisational practices, and contact with customers are most likely to
affect firms (Figure 1.1). Such changes can leave workers – even those with high levels of education and
skills – lacking the specific skills required for their job. Whether they translate into sustained skill gaps
depends on the ability of firms to recognise, diagnose and address them (McGuinness and Ortiz, 2016[2])

Figure 1.1. Changes affecting firms are widespread

Share of firms that indicated having experienced change in the named areas in the past three years (%)

70

60

50

40

30

20

10

0
ICT and ICT Working methods and Client or customer Products or services Machinery Domestic outsourcing Foreign outsourcing
processes organisational contact practices practices
practices

Note: Unweighted average across participating countries.

Source: PIAAC Employer Module (2022).

The PIAAC Employer Module is a unique dataset capturing employers’ perspectives on these skill gaps.
The initial wave of the survey was conducted in five OECD countries – Hungary, Italy, the Netherlands,

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  11

Portugal, and the Slovak Republic.2 This chapter first presents the empirical results of the extent of the
skill gap faced by firms in different countries, industries and of different sizes.3 It then explores the types
of skills that employers consider to be lacking, before analysing the relationship between skill gaps and
firm performance. Finally, it compares employer and employee perspectives on skill gaps by drawing on
results of the 2023 Survey of Adult Skills. These findings are essential for policy makers seeking to
understand the extent of skill gaps in the economy and to identify the support needs in addressing the
gaps for different types of firms.

Box 1.1. Distinguishing skill gaps and skill shortages

Skill gaps refer to situations where workers lack the skills required for their current job, according to
employers. Unlike skill shortages, which indicate a lack of skilled workers in the labour market, skill
gaps relate to a firm’s current employees and are specific to the needs of the firm. Skill gaps can
therefore be understood as micro-level mismatches, whereas skill shortages are macro-level
mismatches.
Under-skilling refers to a worker’s perspective on skill gaps and denotes a situation where workers do
not have what they consider to be the necessary skills for their current job. While skill gaps and
under-skilling are closely related, they are not identical.
Source: Marcolin and Quintini (2023[3]) Measuring skill gaps in firms: the PIAAC Employer Module, OECD Social, Employment and Migration
Working Papers No. 292, https://doi.org/10.1787/903c19c9-en and Cedefop (2010[4]), Briefing note: Skill mismatch in Europe, June 2010,
www.cedefop.europa.eu/files/9 023_en.pdf

How widespread are skill gaps in firms?

Skill gaps have been less widely studied than other types of skill imbalances. Skill gaps are typically
understood as the difference between the skills workers currently possess and the skills they need to
perform their jobs effectively (Marcolin and Quintini, 2023[3]; McGuinness, Pouliakas and Redmond,
2018[1]). This can encompass a wide range of skills, from technical job-specific skills to cognitive and non-
cognitive skills. Furthermore, these skill needs can vary across jobs, occupations and sectors (OECD,
2017[5]).
Research has mainly relied on employer surveys to measure skill gaps, which come with the usual caveats
around subjectivity and perception bias (McGuinness, Pouliakas and Redmond, 2018[1]; Rikala et al.,
2024[6]; Centeno, Karpinski and Urzi Brancati, 2022[7]). These surveys directly ask firms whether, or what
proportion of, their workforce lacks skills, and about the specific skills they perceive to be lacking. This
approach captures the extent of workers’ deficiencies in relation to current job requirements. The inverse
approach of asking workers to assess their skills is often reflected in the concept of ‘under-skilling’. While
skill gaps and under-skilling are closely related, they are not identical. Research using linked employer-
employee data shows that workers tend to report higher levels of skill deficiencies than employers
(McGuinness and Ortiz, 2016[2]). This disparity may be because employees consider broader career
development needs, while employers focus on immediate – and often short-term – operational needs.
The PIAAC Employer Module follows this approach but provides new insights by using a standardised
approach to collect data across several countries. It asks firm representatives to estimate how many of
their employees lack the necessary skills to perform their job at the required level. The data highlight
substantial differences in the extent of reported skill gaps across the five countries, with over half of firms
in the Slovak Republic acknowledging some degree of skill gap (54%), the highest of all countries

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12 

(Figure 1.2). This is followed by Italy (37%), Portugal (32%), the Netherlands (31%) and Hungary (27%).
Where firms identify skill gaps, these most frequently concern only few or some of their employees. Much
smaller shares of firms (<5%) report that most of or all their employees do not have the skills needed to do
their job to the required level.
A non-negligible share of firms state they do not know whether they have a skill gap, at, most notably, 18%
in the Netherlands and 15% in Hungary. The uncertainty expressed by many firms about the skill gaps in
their workforce is likely to reflect a wider problem of inadequate skills assessment and anticipation,
particularly in smaller firms. According to OECD research, many firms assess their future skills and
competence needs (OECD (2021[8]), see also Chapter 2). However, they often use only basic methods
and do not use their assessment for strategic workforce planning. In addition, skill needs are typically
assessed by HR and management functions, with limited involvement of employees and their
representatives, who could provide complementary insights (OECD, 2021[8]).

Figure 1.2. A sizeable share of firms reports skill gaps in their organisation
Share of all firms reporting skill gaps by intensity, by country

Few Some Most All None Don't know

%
100
90
80
70
60
50
40
30
20
10
0
Slovak Republic Italy Portugal Netherlands Hungary

Note: Countries are ordered by descending share of firms identifying skill gaps; some data for the Netherlands are censored due to confidentiality
constraints.
Source: PIAAC Employer Module (2022).

Understanding how skill gaps differ across firms of different sizes and sectors is essential for developing
targeted strategies to address them effectively. Data from the Employer Module show that large firms are
most likely to report skill gaps (Figure 1.3). In all countries, more than 50% of large firms state that they
experience a skill gap, ranging from 72% in the Slovak Republic to 52% in Portugal. By contrast, 51% of
small firms in the Slovak Republic and only 25% of small firms in Hungary report similar issues. It should
be noted that, in aggregate, the majority of skill gaps are in fact concentrated in small and medium sized
firms, which constitute the majority of businesses in the economy.
This pattern is aligned with patterns observed in previous research on skill gaps (McGuinness and Ortiz,
2016[2]; Fissuh, Gbenyo and Ogilvie, 2022[9]). It may reflect both real differences in the experience of skill
gaps between larger and smaller firms, and different levels of awareness of these gaps. Larger firms
typically have more formalised management practices, which include workforce planning and the
systematic assessment of skills (OECD, 2021[8]; McGuinness and Ortiz, 2016[2]; Storey et al., 2010[10]).

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  13

Larger firms may also be less agile than smaller firms to react and adapt to changing skill demands on
their workforce, due to organisational complexity and more decentralised decision making processes
(Bueechl et al., 2021[11]; Baum and Wally, 2003[12]).

Figure 1.3. Large firms are more likely to experience skill gaps
Share of firms in each size group reporting some degree of skill gap, by country (%)

Small Medium Large

80

70

60

50

40

30

20

10

0
Slovak Republic Italy Portugal Netherlands Hungary

Note: Share of firms reporting any kind of skill gap includes some, few, most or all employees; Countries are ordered by descending share of
firms identifying skill gaps; Small refers to firms that employ 10-49 employees; Medium refers to firms that employ 50-249 employees, Large
refers to firms that employ 250 or more employees.
Source: PIAAC Employer Module (2022).

When looking at skill gaps within sectors of activity, patterns across countries are less consistent, though
in most countries, the highest proportions of firms with skill gaps are found in manufacturing. (Figure 1.4).
A notable exception is Italy, where skill gaps are comparatively evenly distributed across sectors, with firms
in communication and financial services having the highest share (40%). The sectors with the lowest
shares of firms with skill gaps vary between countries and are communications and financial services in
Hungary (20%), the Netherlands (25%) and the Slovak Republic (45%), construction in Italy (32%), and
real estate, business services and arts in Portugal (25%). Differences between sectors may be partly due
to the different ways and the different speeds in which technological progress is reshaping industries and
thus the skill requirements in different sectors (Nedelkoska and Quintini, 2018[13]; OECD, 2023[14]).
Regression analysis looking at the link between skill gaps and firm characteristics largely supports the
descriptive analysis discussed above (Table 1.1). It finds that medium and large firms are more likely than
small firms to experience a skill gap (Models 1 and 2). However, when they experience skill gaps, these
tend to be less pronounced than in small firms (Models 3 and 4). This may be because medium and large
firms have more resources and strategies to address skill gaps before they escalate (see details below).
Additionally, in smaller firms with fewer employees, even a small number of individuals with skill gaps can
make the overall gap in the workforce feel more significant.
The construction sector is less likely to experience skill gaps compared to manufacturing, while other
industries do not significantly vary in their likelihood of experiencing skill gaps, after controlling for other
background characteristics (Models 1 and 2). When construction firms experience skill gaps, they also
tend to be less severe (Models 3 and 4).

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14 

This analysis also finds that younger firms – those created in the last two decades – are more likely to
exhibit skill gaps (Model 2), though they are not significantly more likely than older firms to experience
more pronounced gaps (Model 4). This may be because younger firms are generally less well-established
in the market and do not yet have well-functioning processes to identify and address skill gaps, or because
their work processes may be changing more rapidly.

Figure 1.4. Manufacturing firms most frequently experience skill gaps

Share of firms in each industry reporting some degree of skill gap, by country (%)

Manufacturing Construction Wholesale; Transport; Accom Comm; Finance Real Estate; Services

70

60

50

40

30

20

10

0
Slovak Republic Italy Portugal Netherlands Hungary

Note: Share of firms reporting any kind of skill gap including some, few, most or all employees; Countries are ordered by descending share of
firms identifying skill gaps; Manufacturing refers to NACE Rev. 2. B, C, D, E, Construction refers to NACE Rev. 2. F, Wholesale; Transport;
Accom refers to NACE Rev. 2. G, H, I, Comm; Finance refers to NACE Rev. 2. J, K, Real Estate; Services refers to NACE Rev. 2. L, M, N, R, S.
Source: PIAAC Employer Module (2022).

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Table 1.1. Relationship between skill gaps and firm characteristics

OLS coefficients

Experiencing any size Experiencing any size Experiencing Experiencing

skill gap skill gap pronounced skill gaps pronounced skill gaps
(Model 1) (Model 2) (Model 3) (Model 4)
Medium firm 0.171*** 0.168*** -0.0494*** -0.0565***
(0.000) (0.000) (0.000) (0.000)
Large firm 0.291*** 0.274*** -0.0677*** -0.087***
(0.000) (0.000) (0.000) (0.000)
Construction -0.0438* -0.0552** -0.0292* -0.032*
(0.014) (0.002) (0.023) (0.015)
Wholesale; Transport; -0.0187 -0.0194 0.0128 0.023*
Accom (0.200) (0.188) (0.234) (0.039)
Comm; Finance -0.0575* -0.0329 -0.016 -0.00395
(0.038) (0.086) (0.235) (0.821)
Real Estate; Services -0.0311 -0.033 -0.0145 -0.021
(0.056) (0.067) (0.481) (0.389)
Younger firm 0.0586*** -0.0174
(0.000) (0.322)
R-squared 0.032 0.031 0.020 0.010
Observations 31 372 21 934 14 398 10 038

Note: Any size skill gap includes firms indicating skill gaps for some, few, most or all employees; Pronounced skill gaps include firms indicating
skill gaps for most or all employees; Medium firm refers to 50-249 employees, Large firm refers to 250 or more employees (reference category
is small firms; 10-49 employees); Construction refers to NACE Rev. 2. F, Wholesale; Transport; Accom refers to NACE Rev. 2. G, H, I, Comm;
Finance refers to NACE Rev. 2. J, K, Real Estate; Services refers to NACE Rev. 2. L, M, N, R, S (references category is Manufacturing; NACE
Rev. 2. B, C, D, E); Younger firm refers to firms created 2001-20 (references category is firms created before 2000); regressions control for
country; standard errors clustered at the country-size-industry level; p-values in brackets; significance levels as follows: * p <0.05, ** p < 0.01,
*** p <0.001.
Source: PIAAC Employer Module (2022).

Frontier firms, i.e. firms that are more productive, more innovative, and more profitable (Andrews, Criscuolo
and Gal, 2015[15]), may be more likely than other firms to experience skill gaps. As these firms develop
innovative products and adopt cutting-edge technologies, the skill needs required of their workforce may
evolve faster than their employees can upskill, creating skill gaps. In addition, the specialised skill sets
required by frontier companies are often in high demand but low supply in the labour market overall, making
it difficult to satisfy skill needs through hiring. Data from the PIAAC Employer Module finds that firms that
are more innovative are more likely to experience a skill gap, when compared to non-frontier firms
(Table 1.2, Model 1).
In contrast, there is some evidence to suggest that firms that operate in premium quality markets are
significantly less likely to experience a gap (Model 3). This may be because firms that focus on producing
high quality products and services often cultivate a culture of continuous improvement and skills
development, ensuring that employees are well prepared to meet the evolving needs of the industry.
Moreover, neither being highly innovative nor selling premium quality goods or services is associated with
experiencing a more pronounced skill gap (Models 2 and 4). Given these mixed findings, further research
is needed to understand the link.

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Table 1.2. Relationship between skill gaps and frontier firms

OLS coefficients

Experiencing any size Experiencing Experiencing any size Experiencing

skill gap pronounced skill gaps skill gap pronounced skill gaps
(Model 1) (Model 2) (Model 3) (Model 4)
Innovative firms 0.0698*** 0.0101
(0.000) (0.462)
Premium quality firms -0.0433** 0.0194
(0.005) (0.527)
R-squared 0.029 0.022 0.026 0.022
Observations 23 386 10 767 23 386 10 767

Note: Any size skill gap includes firms indicating skill gaps for some, few, most or all employees; Pronounced skill gaps include firms indicating
skill gaps for most or all employees; Innovative firms refers to firms who very frequently or frequently lead the way in terms of developing new
products, services or techniques compared to other firms in their sector (reference category is firms that innovate occasionally, rarely or very
rarely); Premium quality firms refers to firms that compete in a market for premium quality products or services (reference category is non-
premium quality); regressions control for firm size, industry and country; standard errors clustered at the country-size-industry level; p-values in
brackets; significance levels as follows: * p <0.05, ** p < 0.01, *** p <0.001.
Source: PIAAC Employer Module (2022).

In what areas do firms experience skill gaps?

The nature and way in which megatrends influence skill gaps varies considerably across countries, sectors,
and types of firms. Some firms struggle to find workers with the technical expertise needed to operate
advanced machinery or new software, while others face shortages in soft skills such as communication,
problem-solving and adaptability. Identifying and understanding these specific skill gaps is crucial for policy
makers who want to support firms in developing strategies to maintain their competitiveness. This section
examines the different types of skill gaps faced by firms.
The PIAAC Employer Module asked employees to state up to three skill areas that need improvement in
their workforce. Across countries, the following categories are most frequently identified as needing
improvement: i) technical skills; ii) problem-solving skills; and iii) teamwork skills (Figure 1.5). Some
notable exceptions exist, with firms in the Slovak Republic naming customer handling skills amongst the
top-three gaps, and firms in the Netherlands naming customer handling and management skills amongst
the top-three gaps.
Across countries, large firms are most likely to report gaps in IT professional and management skills, while
small firms are most likely to report shortages in customer service and problem-solving skills. These
reported skill gaps likely reflect the different needs of firms of different sizes, with larger firms requiring
more managerial skills, for example. Looking at differences in gaps for firms in different industries, across
all countries, firms in the communication and financial sectors are more likely to be short of IT professional
and management skills, while firms in the manufacturing and construction sectors are particularly short of
technical skills. Skill gaps in certain areas are likely to reflect the underlying skill needs of industries, with
IT skills, for example, being more relevant to the skill needs of the services sector.

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Figure 1.5. Key skill gaps are reported for technical, problem-solving, and people-oriented skills
Share of firms reporting skill gaps in different skill areas, by country (%)

Hungary

60

40

20

Italy

60

40

20

Netherlands

60

40

20

Portugal

60

40

20

Slovak Republic

60

40

20

Source: PIAAC Employer Module (2022).

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Do employers and employees have different views on skill gaps?

Policy makers benefit from examining skill gaps from both employers’ and employees’ perspectives, as
these often diverge. Empirical research comparing these perspectives is limited. The most notable studies
use matched employer-employee data from the 2006 Irish National Survey. They find that employees are
more likely to identify skill gaps than employers. Further, they show that effective communication between
management and employees – through mechanisms such as human resource management or collective
bargaining – play a key role in aligning employer and employee views. In the absence of these structures,
information asymmetries arise, with employers identifying gaps that employees may not perceive, and vice
versa. Finally, they demonstrate that firm performance is affected by the degree to which employee and
employer views on skill gaps coincide (McGuinness and Ortiz, 2016[2]; 2014[16]).
A study by Jackson and Chapman (2012[17]) extends the understanding of asymmetries in perception of
skill gaps by comparing views of employers and academics on skill gaps in Australian business graduates.
Focusing on non-technical skills, this study shows significant differences between academic and employer
perceptions of graduate skill gaps, particularly in areas such as decision-making and commercial
awareness, where employers rated graduates significantly lower than academics. Both studies highlight
the importance of effective communication and alignment between different stakeholders to accurately
identify and address skill gaps.
The Employer Module provides a valuable opportunity to examine skill gaps from the employer perspective
and then compare it with employees’ perspective in the 2023 Survey of Adult Skills (OECD, 2024[18]). The
two are conceptually aligned, using consistent language and concepts to assess skill gaps, with both data
collections taking place simultaneously. This alignment allows some comparisons between the two
perspectives and helps to shed light on skill mismatches in the workplace. However, while information on
under-skilling – the employee perspective on skill gaps – can be calculated as the exact share of under-
skilled employees in a country, size group and industry, information on skills mismatches – the firm
perspective on skill gaps – can only be calculated as the share of firms that report having ‘few’, ‘some’,
‘most’ and ‘all’ employees with skill gaps.
To compare the skill gaps reported by employers and employees across countries (Table 1.3), one needs
to consider how individuals typically interpret categorical responses. Alongside any cross-country
differences in response styles, people can have different interpretations of terms such as ‘few’, ‘some’,
‘most’ and ‘all’:
• Few: A small number between 1% and 10% of a group,
• Some: A moderate number, between 10 and 30% of a group,
• Most: A majority, more than 50% of a group,
• All: 100% of the group.
The comparison between employers’ and employees’ perceptions shows that in most countries the views
of the two are not particularly close, with employers more likely to report that their employees lack skills.
The exception is the Netherlands, where 25% of employers report that few (i.e. less than 10%) of their
employees have skill gaps and 5% of employers report that some (10-30%) of their employees have skill
gaps. Hence, the relatively high proportion of employees reporting being under-skilled (13%) is seemingly
more aligned with employer views than in other countries.

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Table 1.3. Employer and employee perceptions on the extent of skill gaps are not aligned
Share of employers reporting skill gaps at various levels; share of employees reporting being under-skilled (%)

Percentage of employers indicating that […] of their employees lack the Percentage of employees that say
skills to do their job they lack the skills to do their job
Few Some Most All
Hungary 19 6 2 0 4
Italy 22 10 3 1 6
The Netherlands 25 5 0 0 13
Portugal 20 8 2 2 7
The Slovak Republic 45 4 3 2 5

Source: PIAAC Employer Module (2022) and Survey of Adult Skills (2023).

There is also a significant disconnect between the areas where skill gaps are identified by employers and
the areas in which employees feel under-skilled (Table 1.4). In all countries, employees cite computer and
software skills as a top area where they feel lacking, yet only employers in the Netherlands highlight lack
of digital skills as a top skill gap. This could reflect the fact that employees may take a broader view on
their skills including anticipating future upskilling needs, while employers may be more focussed on daily
or current operational needs. By contrast, while employers in most countries emphasise technical skills,
employees tend to identify gaps in foreign language skills and organisational skills. This divergence points
to a potential mismatch between the immediate operational needs of firms and the broader skills that
employees believe are essential for their long-term career.
Employers and employees have a shared recognition for teamwork and communication skills as being
important, although these are not consistently prioritised by either side. Employers in Hungary and Italy
rank teamwork highly, while employees in the Slovak Republic feel most under-skilled in communication
and presentation skills. This reflects a common concern about interpersonal skills, albeit with different
emphasis on where improvement is needed across countries.
These results highlight a clear gap in perceptions between employers and employees, particularly around
digital skill gaps. This shows the importance of skill needs assessment that draws on insights from firm
management and HR, employees, and their representatives.

Table 1.4. Employer and employee perceptions on the most important skill gaps diverge
Top three skill gaps identified by employers and employees, by country

Top three areas where firms have skill gaps Top three areas where employees are under-skilled
Hungary • Problem-solving • Computer and software
• Technical • Foreign language
• Teamwork • Other
Italy • Technical • Project management and organisational
• Teamwork • Computer and software
• Problem-solving • Foreign language
The Netherlands • Technical • Computer and software
• Customer handling • Communication and presentation
• Management • Skills in handling customers, clients, patients or
students
Portugal • Technical • Other
• Teamwork • Computer and software
• Problem-solving • Project management and organisational

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Top three areas where firms have skill gaps Top three areas where employees are under-skilled
The Slovak Republic • Technical • Skills in handling customers, clients, patients or
• Customer handling students
• Problem-solving • Computer and software
• Communication and presentation

Source: PIAAC Employer Module (2022) and Survey of Adult Skills (2023).

Do skill gaps influence firm performance?

The limited research that is available shows that skill gaps have a detrimental effect on organisational
performance. These gaps reduce productivity, hamper innovation and increase operating costs,
particularly through higher labour costs and frequent investment in training. The impact of skill imbalances
more broadly has been studied extensively and shows how shortages can disrupt productivity and growth
(see Marcolin and Quintini (2023[3]))
Productivity is one of the most direct and measurable areas affected by skill gaps. When workers lack the
necessary skills to perform their jobs efficiently, firms experience a decline in output and often need to
invest more time and resources to achieve good levels of performance. McGuinness and Ortiz (2016[2])
note that firms with significant skill gaps tend to hire additional workers or extend working hours to maintain
productivity, which increases labour costs. This inefficiency can result in firms being unable to meet
demand, which in turn can lead to lower profitability. For example, a study on UK firms finds that ICT skill
gaps had a negative impact on sales performance (Forth and Mason, 2004[19]). In cases where a firm
operates in a highly competitive market, the inability to meet production targets or deadlines due to skill
shortages can lead to a loss of market share.
Beyond direct productivity losses, skill gaps can also hamper innovation. In industries where technological
progress and innovation are crucial to maintain competitiveness, such as ICT or high-tech manufacturing,
the lack of key technical skills amongst the workforce can be a critical bottleneck. Summarising the results
from various employer surveys, Tether at al (2005[20]) show that between 30% and 40% of firms
experiencing skill gaps reported that this had delayed the introduction of new working practices and
between 20% and 30% reported that it delayed the introduction of new products. A Scottish survey found
that 25% of firms reported that skill gaps caused difficulties in implementing technological change.
Innovation, particularly in sectors that rely heavily on research and development, is linked to the ability of
workers to adapt to and implement new processes and technologies. Skill gaps in these areas limit a firm’s
ability to introduce new products or services, reducing long-term growth prospects.
Skill gaps can also increase operating costs. Firms may need to invest heavily in training or outsourcing to
compensate for the lack of internal expertise. Although training can be an effective long-term strategy for
addressing skill gaps, it also imposes short-term financial burdens, particularly if firms need to frequently
up-skill or reskill workers to keep pace with industry developments. McGuinness and Ortiz (2016[2])
highlight that this approach can lead to additional costs, and without strategic planning, firms may not fully
recoup the cost of their investments.
By examining data from the PIAAC Employer Module, this report provides further empirical evidence on
the extent to which skill gaps affect firms, contributing to a deeper understanding of how firms are
addressing these challenges. It collects information on the perceived impact of skill gaps on firms. These
data are available for Hungary, Italy and Portugal as these countries opted to use this optional question of
the PIAAC Employer Module.

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Figure 1.6. Skill gaps impart a range of impacts on firms

Share of firms reporting impact of skill gaps, by country (%)

Hungary Italy Portugal

Delays in developing Delays in developing Delays in developing

new products/services new products/services new products/services

Difficulty introducing Difficulty introducing Difficulty introducing

new work practices new work practices new work practices

Difficulty introducing Difficulty introducing Difficulty introducing

technological change technological change technological change

Difficulty meeting Difficulty meeting Difficulty meeting

customer service customer service customer service
objectives objectives objectives

Difficulty meeting quality Difficulty meeting quality Difficulty meeting quality

standards standards standards

Increased operating Increased operating Increased operating

costs costs costs

Increased workload Increased workload Increased workload

Loss of business to Loss of business to Loss of business to

competitors competitors competitors

Take-on less business Take-on less business Take-on less business

than desired than desired than desired

Withdrawal of Withdrawal of Withdrawal of

products/services products/services products/services

0 50 100 0 50 100 0 50 100

Source: PIAAC Employer Module (2022).

Almost all firms with a skill gap (99% in Portugal, and 92% in Hungary and Italy) experience some kind of
negative effect. Across countries, an increase in workload for existing staff, increased operating costs and
difficulties in introducing new work are the most common impacts experienced (Figure 1.6). Other top
concerns mentioned by firms include difficulties meeting customer service objectives – especially
mentioned by a large majority of firms in Portugal – and quality standards. While not the highest concern,
about one-quarter of firms across all countries mention losing business to competitors or not being able to
take on as much business as desired, while another third faced difficulty introducing new technologies.
These data together suggest that firms facing skill gaps suffer considerable business impacts that limit
their ability to meet their current and future business needs. Some of these impacts also limit firms’ ability
to reform work practices and adapt to technological change, hindering their potential future productivity
and growth.
Across countries, small firms are more likely than medium and large firms to report: i) not being able to
take-on as much business as they would have liked; ii) a loss of business to competitors; and iii) delays in
developing new products or services. While in Hungary large firms are the most likely to face increased
operating costs, the opposite is true in Italy where small and medium sized firms face higher costs when
confronted with skill gaps. No significant differences in effects are reported across different industries.

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Surprisingly, firms with more pronounced skill gaps tend to experience negative effects less frequently than
firms with less pronounced skill gaps (Table 1.5). Even when firms actively implement strategies to address
these gaps – such as carrying out skill needs assessments and investing in training (Models 2 and 3) –
this relationship still exists. This may indicate that firms with more severe gaps do not take corrective action
because they are less affected by their negative effects. Alternatively, it may suggest that firms with less
severe skills gaps are more proactive in addressing gaps before they become more severe, also because
they more strongly experience their effects as negative. Further analysis is needed to better understand
the link between severity of skill gaps, their consequences and strategies implemented to improve gaps.
Together, results in this chapter reiterate that identifying and addressing skill gaps remains important.
Firms should develop a broader approach to workforce development that includes long-term planning,
continuous upskilling and possibly redesigning roles to better match available skills. The discussion in the
following chapter takes a closer look at the specific strategies used by firms to address skill gaps, such as
the frequency and method of assessing skill needs, recruitment practices and the types of training
provided, and how these practices differ by sector and firm size.

Table 1.5. Relationship between skill gaps and firm performance

OLS coefficients

Experiencing pronounced skill Experiencing pronounced skill Experiencing pronounced skill

gaps gaps gaps
(Model 1) (Model 2) (Model 3)
Experience negative effects -0.136** -0.126* -0.126*
(0.007) (0.013) (0.014)
Use SAA -0.0782***
(0.000)
Offer training -0.0408*
(0.049)
R-squared 0.022 0.030 0.024
Observations 10 937 10 937 10 937

Note: Pronounced skill gaps include firms indicating skill gaps for most or all employees; Experience negative effects refers to firms that
experience at least one negative effect (reference category is no negative effects); Use SAA refers to firms that use skill needs assessment
either regularly or on an ad hoc basis (reference category is no SAA); Offer training refers to firms that offer training (reference category is no
training offered); regressions control for firm size, industry and country; standard errors clustered at the country-size-industry level; p-values in
brackets; significance levels as follows: * p <0.05, ** p < 0.01, *** p <0.001.
Source: PIAAC Employer Module (2022).

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References

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Baum, J. and S. Wally (2003), “Strategic decision speed and firm performance”, Strategic [12]
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Bueechl, J. et al. (2021), Potentials and Barriers of Agility in Small and Medium Sized [11]
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(TIB), https://doi.org/10.52825/bis.v1i.69.

Cedefop (2010), Briefing note: Skill mismatch in Europe, June 2010, [4]
https://www.cedefop.europa.eu/files/9023_en.pdf.

Centeno, C., Z. Karpinski and C. Urzi Brancati (2022), “Supporting policies addressing the digital [7]
skills gap. Identifying priority groups in the context of employment.”, JRC Science for Policy
Report.

Fissuh, E., K. Gbenyo and A. Ogilvie (2022), Determinants of skill gaps in the workplace and [9]
recruitment difficulties in Canada by by Eyob Fissuh, Kodzo-Kuma Gbenyo, and Andrew
Ogilvie, Statistics Canada [Statistique Canada].

Forth, J. and G. Mason (2004), Information and Communication Technology (ICT) Skill Gaps and [19]
Company-Level Performance: Evidence from the ICT Professionals Survey 2000-2001.

Jackson, D. and E. Chapman (2012), Non-technical skill gaps in Australian business graduates, [17]
https://doi.org/10.1108/00400911211210224.

Marcolin, L. and G. Quintini (2023), “Measuring skill gaps in firms: the PIAAC Employer Module”, [3]
OECD Social, Employment and Migration Working Papers, No. 292, OECD Publishing, Paris,
https://doi.org/10.1787/903c19c9-en.

McGuinness, S. and L. Ortiz (2016), “Skill gaps in the workplace: measurement, determinants [2]
and impacts”, Industrial Relations Journal, Vol. 47/3, pp. 253-278,
https://doi.org/10.1111/irj.12136.

McGuinness, S. and L. Ortiz (2014), “Who should we ask? Employer and employee perceptions [16]
of skill gaps within firms”, ESRI Working Paper, No. 48, https://hdl.handle.net/10419/129435.

McGuinness, S., K. Pouliakas and P. Redmond (2018), “Skills mismatch: concepts, [1]
measurement and policy approaches”, Journal of Economic Surveys, Vol. 32/4, pp. 985-1015,
https://doi.org/10.1111/joes.12254.

Nedelkoska, L. and G. Quintini (2018), “Automation, skills use and training”, OECD Social, [13]
Employment and Migration Working Papers, No. 202, OECD Publishing, Paris,
https://doi.org/10.1787/2e2f4eea-en.

OECD (2024), Do Adults Have the Skills They Need to Thrive in a Changing World?: Survey of [18]
Adult Skills 2023, OECD Skills Studies, OECD Publishing, Paris,
https://doi.org/10.1787/b263dc5d-en.

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OECD (2023), OECD Employment Outlook 2023: Artificial Intelligence and the Labour Market, [14]
OECD Publishing, Paris, https://doi.org/10.1787/08785bba-en.

OECD (2021), Training in Enterprises: New Evidence from 100 Case Studies, Getting Skills [8]
Right, OECD Publishing, Paris, https://doi.org/10.1787/7d63d210-en.

OECD (2017), Getting Skills Right: Skills for Jobs Indicators, Getting Skills Right, OECD [5]
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Storey, D. et al. (2010), “Linking HR formality with employee job quality: The role of firm and [10]
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Notes

1
It should be noted that while the data for the Employer Module was collected in 2022 and 2023, the
reference year for firms is 2020.

2
All analysis applies weights that scale the sample to the population level within each country.

3
Summary statistics by firm size, industry, firm age and market sector are presented in Annex E.

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2 How firms address skill gaps

The global economy is evolving rapidly, creating challenges for firms to

align the skills of their workforce with emerging skill needs, resulting in skill
gaps in firms. This chapter examines how firms are addressing these skill
gaps through strategies such as training and development, recruitment,
changes in working practices and outsourcing. Drawing on new data from
the PIAAC Employer Module, it also seeks to understand the relationship
between firms’ practices for assessing skill needs and the reporting of skill
gaps.

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In Brief
How firms address skill gaps

• Firms use various strategies to address skill gaps, with the most common being training and
developing existing staff. Nine in ten firms facing skill gaps employ this approach. Fewer firms
rely on recruitment (49%) and changes in work practices (39%). Only a small share of firms
addresses skill gaps through outsourcing or abandoning activities (5%).
• The approach taken varies by firm size and sector. Larger firms with skill gaps tend to rely more
on training (97%), while smaller firms often adjust work practices (42%), such as by redistributing
tasks. Sectoral differences are modest, although service sector firms do provide more training
than those in manufacturing.
• Recognising skill gaps is essential to addressing them, and new evidence from the PIAAC
Employer Module shows that anticipating skill needs is positively correlated with reporting skill
gaps (73% of firms with a skill gap assess skill needs compared to 63% of firms with no gap).
Firms that do not assess skill needs are least likely to know whether they have skill gaps. This
points to the need for policies that support firms – particularly small and medium sized firms –
to identify their evolving skill needs.
• Recruitment is a key strategy for addressing skill gaps, allowing firms to bring in the skills they
need for immediate operational needs. However, tight labour markets make recruitment
increasingly difficult, particularly for technical skills. Data from the PIAAC Employer Module
highlight the overlap between the skills that firms report as lacking in their own workforce and
the skills that they find difficult to recruit in the wider labour market. In addition, data from Portugal
show that firms with skill gaps are more likely to experience recruitment and retention difficulties.
Taken together, these findings emphasise the need for firms to adopt a variety of strategies to
address skill gaps, rather than relying on recruitment alone.
• Firms with skill gaps are more likely to provide training (53% of firms with a skill gap provide
training compared to 37% of firms with no gap). Larger firms and those operating in service
industries are also significantly more likely to provide training. This suggests that training is a
key strategy for addressing skill gaps.
• Firms with skill gaps are less likely to use modern work practices. Data from Portugal shows that
firms with skill gaps have a lower share of employees working in teams (46% vs. 48%), are less
likely to have meetings to improve working practices (25% vs. 27%) and to use and update
databases of best practices (23% vs. 31%) than firms without skill gaps. This suggests that these
gaps limit their ability implement modern work practices.

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Introduction

Skill gaps have a direct impact on productivity, innovation and competitiveness (see Chapter 1). It is
therefore crucial for firms to address them to ensure their long-term competitiveness in a changing global
market. The literature identifies several strategies that employers can use to tackle skill gaps. These
strategies include adapting organisational structures, adopting new technologies, fostering a culture of
continuous learning, and adapting human resource management (HRM) practices to evolving needs.
Employers play a central role in shaping their organisation to both utilise existing skills and encourage the
development of new ones (Greenan and Lorenz, 2017[1]). Decisions about organisational design and
working practices directly influence how skills are used in the workplace and create opportunities for
continuous skills development. A key area where employers can have an impact is using technology,
particularly information and communication technologies (ICT). Research shows that employers’ decisions
about how and when to use these technologies can reshape work processes – sometimes intensifying
tasks, but also automating routine functions (Frey and Osborne, 2017[2]; Nedelkoska and Quintini, 2018[3];
Lane, Williams and Broecke, 2023[4]). These changes in skill requirements create opportunities for
employers to up-skill their workforce, particularly in emerging areas such as artificial intelligence.
Management practices that encourage continuous learning and staff development are also essential.
Techniques such as job rotation, autonomous teams and project groups create an environment that fosters
skills development (Fialho, Quintini and Vandeweyer, 2019[5]; OECD, 2021[6]). In addition, organisations
that emphasise employee autonomy and flexible co-ordination mechanisms tend to foster more innovation
by giving employees the space to explore new ideas and skills. Formal and non-formal training
programmes also bridge the gap between current skills and future needs, reducing skill gaps within firms.
Schwalje (2012[7]) stresses that these efforts need to be supported by long-term strategies that integrate
internal and external training opportunities, with co-operation between employers, educational institutions
and policy makers playing a crucial role in developing responsive and flexible training programmes.
Human resource policies are another important tool for addressing skill gaps. Recruitment and selection
processes allow firms to target specific skills needed to meet current and emerging demands. However,
research suggests that recruitment alone may not be sufficient, particularly in the face of demographic
change and increasing competition for talent (Braun et al., 2024[8]). Performance management, reward and
career development policies are therefore essential to motivate employees to acquire and apply new skills.
This chapter draws on new data from the PIAAC Employer Module to examine the strategies used by firms
to address skill gaps. It begins with an overview of the types of strategies used, followed by a more detailed
analysis of the use of skill needs assessment, recruitment, training, and work organisation practices. Due
to the optional nature of some of these aspects in the survey, some of the analysis is limited to certain
countries where data are available.

Overview of firm practices to address skill gaps

The Employer Module asks firms about the three most important strategies they use to address skill gaps
within their workforce. For the analysis in this section, strategies have been grouped into four categories:
• Training and development: Offer training, offer internal job mobility, implement mentoring
programmes or buddy schemes, increase performance monitoring, and provide regular feedback
to staff.
• Recruitment: Hire new staff with the necessary qualifications, skills, and competencies, potentially
combined with training.
• Work practice adjustments: Change work practices, reallocate tasks, and automate production
processes.

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28 

• Outsourcing or discontinuation: Outsource certain activities or discontinue them altogether.

The most frequently applied strategy by firms facing skill gaps is training and development (Figure 2.1).
Around nine in ten firms with skill gaps in all countries use this option. Recruitment is the next most used
strategy (between 40% and 57% of firms depending on the country), followed by changes in working
practices (between 28% and 51%). Only a small proportion of firms use outsourcing or discontinuation of
activities to address skill gaps (between 2% and 10%).
Firms in the Slovak Republic are more likely than those in other countries to report outsourcing or
discontinuing activities in response to staff skill gaps (10%), although this still represents a small proportion
of firms. Another notable deviation from the cross-country patterns observed is that firms in Hungary report
a lower use of recruitment (40%) and a higher use of changes in working practices (51%) than those in the
other countries in the sample. Box 2.1 discusses other ways in which firms in Portugal are changing their
work practices.

Figure 2.1. Most firms use training and development to tackle skill gaps
Share of firms with skill gaps that use the named strategy, by country (%)

Hungary Italy Netherlands Portugal Slovak Republic

100
90
80
70
60
50
40
30
20
10
0
Training and development Recruitment Change work practices Outsource or abandon activity

Note: Categories are grouped as defined in text.

Source: PIAAC Employer Module (2022).

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  29

Figure 2.2. Smaller firms more frequently change work practices to address skill gaps
Share of firms with skill gaps indicating strategy employed, by size group and country (%)

Hungary

Small Medium Large

100
80
60
40
20
0
Training and development Recruitment Change work practices Outsource or abandon activity

Italy

Small Medium Large

100
80
60
40
20
0
Training and development Recruitment Change work practices Outsource or abandon activity

Netherlands

Small Medium Large

100
80
60
40
20
0
Training and development Recruitment Change work practices Outsource or abandon activity

Portugal

Small Medium Large

100
80
60
40
20
0
Training and development Recruitment Change work practices Outsource or abandon activity

Slovak Republic

Small Medium Large

100
80
60
40
20
0
Training and development Recruitment Change work practices Outsource or abandon activity

Note: Categories are grouped as defined in text; Small refers to firms that employ 10-49 employees; Medium refers to firms that employ 50-249
employees, Large refers to firms that employ 250 or more employees; some data for the Netherlands are censored due to confidentiality
constraints.
Source: PIAAC Employer Module (2022).

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30 

Figure 2.3. Across industries, firms use similar strategies to tackle skill gaps
Share of firms with skill gaps indicating strategy employed, by industry and country (%)

Hungary

Manufacturing Construction Wholesale; Transport; Accom Comm; Finance Real estate; Services; Arts

100
80
60
40
20
0
Training and development Recruitment Change work practices Outsource or abandon activity

Italy

Manufacturing Construction Wholesale; Transport; Accom Comm; Finance Real estate; Services; Arts

100
80
60
40
20
0
Training and development Recruitment Change work practices Outsource or abandon activity

Netherlands

Manufacturing Construction Wholesale; Transport; Accom Comm; Finance Real estate; Services; Arts

100
80
60
40
20
0
Training and development Recruitment Change work practices Outsource or abandon activity

Portugal

Manufacturing Construction Wholesale; Transport; Accom Comm; Finance Real estate; Services; Arts

100
80
60
40
20
0
Training and development Recruitment Change work practices Outsource or abandon activity

Slovak Republic

Manufacturing Construction Wholesale; Transport; Accom Comm; Finance Real estate; Services; Arts

100
80
60
40
20
0
Training and development Recruitment Change work practices Outsource or abandon activity

Note: Categories are grouped as defined in text; Manufacturing refers to NACE Rev. 2. B, C, D, E, Construction refers to NACE Rev. 2. F,
Wholesale; Transport; Accom refers to NACE Rev. 2. G, H, I, Comm; Finance refers to NACE Rev. 2. J, K, Real Estate; Services refers to NACE
Rev. 2. L, M, N, R, S; some data for the Netherlands are censored due to confidentiality constraints.
Source: PIAAC Employer Module (2022).

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  31

In all countries, large firms are more likely to offer training and development opportunities to their
employees than small or medium sized ones (Figure 2.2). This is consistent with existing research showing
that larger firms are more likely to provide training in general (OECD, 2019[9]; OECD, 2021[6]) and likely
reflects the greater availability of human and financial resources in larger firms to devote to training and
development. Managers in larger firms may also be better equipped to train and develop their employees.
This is reflected in the wider literature which finds that managerial quality, including the quality of
performance appraisal, is better in larger firms, with managerial quality in turn being an important
determinant of firm productivity (Criscuolo et al., 2021[10]).
In contrast, small firms are more likely to make changes to their working practices to cope with skill gaps
(between 33% and 52% depending on the country), such as redistributing work between teams. This is
also in line with the literature suggesting that smaller firms may be more agile in responding to skill gaps
(see Chapter 1). While outsourcing or discontinuing activities remains rare across the board, small firms in
the Slovak Republic are more likely to use these strategies than all other firms.
Across sectors, firms tend to use similar strategies to address skill gaps, although there are some notable
differences (Figure 2.3). For example, firms in the services sector are more likely to provide training to
workers than those in manufacturing. In Hungary, service-oriented firms are also more likely to hire new
staff to address skill gaps. Moreover, firms in the communications and finance industries in the Netherlands
are the least likely out of all countries and sectors to change their working practices.

Box 2.1. HR practices, organisation of work and skill gaps (Portugal)

Using additional data collected for Portugal, insights can be gained into how firms with or without skill
gaps organise their work structures. Firms with skill gaps tend to have a smaller percentage of their
workforce working in teams (46% vs. 48% for no gap firms), are less likely to have meetings to improve
work practices (25% vs. 27%) and less likely to update databases of good practices (23% vs. 31%).
This suggests that skill gaps may prevent firms from tapping into their collaborative and innovative
potential, underscoring the importance of alleviating skill gaps before they impact business performance
and productivity. Firms with skill gaps may therefore tend to place a lower value on teamwork and
improving work practices than firms with no skill gaps.

The role of assessing skill needs in addressing skill gaps

Assessing skill needs is a crucial first step in recognising skill gaps and then addressing them. Firms that
incorporate these assessments into their planning processes can more effectively manage skill gaps and
implement targeted strategies such as upskilling, reskilling, or strategic recruitment (OECD, 2019[9];
Sparkman, 2018[11]). Approaches to skill assessments vary, but often involve the collection and analysis
of data on workforce trends, technological changes, and demographics (OECD, 2021[6]). This section
examines the extent to which different types of firms assess their future skill needs and the link to skill
gaps, analysing patterns across countries, firm sizes and sectors. It distinguishes between firms that do
not assess skill needs, those that only do so intermittently and in response to staffing changes (i.e. on an
ad hoc basis), and those that integrate such assessments into their overall approach to workforce planning.
There are relatively large differences between countries in the extent to which firms assess skill needs and
the regularity with which they do so (Figure 2.4). Italy and Portugal have very high shares of firms engaging
in skill needs assessment either regularly or on an ad hoc basis (83% and 80%, respectively), followed by
the Netherlands (68%). Skill needs assessment is less common in the Slovak Republic and Hungary (49%
and 41%, respectively). Portugal has the highest share of firms assessing skill needs on a regular basis

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32 

as a part of the overall planning processes of the firm (34%), while on the other end of the spectrum, only
one in ten firms in Hungary regularly assesses their skill needs.
Analysing differences between differently sized firms shows a familiar pattern. Between 85% and 95% of
all large firms in all countries assess their skill needs, regularly or on an ad hoc basis (Figure 2.5). In
contrast, small and medium sized firms are less likely to carry out these assessments, with particularly low
rates in Hungary and the Slovak Republic (37% and 44%, respectively). Italy and Portugal show less
variation between firm sizes, perhaps reflecting a generally higher commitment to skill needs assessment
in the country.

Figure 2.4. Few firms regularly assess their skill needs

Share of firms indicating use of skill needs assessment, by country (%)

Yes, regularly Yes, ad-hoc No

100
90
80
70
60
50
40
30
20
10
0
Italy Portugal Netherlands Slovak Republic Hungary

Note: Countries are ordered by descending share of firms conducting skill needs assessments.
Source: PIAAC Employer Module (2022).

Differences between differently sized firms remain significant when controlling for other firm characteristics,
such as size, industry and age (Table 2.1). This is consistent with research suggesting that larger firms,
with more structured HRM systems and resources, are better placed to carry out skill needs assessment
and long-term workforce planning. Smaller firms often lack the capacity for systematic assessment, leading
to more reactive and short-term solutions to skills shortages (Braun et al., 2024[8]; OECD, 2021[6]). From a
policy perspective, strengthening skill needs assessment in small firms could involve providing targeted
support and resources to build assessment capacity, and encouraging partnerships between small firms,
larger firms and training providers to address skill gaps more proactively.
The ability of firms to anticipate skill gaps is related not only to their size, but also to the sector in which
they operate. Industries undergoing rapid technological change, such as ICT and manufacturing, are often
under greater pressure to anticipate skill needs to remain competitive. However, firms in these sectors may
also struggle to keep pace with these changes. In contrast, sectors with more stable skills requirements
may not face the same urgency but can still benefit from regular skill assessments to improve workforce
development. Data from the PIAAC Employer Module show that across countries, firms in service-oriented
industries, such as those in communications, finance and professional services, are more likely than firms
in manufacturing and construction to engage in anticipating skill needs. The communications and finance
sectors are particularly and significantly more likely than manufacturing to assess skill needs (Table 2.1).

UNDERSTANDING SKILL GAPS IN FIRMS © OECD 2024

  33

Figure 2.5. Larger firms everywhere are more likely to assess skill needs
Share of firms assessing skill needs, by size group and country (%)

Small Medium Large

100

90

80

70

60

50

40

30

20

10

0
Italy Portugal Netherlands Slovak Republic Hungary

Note: Small refers to firms that employ 10-49 employees; Medium refers to firms that employ 50-249 employees, Large refers to firms that
employ 250 or more employees.
Source: PIAAC Employer Module (2022).

The use of skill needs assessment also correlates with the experience of skill gaps. Firms with skill gaps
are more likely than firms with no gap to assess and anticipate skill needs (73% versus 63% on average
across countries) (Figure 2.6). The difference between firms with and without skill gaps is particularly high
in the Netherlands and the Slovak Republic – at about 21 and 12 percentage points, respectively. Further,
firms that report that they do not know whether their workforce displays a skill gap are the least likely to
assess skill needs. This is as low as 15% in Hungary. This shows that firms that are least aware of their
skill gaps are also the least likely to use tools to identify changes in their skill needs.
Regression analysis assessing the link between skill gaps and skills assessment confirms these findings
(Table 2.2), highlighting how firms with a skill gap are more likely to assess skill needs than those without
a gap, after controlling for background characteristics (Model 1). However, firms with more pronounced
skill gaps are less likely to anticipate skill needs than firms with moderate skill gaps (Model 2). These
patterns suggest that firms that are proactive in anticipating skill needs may be better at detecting gaps
early and addressing them before they worsen.

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34 

Table 2.1. Relationship between skill needs assessments and firm characteristics
OLS coefficients

Assess skill needs Assess skill needs

(Model 1) (Model 2)
Medium firm 0.128*** 0.0921*
(0.000) (0.000)
Large firm 0.222*** 0.156***
(0.000) (0.000)
Construction -0.0144 0.00507
(0.632) (0.835)
Wholesale; Transport; Accom -0.0287*** -0.0258***
(0.001) (0.000)
Comm; Finance 0.0858*** 0.0975***
(0.000) (0.000)
Real Estate; Services 0.0328** 0.0284*
(0.010) (0.041)
Younger firm -0.00241
(0.695)
R-squared 0.121 0.054
Observations 34 588 23 423

Note: Assess skill needs refers to firms that assess skill needs either regularly or on an ad hoc basis; Medium firm refers to 50-249 employees,
Large firm refers to 250 or more employees (reference category is small firms; 10-49 employees); Construction refers to NACE Rev. 2. F,
Wholesale; Transport; Accom refers to NACE Rev. 2. G, H, I, Comm; Finance refers to NACE Rev. 2. J, K, Real Estate; Services refers to NACE
Rev. 2. L, M, N, R, S (references category is Manufacturing; NACE Rev. 2. B, C, D, E); Younger firm refers to firms created 2001-20 (references
category is firms created before 2000); regressions control for country; standard errors clustered at the country-size-industry level; p-values in
brackets; significance levels as follows: * p <0.05, ** p < 0.01, *** p <0.001.
Source: PIAAC Employer Module (2022).

Figure 2.6. Firms with skill gaps are more likely to assess and anticipate skill needs
Share of firms assessing skill needs, by experience of skill gaps and country (%)

Gap No gap Don't know

100
90
80
70
60
50
40
30
20
10
0
Netherlands Italy Portugal Slovak Republic Hungary

Note: Gap refers to any size skill gap; countries are ordered by descending share of firms with a skill gap.
Source: PIAAC Employer Module (2022).

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  35

Table 2.2. Relationship between skill gaps and skill needs assessments
OLS coefficients

Experiencing any size skill gap Experiencing pronounced skill gaps

(Model 1) (Model 2)
Assess skill needs 0.0906*** -0.0863***
(0.000) (0.000)
R-squared 0.038 0.032
Observations 31 372 14 398

Note: Any size skill gap includes firms indicating skill gaps for some, few, most or all employees; Pronounced skill gaps include firms indicating
skill gaps for most or all employees; Assess skill needs refers to firms that assess skill needs either regularly or on an ad hoc basis; regressions
control for firm size, industry and country; standard errors clustered at the country-size-industry level; p-values in brackets; significance levels
as follows: * p <0.05, ** p < 0.01, *** p <0.001.
Source: PIAAC Employer Module (2022).

The role of recruitment in addressing skill gaps

Recruitment is a key strategy for firms seeking to fill skill gaps, allowing them to bring in the specific skills
needed to meet immediate operational needs. When thinking about how recruitment can address skill
gaps, it is important to distinguish between external skills shortages and internal skill gaps that may arise
after recruitment. External skill shortages occur when firms struggle to find suitably qualified candidates,
resulting in hard-to-fill vacancies that can negatively impact business performance (Bennett and
McGuinness, 2009[12]; Fabling and Maré, 2013[13]; Filippucci, Laengle and Marcolin, forthcoming[14])
Internal skill gaps, on the other hand, occur when employees are recruited but do not have the necessary
competencies to perform their roles effectively. This might necessitate further training to close gaps.
Increasingly tight labour markets make it difficult to rely on recruitment to address skill gaps (Braun et al.,
2024[8]). Nonetheless, recruitment remains an important tool for firms looking to bring in new talent to fill
skill gaps in the short term.
Using data for an optional survey question asked in Portugal, the Employer Module allows for an analysis
of the severity of recruitment difficulties across different types of jobs. This data finds that a sizeable share
of firms in Portugal report experiencing difficulties recruiting appropriately skilled staff. For jobs which
normally require a formal vocational qualification, 50% of firms reported difficulty recruiting, 43% report
difficulty for jobs which normally do not require any formal qualification or degree, and 24% for jobs which
normally require a university degree (Figure 2.7). This may reflect the supply and demand of workers with
these different levels of skills in the economy. The relatively lower difficulty of hiring workers for jobs
requiring a university degree may reflect the relatively lower demand for workers, i.e. a lower supply of
high-skilled jobs.
The main reason why employers struggled to fill these jobs is because too few or no applicants applied for
the job (Figure 2.7). A shift towards removing or reducing qualification requirements in job advertisements
as more employers adopt skills-first policies can help increase the pool of applicants going forward (OECD,
2024[15]). More generally, data from the Netherlands (the only country for which this data is available)
indicate that 38% of firms experienced difficulties finding candidates who possessed the skills needed to
do the job to the required level, reiterating again a relatively high share of employers facing hiring
difficulties. Box 2.2 describes the reasons behind these recruitment and difficulties using data for Portugal.
Of the firms that face difficulty hiring appropriately skilled candidates, a very high share (63% in the
Slovak Republic, 62% in Portugal and 56% in the Netherlands) state that these difficulties concern hiring
for technical, practical, or job-specific skills. This is well ahead of any other skill area as the area of greatest
concern. Around a quarter to a third of firms in Portugal and the Slovak Republic also report difficulties in

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36 

recruiting for teamwork and problem-solving, which are also among the skills that firms identify as their
biggest skill gap areas (see Chapter 1). These results highlight the strong correlation between skill gap
areas and recruitment difficulties in specific skills.
The Employer Module can also provide insight into the extent of firms experiencing issues of staff retention,
using an optional question deployed by Portugal. In Portugal, 37% of firms state that they recently
encountered difficulties in retaining employees. This finding on retention, together with the findings on
recruitment, likely reflects the tightening of labour markets following the COVID-19 pandemic. The survey
was conducted in 2021 and 2022 and captured data for 2020, a period marked by significant workforce
disruption and skills shortages in many sectors as the economy began to recover after the COVID-19
pandemic (OECD, 2022[16]). This made recruitment and retention more difficult for firms. Future iterations
of the Employer Module and similar surveys should investigate whether staff recruitment and retention
issues have persisted after COVID-19.

Figure 2.7. Employers struggle more to recruit for jobs requiring a vocational qualification
Share of firms in Portugal experiencing difficulty hiring employees, by education group (%)

Difficulty recruiting employees for jobs which normally require...

formal vocational qualification no formal qualification or degree university degree

40

35

30

25

20

15

10

0
Yes, few or no applicants Yes, applicants didn't have skills Yes, other No

Note: Includes data for Portugal only.

Source: PIAAC Employer Module (2022).

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  37

Box 2.2. Reasons behind recruitment and retention difficulties

Additional data from an optional survey question asked in Portugal provides insight into the reasons behind
recruitment and retention difficulties (Figure 2.8). Just over half of firms in Portugal facing difficulties hiring
or retaining employees state that there isn’t enough interest in the advertised job. The next most important
reason is that employers believe that staff did not want to make a long-term commitment and that there is
high competition from other employers. These data suggest that the reasons for recruitment and retention
difficulties can be varied, with candidate preferences, competition and job conditions all playing a role.

Figure 2.8. Employers attribute recruitment difficulties to employees’ lack of interest and
commitment
Share of firms in Portugal experiencing difficulty hiring or retaining employees, by cause (%)

60

50

40

30

20

10

0
Not enough No desire for High competition Other Lower wages Location Lack of career Long/unsocial Unattractive
interest commitment progression hours conditions

Note: Includes data for Portugal only.

Source: PIAAC Employer Module (2022).

Moreover, firms with a skill gap are more likely to report all the above difficulties to a greater extent than
firms without a skill gap, which again underlines the link between internal and external skill imbalances. In
addition, Chapter 1 finds that firms with a skill gap are very likely to experience an increase in the workload
of existing staff, which can be seen as a common consequence of an inability to recruit appropriately skilled
staff. Firms with skill gaps attempt to fill them by hiring new staff, as discussed in Chapter 1. There may
therefore be a lag between the emergence of skill gaps and the recruitment of new staff. Alternatively, it
may be the case that firms with skill gaps face persistent problems with their recruitment pipeline and
should therefore consider alternative approaches to hiring new staff (OECD, 2024[15]).
Source: OECD (2024[15]), Bridging Talent Shortages in Tech: Skills-first Hiring, Micro-credentials and Inclusive Outreach, Getting Skills Right,
OECD Publishing, Paris, https://doi.org/10.1787/f35da44f-en.

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38 

The role of training in addressing skill gaps

Training is the primary strategy for addressing skill gaps within firms, providing a proactive means of
equipping employees with the skills needed to meet evolving business needs. By investing in targeted
training, firms can fill immediate skill gaps, improve overall productivity, and better prepare for future
challenges. Firms may also choose to hire not fully skilled workers and provide training as a cost-effective
alternative to hiring fully skilled, more expensive workers (Marcolin and Quintini, 2023[17]). McGuinness
and Ortiz (2016[18]) found that skill gaps are a key determinant of training investment, with firms more likely
to engage in training when both employers and employees are mutually aware of skill gaps.
The direction of the relationship between training and skill gaps is not obvious. On the one hand, firms that
prioritise and invest in training should experience fewer or less severe skill gaps – at least in the longer
term. This is because training supports the continuous upgrading of skills, enabling employees to adapt to
the changing needs of the firm. On the other hand, firms that invest in training may be more aware of and
therefore more likely to report on their skill gaps, as they also conduct skill and training needs assessments.
There may also be a lag between the provision of training and the closing of skill gaps.
Training is only effective in addressing skill gaps if it is high quality and targeted to help workers develop
the specific skill they are lacking. Regular assessment of skill needs is essential to ensure that training
remains relevant (OECD, 2019[9]; OECD, 2021[6]). This requires a strong link between skill needs
assessment, and the development and implementation of training in firms. Without the alignment to skill
needs, training becomes a missed opportunity that fails to improve productivity or business performance.
It is important to note that the purpose of training goes beyond improving worker productivity by matching
skills to job tasks, but also supports broader career development (Marcolin and Quintini, 2023[17]).
This section examines how firms use training to address skill gaps, focusing on the types of training offered,
and the relationship between training and the severity of skill gaps across different sectors and firm sizes.
On average across countries, over half of all firms offer some kind of training opportunity to their workers,
with training offered by 38% of firms in Hungary, 59% in the Slovak Republic, 69% in Italy, 75% in Portugal,
and 77% in the Netherlands. Firms are most likely to offer external continuing vocational training courses
or provide on-the-job training, though internal continuing vocational training courses, conferences or
workshops, and self-directed learning are also frequently offered (Figure 2.9).
In line with the above findings on skill needs assessment, larger firms are more likely than small or medium
sized firms to offer training to their workers, with almost all large firms in Portugal for example offering
training (Figure 2.10). Even in Hungary, the country with the lowest share of firms offering training, large
firms are 53 percentage points more likely than small firms to offer training. Large firms are also more likely
to offer all types of training.
Differences between differently sized firms remain significant when controlling for other firm characteristics
(Table 2.3). This finding mostly reflects the fact that larger firms have greater resources and therefore a
greater capacity to offer training, as well more generally better awareness amongst management of the
value of training. Financial and in-kind support for smaller firms can support the uptake of training, while
more general guidance to help smaller firms identify, assess and address skill needs can help smaller firms
adopt a more proactive approach to training.
Firms in the communications and finance sectors are more likely than those in manufacturing to offer
training to their workers, even after controlling for other background characteristics (Table 2.3). This may
reflect higher training needs present in these service sectors as well their greater ability to conduct skill
needs assessment (as noted above). Additionally, this regression analysis shows that firms in wholesale
trade, transport, and accommodation and food services are significantly less likely to offer training than
firms in manufacturing.

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  39

Figure 2.9. Firms offer a variety of training opportunities to their workers

Share of firms offering training, by type of training and country (%)

Netherlands Portugal Italy Slovak Republic Hungary

90

80

70

60

50

40

30

20

10

0
External Guided-on-the- Conferences/ Internal Self-directed Learning or Job rotation,
CVT courses job training workshops CVT courses learning/e-learning quality circles secondments,
study visits

Note: Countries are ordered by descending share of firms providing training.

Source: PIAAC Employer Module (2022).

Figure 2.10. Larger firms are more likely to offer training

Share of firms offering training, by size group and country (%)

Small Medium Large

100
90
80
70
60
50
40
30
20
10
0
Portugal Netherlands Italy Slovak Republic Hungary

Note: Small refers to firms that employ 10-49 employees; Medium refers to firms that employ 50-249 employees, Large refers to firms that
employ 250 or more employees.
Source: PIAAC Employer Module (2022).

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40 

Table 2.3. Relationship between training and firm characteristics

OLS coefficients

Offer training Offer training

(Model 1) (Model 2)
Medium firm 0.207*** 0.197**
(0.000) (0.000)
Large firm 0.305*** 0.287***
(0.000) (0.000)
Construction 0.0549 0.102*
(0.317) (0.022)
Wholesale; Transport; Accom -0.0590*** -0.0653***
(0.001) (0.000)
Comm; Finance 0.127*** 0.154***
(0.000) (0.000)
Real Estate; Services 0.0345* 0.0438**
(0.011) (0.003)
Younger firm -0.0260***
(0.000)
R-squared 0.096 0.052
Observations 34 588 23 423

Note: Offer training refers to at least one training activity offered to workers in reference year; Medium firm refers to 50-249 employees, Large
firm refers to 250 or more employees (reference category is small firms; 10-49 employees); Construction refers to NACE Rev. 2. F, Wholesale;
Transport; Accom refers to NACE Rev. 2. G, H, I, Comm; Finance refers to NACE Rev. 2. J, K, Real Estate; Services refers to NACE Rev. 2. L,
M, N, R, S (references category is Manufacturing; NACE Rev. 2. B, C, D, E); Younger firm refers to firms created 2001-20 (references category
is firms created before 2000); regressions control for country; standard errors clustered at the country-size-industry level; p-values in brackets;
significance levels as follows: * p <0.05, ** p < 0.01, *** p <0.001.
Source: PIAAC Employer Module (2022).

The ability of firms to offer training also correlates with their experience of skill gaps (Figure 2.11 and
Table 2.4), whereby firms with skill gaps are significantly more likely than those not reporting a gap to offer
training (Model 1). However, firms with more pronounced skill gaps are less likely to offer training than
those with moderate gaps (Model 2), indicating that the severity of skill gaps is inversely related to the
extent to which firms enact solutions to address them. This may reflect challenges such as resource
constraints or the complexity of addressing larger skills gaps. This suggests that firms with moderate skills
gaps may be more proactive in offering training as a means of addressing gaps before they become more
severe.
Most firms that do not provide training (76%) believe training is not needed; that is, they believe the existing
qualifications, skills and competences in their firm are sufficient to satisfy the current needs of their firm.
Another 43% of firms prefer to recruit new staff members with the required qualifications, skills and
competences instead of training existing staff members. High costs and a lack of time are also noted as
barriers to offering training by about one-quarter of firms, which highlights the importance of both financial
support and training courses that are more flexible (OECD, 2023[19]). Similarly, for firms that do provide
training but not enough, over half believe that the training provided is sufficient for their business needs.
Recruitment is also a preferred option amongst these firms, while cost and high workload are also
commonly cited as barriers to further training. Finally, firms with skill gaps are much less likely than firms
without gaps to believe that training is not needed (i.e. that the existing skills in their workforce are
sufficient). This reiterates earlier findings that firms with gaps are more likely to address skill gaps through
training.
Data from the 2023 Survey of Adult Skills can provide a complementary employee perspective on the
extent of training offered to address skill gaps. About 40% of employees in the five countries included in

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the PIAAC Employer Module have engaged in some kind of training over the past year, ranging from 33%
in Italy and Hungary to 60% in the Netherlands. Furthermore, about one-quarter of workers engaged in
job-related training that was funded by their employer. This relatively lower share highlights the gap
between overall participation in training and the provision of employer-financed training.
When looking specifically at employees that self-report as under-skilled in the Survey of Adult Skills, rates
of participation are much higher. On average across the five countries, 61% of under-skilled employees
have engaged in some form of training over the past year, compared to 40% of all workers. This reiterates
findings from the Employer Module which suggest that employees working in firms with skill gaps are more
likely to receive training in order to address their gaps.

Figure 2.11. Firms with skill gaps are more likely to offer training
Share of firms offering training, by experience of skill gaps and country (%)

Gap No gap Don't know

100
90
80
70
60
50
40
30
20
10
0
Netherlands Portugal Italy Slovak Republic Hungary

Note: Gap refers to any size skill gap; countries are ordered by descending share of firms with a skill gap.
Source: PIAAC Employer Module (2022).

Table 2.4. Relationship between skill gaps and training

OLS coefficients
Experiencing any size skill gap Experiencing pronounced skill gaps
(Model 1) (Model 2)
Offer training 0.124*** -0.0657***
(0.000) (0.000)
R-squared 0.045 0.028
Observations 31 372 14 398
Note: Any size skill gap includes firms indicating skill gaps for some, few, most or all employees; Pronounced skill gaps include firms indicating
skill gaps for most or all employees; Offer training refers to at least one training activity offered to workers in reference year; regressions control
for firm size, industry and country; standard errors clustered at the country-size-industry level; p-values in brackets; significance levels as follows:
* p <0.05, ** p < 0.01, *** p <0.001.
Source: PIAAC Employer Module (2022).

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Criscuolo, C. et al. (2021), “The human side of productivity: Uncovering the role of skills and [10]
diversity for firm productivity”, OECD Productivity Working Papers, No. 29, OECD Publishing,
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Fabling, R. and D. Maré (2013), Firm-Level Hiring Difficulties: Persistence, Business Cycle and [13]
Local Labour Market Influences.

Fialho, P., G. Quintini and M. Vandeweyer (2019), “Returns to different forms of job related [5]
training: Factoring in informal learning”, OECD Social, Employment and Migration Working
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Filippucci, F., K. Laengle and L. Marcolin (forthcoming), “The firm side of labour shortages: 5 [14]
facts from the GFP Employer Survey”, OECD Productivity Working Paper.

Frey, C. and M. Osborne (2017), “The future of employment: How susceptible are jobs to [2]
computerisation?”, Technological Forecasting and Social Change, Vol. 114, pp. 254-280,
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Greenan, N. and E. Lorenz (2017), Proposal for an employer survey on adult skills. Scoping [1]
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from the OECD AI surveys of employers and workers”, OECD Social, Employment and
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Marcolin, L. and G. Quintini (2023), “Measuring skill gaps in firms: the PIAAC Employer Module”, [17]
OECD Social, Employment and Migration Working Papers, No. 292, OECD Publishing, Paris,
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McGuinness, S. and L. Ortiz (2016), “Skill gaps in the workplace: measurement, determinants [18]
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Nedelkoska, L. and G. Quintini (2018), “Automation, skills use and training”, OECD Social, [3]
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OECD (2024), Bridging Talent Shortages in Tech: Skills-first Hiring, Micro-credentials and [15]
Inclusive Outreach, Getting Skills Right, OECD Publishing, Paris,
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OECD (2021), Training in Enterprises: New Evidence from 100 Case Studies, Getting Skills [6]
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OECD Publishing, Paris, https://doi.org/10.1787/9789264311756-en.

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Sparkman, R. (2018), Strategic Workforce Planning. Developing Optimized Talent Strategies for [11]
Future Growth, Kogan Page.

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Annex A. Design, development and

implementation of the PIAAC Employer Module

Rationale for the PIAAC Employer Module

The Programme for the International Assessment of Adult Competencies (PIAAC) is a programme of
assessment and analysis of adult skills. The best-known aspect of the programme is the Survey of Adult
Skills, a household survey that assesses adults’ proficiency in key information processing skills – literacy,
numeracy and problem-solving. It also collects information and data on how adults use their skills at home,
at work and in the wider community. Data collection for the 2023 Survey of Adult Skills took place between
2022 and 2023, with the participation of more than 30 countries.
The PIAAC Employer Survey Module on Skill Gaps (hereafter referred to as the ‘Employer Module’, ‘the
Module’ or ‘the Survey’) is an enterprise survey that complements the data collected by the Survey of Adult
Skills. The Employer Module aims to understand employers’ perspectives on skill gaps at the enterprise
level, the skills that employers believe they will need in the future, and the most common human resource
practices that employers use to ensure access to these skills. Compared to existing national employer
skills surveys, the Module collects information in a consistent way across OECD countries, using a
common standardised questionnaire, in alignment with the concepts used in the 2023 Survey of Adult
Skills.
Despite their importance for individual, business, and economic outcomes, skill gaps have received limited
attention by the research and policy community compared to other forms of skill mismatch and shortages.
Skill gaps occur when the skills of employees exceed or fall short of the requirements of their jobs under
current market conditions. This includes qualification mismatch, where an employee’s qualifications do not
meet the requirements of the job, and field-of-study mismatch, where an employee’s qualifications are in
a different field to that required by the job. These skill gaps have significant economic consequences,
including lower earnings and lower job satisfaction at the individual level, as well as lower productivity and
slower growth at the level of the economy.

Relationship between Employer Module and the Survey of Adult Skills

The Survey of Adult Skills and the Employer Module are conceptually linked and provide complementary
perspectives on skills mismatches from both the employer and employee perspectives, which enriches the
evidence from each. The alignment between both surveys is achieved through the consistent use of key
concepts and terminology related to skills and training in both questionnaires. There is a deliberate
correspondence in the types of skills and macro trends measured (‘core questions’), as well as in the way
data on key enterprise characteristics such as location, size of enterprise and economic activity are
collected (‘essential questions’). In addition, ‘desirable’ questions extend the data collection in directions
not covered by the other survey. For example, data on work organisation of employees from the 2023
Survey of Adult Skills can be interpreted alongside information on internal organisational structures, human
resource practices and skill gaps from the Employer Module. For a more detailed description of the
relationship and the mapping of survey items in both questionnaires see Marcolin and Quintini (2023[1]).

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It is important to note that the data from the two surveys are not statistically linked at the individual level
due to their independent administration. The Survey of Adult Skills has not specifically been administered
on workers in enterprises included in the Employer Module or vice versa. Instead, a statistical link can be
achieved through an intermediate level approach. This involves merging data from the Employer Module
and the Survey of Adult Skills at a pre-determined level of aggregation, typically by industry or enterprise
size. By applying appropriate weights, data from both sources can be used together in a representative
way for further analysis. Future iterations of the module may include modifications to facilitate the
implementation of the surveys in a way that allows for individual linkage. This would allow a more detailed
examination of how employers’ policies on training, staffing and addressing skill gaps directly affect
employees’ skills, job satisfaction and wages.

Development and implementation

The development of the PIAAC Employer Module was a multi-year process, which included the
development of the questionnaire, determining a suitable form of administration of the survey across
countries and supporting participating countries in the implementation of the survey. So far, the module
has been administered in five European countries: Hungary, Italy, the Netherlands, Portugal, and the
Slovak Republic.

Questionnaire development

The questionnaire of the PIAAC Employer Module was developed by a group of international experts (see
Annex D) between 2016 and 2018. During that time, the questionnaire underwent several iterations, with
delegates of PIAAC participating countries providing valuable inputs during official OECD meetings
between 2016 and 2020. In addition, a dedicated workshop with Eurostat delegates in December 2018
contributed to the refinement of the questionnaire.
The aim of the questionnaire development was to formulate questions that were easy to understand, that
captured the underlying concepts accurately and that were conducive to cross-country comparability. Each
question was designed to address a single concept whenever possible, and response options and scales
were streamlined to simplify the questionnaire and minimise completion time.
To achieve this goal, the questionnaire drew on survey items from tried-and-tested existing surveys that
had a track record of multiple administrations. In the final version of the questionnaire, four of the five ‘core’
questions on skill gaps were inspired by established national and international surveys, including the
UK Employer Skills Survey, the Eurofound European Company Survey, the Cedefop Employer Survey
Pilot, the Australian NCVER Survey of Employer Use and Views of the VET System and the MEADOW
framework. In addition, some questions were aligned with the background questionnaire used in the
second cycle of the PIAAC Adult Skills Survey administered to households.
The final questionnaire design is presented in Box A A.1 and the full questionnaire is available in Annex C.

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Box A A.1. Questionnaire design

The module’s questionnaire has two parts: 1) core items, focusing on how enterprises encounter and
address skill gaps, and 2) optional – or desirable – items, which enable countries to collect additional
information in line with their policy priorities:
• The core consists of five items on skill gaps, the actions put in place by the enterprise to address
them and the changes at enterprise level that took place recently (Q1 to Q5), and five ‘essential’
questions on the background of the enterprise (Q6 to Q10). These background questions on
sector, location, size, and age are needed to contextualise the module and link it to other data
sources.
• The optional/desirable questions (QA1 to QE2) explore other policy-relevant characteristics
of the enterprise, such as its ability to innovate, its work and organisational practices, its
difficulties in recruiting and retaining staff and its employees’ participation in training.
The full questionnaire can be found in Annex C.

Translation

Careful translation to maintain conceptual fidelity was crucial to ensure the comparability of results across
countries. The questionnaire was translated into national languages by each participating country, with the
support of the OECD for consistency and review. The translation benefited from synergies with the
background questionnaire of the PIAAC household survey and translations of the items inspired by other
existing surveys.
The translation process typically involved different government ministries and agencies. In Italy, a first draft
of the translation was produced by ANPAL (National Agency for Active Labour Market Policies) and then
validated by INAPP (National Institute for Public Policy Analysis) and ISTAT (National Statistical Institute).
In the Netherlands, the translation of the questionnaire was carried out by CBS (National Statistical
Institute) and cross-validated both internally and by the Ministry of Education. In Portugal, the translation
was carried out by the same service responsible for the PIAAC household study, was validated by the
PIAAC national co-ordination group and benefited from the comments of GEP/MTSSS (Office of Strategy
and Planning of the Ministry of Labour, Solidarity and Social Security), which administers the CVTS on
behalf of INE (National Statistical Institute). In the Slovak Republic, the questionnaire was translated by
the Ministry of Education and sent to the National Statistical Office, which administers the CVTS. In
Hungary, the translation of the questionnaire was carried out by the Hungarian Central Statistical Office
(HCSO), which was also responsible for the fieldwork of the PIAAC household study.

Host survey

While the module was developed as a stand-alone survey, the first iteration of the survey was administered
as an add-on to the 2020 wave of the European Continuing Vocational Training Survey (CVTS 6). The
CVTS is an enterprise survey and a suitable host survey for the Employer Module as there is some overlap
and complementarity between the two questionnaires.
Administering the Employer Module together with the CVTS offered considerable cost savings and
provided the opportunity to include a wider range of data collected through the main CVTS data collection
in the analysis. The advantages and disadvantages of using the CVTS as a vehicle for the OECD Employer
Module were discussed in detail at the meeting of experts on continuing vocational training statistics in
Brussels on 6-7 December 2018 (see (Marcolin and Quintini, 2023[1]) and European

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Commission/Eurostat (2019[2])). The use of the CVTS as a host survey impacted several parameters for
the data collection of the module, including the:
• reference area: whole country,
• sector coverage: NACE Rev. 2 categories B, C, D, E, F, G, H, I, J, K, L, M, N, R, S,
• unit of observation: legal units (enterprises),
• enterprise type and size: private enterprises, with 10 persons employed or more,
• time of data collection: 2021 and 2022,
• main reference period: 2020,
• unit of measure: all countries used numbers, percentages, and euros, where relevant.
The reference period being 2020 meant that employers responded to the questionnaire based on their
firm’s performance for 2020, making 2020 the baseline year for all future iterations of the Module.

Box A A.2. The pros and cons of the CVTS as the host survey of the Employer Module
The main advantages of administering the Module as an add-on to the CVTS were:
• Consistency in theme and content: The CVTS was aligned with the theme and content of the
PIAAC Employer Module, ensuring a seamless integration into the existing survey framework.
• Efficiency: Using CVTS as a host survey streamlined the process, making it less resource
intensive and more efficient for participating countries due to the overlap in variables.
Implementing the employer module within CVTS reduced the administrative burden on
countries, as they can seamlessly integrate the additional questions.
• Adherence to high survey standards: Data collection, validation and transmission have been
carried out according to Eurostat standards and in compliance with EU legislation, with
significant quality assurance and quality control.
The main disadvantages of administering the Module as an add-on to the CVTS were:
• Length: As the CVTS was already a demanding survey for respondents, many countries
participating in the Employer Module chose to implement only a limited number of desirable
questions beyond the core items.
• Coverage: The implementation of the Employer Module together with the CVTS imposed
significant limitations on several parameters of data collection. For example, the CVTS targets
enterprises with 10 or more employees in specific NACE sectors, which limited the scope of the
PIAAC employer module.
• Legal considerations: Some countries had established legal frameworks for the CVTS and the
addition of OECD questions raised legal and compliance issues.
Source: European Commission/Eurostat (2019[2]), The meeting of experts on continuing vocational training statistics on 6 and 7 December
2018. Conclusions

It should be noted that Portugal was the only country that did not implement the OECD Employer Module
at the same time as the CVTS. Data collection for the module started nine months after data collection for
the CVTS. This is reflected in the fact that the overall unit response rate of the CVTS was 60%, while it
was lower at 52% for the Employer Module. Despite this difference, the Employer Module was administered
to all enterprises that were in the CVTS sample and all other parameters for the data collection remained
aligned with the CVTS.

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Sampling approach

Eurostat issues strict recommendations on the sampling strategy and methods for the CVTS, which
countries all adhere to, and which ensures a consistent and harmonised approach. These include firstly
the selection of enterprises from business registers using random sampling techniques. Secondly, to
capture the diverse business landscape in each country, countries use a stratified sampling approach. This
involves categorising enterprises according to size and economic activity in line with Eurostat guidelines.
Finally, Eurostat guidelines play a key role in determining the gross sample size. Factors such as the
expected proportion of enterprises involved in vocational training are considered, in line with the overall
objective of obtaining a statistically significant and robust data set.
Table A A.1. below provides an overview of the target population, gross sample size and actual achieved
sample for those countries where data is available.

Table A A.1. Statistical target population, sample sizes and final number of respondents
Target population Gross sample size Achieved sample size
Hungary 36 567 8 607 6 715
Italy 207 295 31 622 17 617*
The Netherlands 58 249 5 370 4 450
Portugal 41 566 6 583 3 419
Slovak Republic 14 649 2 612 2 387

Note: The target population included all companies in the relevant sectors that employed more than 10 people in the year under review. The
gross sample size is number of enterprises initially selected from the sampling frame.
*The sampling plan of the Italian CVTS 6 was implemented by considering the statistical unit ‘Enterprise’, that is the statistical unit for the
observation and analysis implemented within the Italian system of business registers and economic accounts, according to the Council
Regulation (EEC) No 696/93 of 15 March 1993, which applies on the Structural Business Statistics (SBS). The Enterprise is namely “the smallest
combination of legal units that is an organisational unit producing goods or services, which benefits from a certain degree of autonomy of
decision-making, especially for the allocation of its current resources”. Consequently, the enterprise may correspond to a single legal unit or a
group of legal units under common control. The reference population of the Italian CVTS 6 carried out consisted of Enterprises active and
residing in Italy, and included in the ENT Business Register, according to CVTS coverage criteria (10 or more persons employed in NACE Rev.
2 sections).
Source: Meta-data submitted by countries; analysis of the micro-data.

Mode of administration

Data collection, recording, checking, and processing were carried out by the statistical offices of the
participating countries. For the CVTS, the data collection method was decided at national level,
i.e. countries conducted the survey using the method that was best suited to achieve a sufficiently high
response rate. While in previous waves countries used multi-mode data collection methods to ensure the
participation of enterprises in the survey, in 2020 Computer Assisted Web Interviewing (CAWI) was the
main mode used.
CAWI is an easily accessible and cost-effective mode of data collection as it simplifies the routing of
questions and question blocks according to the choices made by the enterprise during the survey and
minimises errors in data entry and post-processing. CAWI also allows respondents to answer at their own
pace, possibly consulting additional sources before answering and returning to previous sections of the
questionnaire to complete unanswered questions or amend previous entries.
Countries participating in the employer module were generally positive about the mode of administration.

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Optional questions

The module was administered in five European countries: Hungary, Italy, the Netherlands, Portugal, and
the Slovak Republic. The questionnaire administered for the module included “core” and “essential”
questions, as well as the “desirable” items on training strategies (items QB1 to QB4, 5, Annex C), which
are included in the official CVTS questionnaire. Each participating country extended the questionnaire of
the module with further “desirable” questions according to the country’s policy priorities (Table A A.2. ).

Table A A.2. Optional and desirable questions selected by participating countries

section section question Hungary Italy Netherlands Portugal Slovak Republic
denomination number
2A optional to core QA1 x x x
QA2 x x x
QA3 x x x
QA4
QA5
2B desirables on QB1 x x x x x
training QB2 x x x x x
QB3 x x x x x
QB4 x x x x x
2C desirables on HR QC1 x
QC2 x
2D desirables on QD1 x
recruitment QD2 x
QD3 x
QD4 x x x
QD5 x
2E desirables on QE1 x x x
firm structure QE2 x

Note: For further information and the exact wording of the questions, please see Annex C.
Source: Information provided by countries and micro-data.

Changes to questions and their order

The order of the questions in the module was carefully considered as it could affect respondents’
understanding, speed of response and the overall coherence of the survey. While it was recommended
that participating countries maintained the suggested order of questions within their surveys, most
countries chose to place the questions of the employer module where they felt most appropriate in the
CVTS, rather than simply adding them all at the end of the CVTS questionnaire:
• The Netherlands integrated the questions of the employer module throughout the CVTS
questionnaire and placed them where they were most closely related to the topics of the CVTS.
• Portugal made some minor changes to the order of the desirable questions, moving the module
“2E: desirable questions on the structure and business model of the enterprise” forward
immediately after the questions of the core module.
• Italy also made some minor changes to the order of the questions. Q4 and Q5 from the core were
moved to the introductory block of the survey, which collects data on general enterprise
characteristics. QA1, a core optional question, was moved forward and asked after Q2. The
selected desirable questions were placed where they were most closely related to the topics of the
CVTS.

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• Hungary made one change to the order of questions, moving QA1 after Q1, where it was most
closely related.
• Slovak Republic did not report any changes in the order of the questions. However, the order of
the categorical response options for Q1, a core question, were asked in reversed order. This was
largely due to difficulties translating the question into Slovak, which resulted in asking “Thinking
about the skills of people employed in your enterprise and the skills needed to do their current job,
how many do you think have the skills needed to do their job to the required level?” instead of
“Thinking about the skills of people employed in your enterprise and the skills needed to do their
current job, how many do you think do not have the skills needed to do their job to the required
level?”. This meant that response options were reversed such that “All” became “None” and “Most”
became “Some”.

Data transmission, treatment, and validation

All field data collection was completed by September 2022. Prior to submission to the OECD, countries
undertook a process of data cleaning and validation at the national level. Countries then securely
transmitted a dataset to the OECD that included firm-level responses to the employer module, a country
code, reference year and enterprise identifier, and sampling weights. The exception was the Netherlands,
where data were not transmitted but had to be accessed remotely by the OECD secretariat. Countries also
provided the metadata used in the preparation of this technical report. The OECD then carried out a second
international validation of the data, producing cross-country statistics and checking the validity of the
constructs.

National quality assurance

Countries participating in the PIAAC employer module showed a collective commitment to ensuring the
quality of the data collected. Approaches to quality assurance were varied, with an emphasis on different
strategies tailored to each country’s specific context, but some common approaches were followed:
• ISO certification and compliance with the Code of Practice: Several countries demonstrated
their commitment to data quality through ISO certification, indicating compliance with international
standards. The adoption of the European Statistics Code of Practice further underlined the shared
commitment to sound statistical practices.
• Use of web-based questionnaires: The use of web-based questionnaires ensured consistency
of responses and minimised problems with routing. This approach not only improved data quality,
but also facilitated timely checks and corrections.
• Engagement with enterprises: In the Netherlands, the survey was announced well in advance
(one year in advance) to large enterprises (>=250 employees) to ensure their inclusion in the
survey and to allow them to collect the necessary information during the year. Large enterprises
were selected as these were to be integrally included in the survey and the exact CVTS sample
was not drawn at that time. Moreover, several countries set-up phone and e-mail help desks to
answer any questions that enterprises might have about the survey. Participation in the survey was
mandatory for enterprises in the Slovak Republic and Hungary, thus achieving high response rates.
Moreover, the survey was announced to large enterprises in Hungary one year in advance.
Countries were generally positive about the quality assurance mechanisms and – as a result – the quality
of the data.

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National-level validation and weighting

To ensure the reliability of the data in the PIAAC Employer module, validation procedures were
implemented in a consistent manner across participating countries. All countries implemented continuous
monitoring of response rates, regular global and plausibility checks to validate the completeness of
information, correct coding, and formats. The electronic mode of administration meant that automated tools
and checks built into the electronic questionnaire were used to maintain data completeness and accuracy.
Some countries cross-checked source data against other surveys and administrative data sources (such
as tax return data). Non-respondents were actively followed up, for example by phone and email, and
corrective action was taken promptly to address errors and inconsistencies. Errors were corrected by
editing or imputing as needed, using general correction rules. Several countries used results from previous
waves of the CVTS to check the plausibility of results.
Countries participating in the PIAAC employer module shared a commitment to robust weighting
procedures. Final weights were usually calculated considering the stratification methods used and
adjusting for non-response to ensure representative estimation of key variables. Primary design weights
were modified based on inconsistencies in the responses. Several countries used the General Regression
Estimator (GREG) or Horwitz-Thompson formulae for weighting, with an emphasis on precision in the
estimation of target variables. In some cases, calibration procedures were used to minimise the weighted
distances between direct and final weights, thus helping to converge to known population totals.

Anonymisation and transmission

To ensure confidentiality, countries anonymised employer information and, where necessary, further
manipulated elements of the micro-data to ensure that the surveyed enterprises were not identifiable. Any
data manipulation that had to be carried out at national level was communicated to the OECD in advance,
with the OECD team ensuring that any anonymisation techniques did not compromise the usefulness of
the data.
Portugal, for example, followed CVTS convention by reporting enterprise size in categories (0-49 persons
employed, 50-249 persons employed, 250+ persons employed) rather than a numerical size for each
enterprise to avoid the risk of identifying enterprises. Hungary and Italy chose to report enterprise in six
categories. See Table A A.3. for the full list of variables which were suppressed or modified by countries
for the purpose of anonymisation.
Once the data had been made confidential, countries submitted them to the OECD for processing and
analysis. In some of the participating countries, a legal framework was in place to allow the transfer of the
module’s micro-data to the OECD. In the absence of such a framework, the OECD and the participating
country signed ad hoc legal agreements, setting out the conditions for the secure transfer, storage, and
use of the data. Anonymised data were securely transferred via an OECD tested transfer facility and then
stored on a secure server at the OECD premises in Paris, France. In one case, the Netherlands, data was
not transferred to the OECD, but only accessed remotely, due to restrictions imposed by the Dutch legal
framework.

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Table A A.3. Missing data and changes made to variables by countries

Hungary Italy Netherlands Portugal Slovak Republic
(N = 6 715) (N = 17 617) (N = 4 450) (N = 3 419) (N = 2 387)
No postcode. Region is No postcode or region No postcode No postcode or region No region
set to missing in
920 cases to preserve
anonymity.

No enterprise size. No enterprise size. No enterprise size.

Categorical variables Categorical variable Categorical variable
provided instead: provided instead: provided instead:
1) 10-19 persons 1) 10-19 persons 1) 10-49 persons
2) 20-49 persons 2) 20-49 persons 2) 50-249 persons
3) 50-249 persons 3) 50-249 persons 3) 250+ persons
4) 250-499 persons 4) 250-499 persons
5) 500-999 persons 5) 500-999 persons
6) 1 000+ persons 6) 1 000+ persons
No birth year of firm No birth year of firm No birth year of firm.
Categorical variable
provided instead:
1) Up to 2000
2) 2000 and 2020
NACE 20 reported NACE 20 reported NACE 5 reported

Source: OECD validation of data submitted by countries.

International validation and quality control

After receiving the anonymised data from the countries, the OECD carried out a series of data validation
and quality control checks. Most countries complied with the codebook provided by the OECD, although
there were minor discrepancies, e.g. in variable names. In these cases, the OECD renamed variables to
comply with the international codebook. After some minor editing, the countries’ datasets appeared as in
the codebook, except for Italy, the Netherlands, and the Slovak Republic.
For Italy and the Netherlands, data were received in a coarser form and some data cleaning and
manipulation was required to bring the data in line with international standards. Firstly, some variables had
to be renamed to ensure that they conformed to the naming conventions set out in the codebook. Then,
some new variables were created. Standard validation was then carried out, as for the other three
countries, to ensure that all the values variables took were plausible. After this process, the datasets
resembled the other countries and corresponded exactly to the standards of the codebook.
During the early analysis phase, it became apparent that the key variable on skill gaps (Q1) for the
Slovak Republic had not been coded in accordance with the codebook. This issue was identified through
deviating response patterns compared to other countries (issue also described above). Upon request, an
updated dataset was provided, and standard validation procedures were carried out. After validation, the
dataset aligned with those of the other countries and adhered fully to the codebook standards.
Also, during this phase, it became apparent that some variables required further recoding before analysis
could be undertaken; for instance, for the Netherlands, the coding of the key variable on skill gaps (Q1)
and the variable on how often a firm innovates (QA2) both required reverting the scale. Some additional
minor recoding was made also to variables for Italy and Portugal, after which all variable labels aligned
with the original codebook sent to countries.

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Results of the international validation

After ensuring all five datasets were in line with the codebook, the OECD conducted several checks to
ensure the quality and integrity of the data. For each of the country datasets, the OECD:
• Validated responses to each question and checked which set of questions countries chose to ask;
• Ensured there were no duplicate responses from the same employer;
• Checked total sample size, and for each variable, checked the number of valid, invalid and missing
values;
• Checked logical consistency between variables.
The above checks confirmed that countries asked questions as set-out in Table A A.1. and that each
enterprise was uniquely identified. Except for Italy, all countries provided a variable containing a random
identification number to identify each enterprise in the dataset. To rectify this for Italy, the OECD confirmed
with the relevant Italian authorities that each row was indeed a different enterprise and subsequently
assigned their own random identifiers for each enterprise.
As mentioned above, some countries have chosen not to report certain variables in order to preserve
anonymity – the full list of missing variables for each country can be found in Table A A.3. above. Most
countries have some missing geographical information. Some countries chose to aggregate some
variables in order to reduce the risk of identification. For example, Portugal reported the economic activity
of the enterprise at the NACE 1-digit level rather than at the most detailed 4-digit level. Italy, Portugal and
Hungary also chose to report the size of the enterprise as a categorical variable rather than a numerical
one for confidentiality reasons. These cases of non-reporting are not expected to cause significant
problems for current and future analysis, as the categories used are standard categories also used in the
PIAAC household study and as it is unlikely that research will be carried out at detailed geographical or
sectoral levels.
Finally, the logical consistency of variables was checked to further validate the integrity of the data.
Table A A.4 details examples of the most important logical consistencies that were checked. Aside from a
few instances, most countries passed these checks. In three instances, when data took on implausible or
unexpected values, the check is marked as failed. Future analysis of the data may require some minor
recoding of variables before conducting any analyses. Researchers also confirmed that variables took
values that were logically consistent and as defined in the codebook – that is, variables took on values that
were plausible and values across variables were consistent.

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Table A A.4. Example of logical consistencies checked by OECD researchers

Hungary Italy Netherlands Portugal Slovak Republic
(N = 6 714) (N = 17 617) (N = 4 450) (N = 3 419) (N = 2 387)
Region is not missing if postcode is Unable to Unable to Unable to Unable to Unable to
missing calculate (see calculate (see calculate (see calculate (see calculate (see
missing data missing data missing data missing data missing data
above) above) above) above) above)
Number in training is less than number Unable to Unable to Pass Pass Fail
employed1 calculate (see calculate (see 11 cases
missing data missing data
above) above)
A solution to under-skilling is reported Pass Pass Fail (small Pass Pass
only if under-skilling is reported as an number of
issue cases*)
Training is provided to support staff Pass Pass Pass Pass Pass
through organisational changes only if
organisational change is reported to
have affected the firm in the reference
year
An outcome of under-skilling is only Pass Pass Pass Pass Pass
reported if under-skilling is identified
(optional question)

Note: (*) Unable to reveal exact number due to data privacy reasons.
1. It is a valid occurrence for the number of persons in training to be more than the number employed as the number in training refers to
participants across the year while enterprise size is a reference to the number of persons employed on a single date (31 December 2020).
Therefore, it can be the case that the total number of persons in training across the reference year is above the number of persons employed
on 31 December 2020.
Source: OECD validation of data submitted by countries.

References

Commission/Eurostat, E. (2019), The meeting of experts on continuing vocational training [2]

statistics on 6 and 7 December 2018. Conclusions.

Marcolin, L. and G. Quintini (2023), “Measuring skill gaps in firms: the PIAAC Employer Module”, [1]
OECD Social, Employment and Migration Working Papers, No. 292, OECD Publishing, Paris,
https://doi.org/10.1787/903c19c9-en.

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Annex B. Data availability and use

All countries participating in the employer module have taken steps to ensure the accessibility of their data
for scientific research purposes. In addition, the OECD Secretariat has produced a public use file (PUF) to
facilitate wider scientific use.

National level data access and use

Ensuring access to survey data is crucial for the advancement of scientific research. Countries have taken
different approaches to making the national data of the PIAAC Employer module available, typically
together with the CVTS data:
• Hungary: Main results of the CVTS survey are available in the form of static and dynamic tables
on the webpage of the HCSO. HCSO facilitates scientific research by opening data files upon
request, following an accreditation study. Researchers have controlled access to de-identified
datasets, ensuring legal and methodological guarantees. Access rights for staff are regulated and
details of confidentiality are published on the HCSO website.
• Italy provides access to CVTS survey results through the Istat website. Researchers seeking more
detailed results can request additional data processing, considering compatibility with the sampling
plan. Access to CVTS micro-data is facilitated by the provision of anonymised and perturbed
datasets, with priority given to respondents’ privacy. Istat provides micro-data files for Statistical
Offices or entities belonging to the National Statistical System.
• Portugal: CVTS results for Portugal have been published on the website of the Office of Strategy
and Planning of the Ministry of Labour, Solidarity and Social Security (GEP/MTSSS). Accredited
researchers can request access to anonymised micro-data of both the CVTS and the PIAAC
Employer Module from the PT NSI, ensuring responsible and controlled access.
• Slovak Republic: Data from the Slovak Republic are accessible through the online database
DATAcube, managed by the Statistical Office of the Slovak Republic (SO SR). The platform, which
has been operational since 31 October 2022, provides free access to all users without the need for
registration. In addition, researchers can request anonymised data for scientific purposes under
strict conditions.
• The Netherlands: In the Netherlands, micro-data from the CVTS 2020 survey are accessible to
registered users through a remote access environment. Further information on access is available
on the Statistics Netherlands website. Although there is no specific release calendar, Statistics
Netherlands maintains an overview of available datasets for the authorised public.

International Public Use File

The OECD Secretariat has created a PUF that is freely and publicly available on the OECD website. This
dataset brings together and harmonises data from five participating countries (Italy, Hungary, Portugal, the
Netherlands and the Slovak Republic) to allow external researchers to access and use the data for their
own resource purposes. The final form of the PUF was decided together with the participating countries,
balancing concerns about confidentiality and data protection risks with usability for research purposes.

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Structure and content of the aggregated dataset

The PUF is presented as an aggregated dataset, removing the micro-data nature of the original enterprise
level data. Each row in the dataset represents a combination of key groupings by country, industry, and
enterprise size. Specifically, the dataset includes five countries – Italy, Hungary, Portugal, the Netherlands
and the Slovak Republic – and is structured by:
• five economic activity classes based on the NACE 5 classification.
• three enterprise size classes: 10-49 persons employed, 50-249 persons employed and 250+
persons employed.
For each combination of country, economic activity and enterprise size, the numerical value in the cell
indicates the grossed-up total number of enterprises in that category that provided a specific response to
the survey. As the dataset reflects the total number of enterprises within each grouping, no further
weighting needs to be applied to ensure an accurate representation of the population of enterprises across
sectors and size classes within each country.
To protect confidentiality, standard data protection protocols are followed and any (non-weighted) grouping
by country and size class with less than 10 enterprises is excluded from the dataset.
The dataset includes both core and optional questions. A codebook is provided below.

Transformations applied

The following transformations have been applied to the micro-dataset:

• Categorical variables: The values of categorical variables are converted into separate variables
representing the number of enterprises in each cell reporting a particular value. Where too many
cells would need to be suppressed due to low numbers per cell, categories are merged to create
larger categories. Population weights are applied to produce weighted counts for all categorical
variables.
• New variables: Additional variables are created to improve the usefulness of the dataset, including
the number of enterprises per row (i.e. per country, enterprise size and industry group).
• Variable selection: Variables with limited analytical value or a large amount of missing data when
aggregated, such as region or main reference market, are excluded from the dataset.

Use and analytical value

The aggregated dataset will allow researchers to perform descriptive analyses based on country, industry,
and firm size groupings. While this limits the scope of analysis compared to individual-level data, some
advanced analyses can still be performed. Researchers will also be able to link the aggregated data to
other external datasets, such as the PIAAC Household Survey or the Continuing Vocational Training
Survey (CVTS), provided that these datasets allow the creation of similar sub-groups. Importantly, this
option eliminates any risk of identifying individual enterprises, thus ensuring full compliance with countries’
concern around data protection and confidentiality.

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International codebook

Table A B.1. Employer Module: International codebook

Variable Name Values Description Related Survey
Question
country HU Country code n/a
IT
NL
PT
SK
firm_size 10-49 employees Firm size category Q8
50-249 employees
250+ employees
industry NACE Rev. 2: B, C, D, E Industry NACE 5 category Q7
NACE Rev. 2: F
NACE Rev. 2: G, H, I
NACE Rev. 2: L, M, N, R,
S
NACE Rev. 2; J, K
refyear 2020 Reference year n/a
n Numeric Count of firms in row n/a
birthyear_1 Numeric Count of firms created before 2000 (inclusive) Q10
birthyear_2 Numeric Count of firms created between 2001 and 2020 (inclusive) Q10
d_emp_1 Numeric Count of firms that experienced an increase in headcount in Q9
reference year
d_emp_2 Numeric Count of firms that experienced a decrease in headcount in Q9
reference year
d_emp_3 Numeric Count of firms where headcount in reference year stayed Q9
more or less the same
gap_0 Numeric Count of firms with no skill gap or don’t know Q1 (None or Don’t know)
gap_1 Numeric Count of firms with a skill gap Q1 (Few, Some, Most or
All)
under_flag_1 Numeric Count of firms that have identified at least one area of skill Q2
gap
under_a_1 Numeric Count of firms that have identified skill gap in: General IT Q2
skills
under_b_1 Numeric Count of firms that have identified skill gap in: IT Q2
professional skills
under_c_1 Numeric Count of firms that have identified skill gap in: Management Q2
skills
under_d_1 Numeric Count of firms that have identified skill gap in: Team working Q2
skills
under_e_1 Numeric Count of firms that have identified skill gap in: Customer Q2
handling skills
under_f_1 Numeric Count of firms that have identified skill gap in: Office Q2
administration skills
under_g_1 Numeric Count of firms that have identified skill gap in: Foreign Q2
language skills
under_h_1 Numeric Count of firms that have identified skill gap in: Technical, Q2
practical or job specific skills
under_i_1 Numeric Count of firms that have identified skill gap in: Oral or written Q2
communication skills
under_j_1 Numeric Count of firms that have identified skill gap in: Mathematics Q2
or calculating skills
under_k_1 Numeric Count of firms that have identified skill gap in: Reading skills Q2

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Variable Name Values Description Related Survey

Question
under_l_1 Numeric Count of firms that have identified skill gap in: Problem Q2
solving skills
under_m_1 Numeric Count of firms that have identified skill gap in: Other Q2
solution_flag_1 Numeric Count of firms that have identified at least one action taken Q3
to alleviate skill gap
solution_a_1 Numeric Count of firms that enacted following solution: Provide Q3
training
solution_b_1 Numeric Count of firms that enacted following solution: Offer internal Q3
job mobility
solution_c_1 Numeric Count of firms that enacted following solution: Recruit new Q3
staff with suitable qualifications, skills and competencies
solution_d_1 Numeric Count of firms that enacted following solution: Recruit new Q3
staff combined with specific training
solution_e_1 Numeric Count of firms that enacted following solution: Implement Q3
mentoring /or buddying scheme
solution_f_1 Numeric Solution: Increase performance monitoring Q3
solution_g_1 Numeric Count of firms that enacted following solution: Provide Q3
feedback to staff
solution_h_1 Numeric Count of firms that enacted following solution: Change work Q3
practices
solution_i_1 Numeric Count of firms that enacted following solution: Reallocate Q3
work
solution_j_1 Numeric Count of firms that enacted following solution: Automate Q3
production
solution_k_1 Numeric Count of firms that enacted following solution: Implement Q3
domestic or foreign outsourcing
solution_l_1 Numeric Count of firms that enacted following solution: Abandon the Q3
activity
change_flag_1 Numeric Count of firms where at least one change has significantly Q4
affected enterprise in previous 3 years
change_a_1 Numeric Count of firms where there has been a change to: Machinery Q4
change_b_1 Numeric Count of firms where there has been a change to: Q4
Information and communication technologies and processes
change_c_1 Numeric Count of firms where there has been a change to: Working Q4
methods and organisational practices
change_d_1 Numeric Count of firms where there has been a change to: Domestic Q4
outsourcing practices
change_e_1 Numeric Count of firms where there has been a change to: Foreign Q4
outsourcing practices
change_f_1 Numeric Count of firms where there has been a change to: Products Q4
or services
change_g_1 Numeric Count of firms where there has been a change to: Amount of Q4
contact with clients or customers
trainchange_1 Numeric Count of firms where training was offered to address above Q5 (any Yes response)
changes
inno_1 Numeric Count of firms that innovate very rarely or rarely QA2 (Very rarely or rarely)
inno_2 Numeric Count of firms that innovate occasionally QA2 (Occasionally)
inno_3 Numeric Count of firms that innovate very frequently or frequently QA2 (Very frequently or
frequently)
quality_1 Numeric Count of firms that compete in a market with basic quality QA3 (1, 2 or 3 on scale)
goods/services
quality_2 Numeric Count of firms that compete in a market with premium QA3 (4 or 5 on scale)
quality goods/services
saa_0 Numeric Count of firms that do not conduct skills assessment and QB1
anticipation

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Variable Name Values Description Related Survey

Question
saa_1 Numeric Count of firms that conduct skills assessment and QB1
anticipation on an ad hoc basis
saa_2 Numeric Count of firms that conduct skills assessment and QB1
anticipation regularly
effect_flag_1 Numeric Count of firms that have experienced at least one effect of QA1
having a skill gap
effect_a_1 Numeric Count of firms that have experienced following effect: Not QA1
able to take on as much business as you would like
effect_b_1 Numeric Count of firms that have experienced following effect: Loss QA1
of business or orders to competitors
effect_c_1 Numeric Count of firms that have experienced following effect: Delays QA1
in developing new products or services
effect_d_1 Numeric Effect: Difficulty in meeting quality standards QA1
effect_e_1 Numeric Count of firms that have experienced following effect: QA1
Increased operating costs
effect_f_1 Numeric Count of firms that have experienced following effect: QA1
Difficulty in introducing new working practices
effect_g_1 Numeric Count of firms that have experienced following effect: QA1
Increased workload for existing staff
effect_h_1 Numeric Count of firms that have experienced following effect: QA1
Difficulties in meeting customer service objectives
effect_i_1 Numeric Count of firms that have experienced following effect: The QA1
withdrawal of certain products or services altogether
effect_j_1 Numeric Count of firms that have experienced following effect: QA1
Difficulties in introducing technological change
train_flag_1 Numeric Count of firms that have provided at least one training QB2
activity in reference year
train_a_1 Numeric Count of firms that have provided: Internal CVT courses QB2

train_b_1 Numeric Count of firms that have provided: External CVT courses QB2
train_c_1 Numeric Count of firms that have provided: Guided-on-the-job QB2
training

train_d_1 Numeric Count of firms that have provided: Job rotation, exchanges, QB2
secondments or study visits
train_e_1 Numeric Count of firms that have provided: Conferences, workshops, QB2
trade fairs or lectures
train_f_1 Numeric Count of firms that have provided: Learning or quality circles QB2

train_g_1 Numeric Count of firms that have provided: Self-directed QB2

learning/e-learning

lowtrain_a_1 Numeric Count of firms that have identified following reason for QB4
limited training: Existing qualifications, skills and
competences of current staff were appropriate to current
needs of enterprise
lowtrain_b_1 Numeric Count of firms that have identified following reason for QB4
limited training: Preferred strategy was to recruit individuals
with the required qualifications, skills and competences
lowtrain_c_1 Numeric Why limited training: Difficulties assessing training needs in QB4
the enterprise

lowtrain_d_1 Numeric Count of firms that have identified following reason for QB4
limited training: Lack of suitable offers of CVT courses in the
market

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Variable Name Values Description Related Survey

Question
lowtrain_e_1 Numeric Count of firms that have identified following reason for QB4
limited training: High costs of CVT courses
lowtrain_f_1 Numeric Count of firms that have identified following reason for QB4
limited training: Higher focus on IVT provision than on CVT
lowtrain_g_1 Numeric Count of firms that have identified following reason for QB4
limited training: Major efforts in CVT made in recent years
lowtrain_h_1 Numeric Count of firms that have identified following reason for QB4
limited training: High workload and no time available for staff
to participate in CVT
lowtrain_i_1 Numeric Count of firms that have identified following reason for QB4
limited training: Other reasons

notrain_a_1 Numeric Count of firms that have identified following reason for no QB4
training: Existing qualifications, skills and competences of
current staff were appropriate to current needs of enterprise
notrain_b_1 Numeric Count of firms that have identified following reason for no QB4
training: Preferred strategy was to recruit individuals with the
required qualifications, skills and competences
notrain_c_1 Numeric Count of firms that have identified following reason for no QB4
training: Difficulties assessing training needs in the
enterprise

notrain_d_1 Numeric Count of firms that have identified following reason for no QB4
training: Lack of suitable offers of CVT courses in the market

notrain_e_1 Numeric Count of firms that have identified following reason for no QB4
training: High costs of CVT courses
notrain_f_1 Numeric Count of firms that have identified following reason for no QB4
training: Higher focus on IVT provision than on CVT
notrain_g_1 Numeric Count of firms that have identified following reason for no QB4
training: Major efforts in CVT made in recent years
notrain_h_1 Numeric Count of firms that have identified following reason for no QB4
training: High workload and no time available for staff to
participate in CVT
notrain_i_1 Numeric Count of firms that have identified following reason for no QB4
training: Other reasons

hardhire_a_1 Numeric Count of firms that experienced difficulty recruiting staff for QD1 (any Yes response)
jobs which normally require a formal vocational qualification

hardhire_b_1 Numeric Count of firms that experienced difficulty recruiting staff for QD1 (any Yes response)
jobs which normally require a university degree

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Variable Name Values Description Related Survey

Question
hardhire_c_1 Numeric Count of firms that experienced difficulty recruiting staff for QD1 (any Yes response)
jobs that do not require any formal qualification nor degree

hardkeep_1 Numeric Count of firms that experienced difficulty retaining employed QD2
staff

hardrecruit_1 Numeric Count of firms that experienced difficulty recruiting skilled QD3
candidates

underhire_flag_1 Numeric Count of firms that have identified at least one skill area for QD4
which it was difficult to hire skilled candidates
underhire_a_1 Numeric Count of firms with difficulty hiring skilled candidates in: QD4
General IT skills
underhire_b_1 Numeric Count of firms with difficulty hiring skilled candidates in: IT QD4
professional skills
underhire_c_1 Numeric Count of firms with difficulty hiring skilled candidates in: QD4
Management skills
underhire_d_1 Numeric Count of firms with difficulty hiring skilled candidates in: QD4
Team working skills
underhire_e_1 Numeric Count of firms with difficulty hiring skilled candidates in: QD4
Customer handling skills
underhire_f_1 Numeric Count of firms with difficulty hiring skilled candidates in: QD4
Office administration skills
underhire_g_1 Numeric Count of firms with difficulty hiring skilled candidates in: QD4
Foreign language skills
underhire_h_1 Numeric Count of firms with difficulty hiring skilled candidates in: QD4
Technical, practical or job specific skills
underhire_i_1 Numeric Count of firms with difficulty hiring skilled candidates in: Oral QD4
or written communication skills
underhire_j_1 Numeric Count of firms with difficulty hiring skilled candidates in: QD4
Mathematics or calculating skills
underhire_k_1 Numeric Count of firms with difficulty hiring skilled candidates in: QD4
Reading skills
underhire_l_1 Numeric Count of firms with difficulty hiring skilled candidates in: QD4
Problem solving skills
underhire_m_1 Numeric Count of firms with difficulty hiring skilled candidates in: QD4
Other
causehire_a_1 Numeric Count of firms that experienced difficulty hiring for following QD5
reason: Wages are lower than in other organisations
causehire_b_1 Numeric Count of firms that experienced difficulty hiring for following QD5
reason: Geographic location
causehire_c_1 Numeric Count of firms that experienced difficulty hiring for following QD5
reason: Unattractive conditions of employment
causehire_d_1 Numeric Count of firms that experienced difficulty hiring for following QD5
reason: Lack of career progression
causehire_e_1 Numeric Count of firms that experienced difficulty hiring for following QD5
reason: Long/unsocial hours

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Variable Name Values Description Related Survey

Question
causehire_f_1 Numeric Count of firms that experienced difficulty hiring for following QD5
reason: High competition from other employers
causehire_g_1 Numeric Count of firms that experienced difficulty hiring for following QD5
reason: Not enough people interested in doing type of work
causehire_h_1 Numeric Count of firms that experienced difficulty hiring for following QD5
reason: Staff don’t want long term commitment
causehire_i_1 Numeric Count of firms that experienced difficulty hiring for following QD5
reason: Other reasons

hrhead Numeric Count of firms where person in charge of human resources QC1
reports directly to head of enterprise
pcteam Numeric Average percentage of employed staff working in teams in QC2
row
pcmeet Numeric Average percentage of employed staff meeting to improve QC2
practices in row
pcdatabase Numeric Average percentage of employed staff updating database of QC2
good practices in row

Note: Population weights have been applied to all numeric variables.

Source: OECD international codebook created for public use purposes. Based off data submitted by countries.

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Annex C. Employer Module Questionnaire

SECTION 1A: Core questions on skill gaps

Q1. Thinking about the skills of people employed in your enterprise and the skills
needed to do their current job, how many do you think do not have the skills needed to
do their job to the required level?

1) All
2) Most
3) Some
4) Few
5) None
6) Don’t know

Q2. Thinking about people employed who do not have the skills needed to do their job to
the required level, which of the following do you think would need improving? (Tick the
most important 3).

Skill area [if Q1 = (a) to (d)]

A General IT skills
B IT professional skills
C Management skills
D Team working skills
E Customer handling skills
F Office administration skills
G Foreign language skills
H Technical, practical or job specific skills
I Oral or written communication skills
J Mathematics or calculating skills
K Reading skills
L Problem solving skills
M Other

Q3. Further thinking about the persons you employ who do not have the skills needed to
perform their job to the required level, which of the following actions are you taking to
alleviate this situation? (Tick the most important 3).

[if Q1 = (a) to (d)]

A Provide training
B Offer internal job mobility
C Recruit new staff with suitable qualifications, skills
and competencies
D Recruit new staff combined with specific training

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[if Q1 = (a) to (d)]

E Implement mentoring / buddying scheme
F Increase performance monitoring
G Provide feedback to staff
H Change work practices
I Reallocate work
J Automate production
K Implement domestic or foreign outsourcing
L Abandon the activity

Note: Outsourcing in option (k) should be understood as transactions to either affiliated or unaffiliated (arm’s length) parties. Foreign outsourcing
can therefore also include offshoring.

Q4. In the last three years, was your enterprise significantly affected by any of the
following changes? (Yes/No/I do not know answers, tick all that apply).

Yes No I don’t know

A Changes to machinery
B Changes to information and communication technologies and
processes
C Changes to working methods and organisational practices
D Changes in domestic outsourcing practices
E Changes in foreign outsourcing practices
F Changes in products or services
G Changes to the amount of contact you have with clients or
customers

Note: Outsourcing in options (d) and (e) should be understood as transactions to either affiliated or unaffiliated (arm’s length) parties. Foreign
outsourcing can therefore also include offshoring.

Q5. Was any training provided to support the employed persons through these
changes? [if Q4= Yes at least once].

a) No, no training was needed

b) No, but training was needed
c) Yes, to everyone who needed it
d) Yes, but only to some staff, because of resource constraints
e) Yes, but only to some staff, due to other reasons

SECTION 1B: Core questions on the company’s background (essential

questions)

Q6. What is the postal code of this enterprise? If your enterprise consists of several
local units, please consider the most important one.

Q7. What was the principal economic activity of your enterprise in 20XX?
Note: Show list of NACE rev. 2 sectors (2-digit).

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Q8. What was the total number of persons employed by the enterprise at 31.12.20XX?

Q9. In 20XX, has the number of people working at your enterprise …

a) Increased
b) Decreased
c) Stayed more or less the same
Note: (c) should be chosen if the change ranges from -5% to +5% approximately.

Q10. In what year was your enterprise created?

SECTION 2A: Optional questions to the Module’s core

QA1. Is the fact that some of your staff do not have the skills needed to do their job to
the required level causing your enterprise any of the following? (Yes/No answers, tick all
that apply) [if Q1 = (a) to (d)].

Yes No
A Not able to take on as much business as you would like
B Loss of business or orders to competitors
C Delays in developing new products or services
D Difficulty in meeting quality standards
E Increased operating costs
F Difficulty in introducing new working practices
G Increased workload for other staff
H Difficulties in meeting customer service objectives
I The withdrawal of certain products or services altogether
J Difficulties in introducing technological change

QA2. Compared to others in your sector of economic activity how often does your
enterprise lead the way in terms of developing new products, services or techniques?

a) Very frequently
b) Frequently
c) Occasionally
d) Rarely
e) Very rarely

QA3. Where would you place your enterprise on the following scales? 1 indicates that
this enterprise competes in a market for a standard or basic quality product or service,
and 5 that you compete in a market for premium quality products or services.
Standard or basic quality 1 2 3 4 5 Premium quality

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QA4. Is this establishment…

a) The only establishment in the organisation

b) One of a number of establishments within a larger organisation
Note: Question to be asked only if the survey is administered at the establishment level.

QA5. Are the headquarters of your organisation based in this country or outside?

a) Within the country

b) Outside the country
c) Don’t know
Note: Question to be asked only if QA4=(b).

SECTION 2B: Desirable questions on firm practices: training

QB1. Does your enterprise regularly assess the future needs of skills and competences
in the enterprise?
a) No
b) Yes, but not regularly (mainly linked to changes in personnel)
c) Yes, it is part of the overall planning process in the enterprise
Note: “regularly” refers to whether, over the past few years or going forward, your organisation carried out or plans to carry out the exercise
more than once and on a systematic basis.

QB2. In your enterprise, what are the ways through which employed staff became skilled
at their jobs in 20XX? (Yes/No answers, please tick all that apply).

a) Participation in internal CVT courses

b) Participation in external CVT courses
c) Participation in guided-on-the-job training
d) Participation in job rotation, exchanges, secondments or study visits
e) Participation in conferences/workshops
f) Participation in learning or quality circles
g) Participation in self-directed learning/e-learning

QB3. In 20XX, how many persons employed by the enterprise participated in one or
more CVT course (either internal or external)? Open answer.
Note 1: This refers to CVT courses only. Each person should be counted only ONCE, irrespective of the number of CVT courses the person has
participated in.
Note 2: External CVT courses are principally designed and managed by organisations which are not part of the enterprise itself. It is important
that the responsibility for the content of the course lies outside the enterprise.

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QB4. What were the reasons not to provide training for persons employed in 20XX?
(Yes/No answers, please tick all that apply).

Yes No
A The existing qualifications, skills and competences of the persons
employed were appropriate to the current needs of the enterprise
B The preferred strategy of the enterprise was to recruit individuals with the
required qualifications, skills and competences
C Difficulties in assessing training needs in the enterprise
D Lack of suitable offers of CVT courses in the market
E High costs of CVT courses
F Higher focus on IVT provision than on CVT
G Major efforts in CVT made in recent years
H High workload and no time available for staff to participate in CVT
I Other reasons

SECTION 2C: Desirable questions on firm practices: HR and work organisation

QC1. Does the person in charge of human resources report directly to the head of this
enterprise?

a) Yes
b) No
c) Not relevant (no person in charge of human resources at this enterprise)

QC2. In this enterprise, thinking about work organisation:

a) What percentage of employees work in teams, where the members jointly decide how work is
done?
b) What percentage of employees is involved in groups who meet regularly to think about
improvements that could be made within this workplace?
c) What percentage of employees regularly up-date databases that document good work practices or
lessons learned?

SECTION 2D: Desirable questions on firm practices: talent recruitment

QD1. Has your enterprise recently encountered any difficulties in…

Yes, because Yes, because Yes, for other No Does not

applicants there have reasons apply
did not have been few or
the required no applicants
skills
A …recruiting employees for jobs which normally
require a formal vocational qualification
B … recruiting employees for jobs which
normally require a university degree
C … recruiting employees for jobs that do not
require any formal qualification nor degree

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QD2. Has your enterprise recently encountered any difficulties in retaining employees?

a) Yes
b) No

QD3. Thinking about recent recruitments, did you experience difficulties finding
candidates who possessed the skills needed to do their job to the required level?

a) No, it was not difficult to find candidates with the required skills
b) Yes
c) It does not apply / There were no recent recruitments

QD4. Thinking of the difficulties you experienced finding candidates who possessed the
skills needed to do their job to the required level, what skills were the most difficult to
find in candidates for recruitment? (Tick the most important 3).

Skill area [if QQD3 = (b)]

A General IT skills
B IT professional skills
C Management skills
D Team working skills
E Customer handling skills
F Office administration skills
G Foreign language skills
H Technical, practical or job specific skills
I Oral or written communication skills
J Mathematics or calculating skills
K Reading skills
L Problem solving skills
M Other

QD5. Which of the following are the main reasons why it is difficult to recruit and/or
retain staff? (Tick all that apply).

a) Wages are lower than in other organisations

b) Geographic location
c) Unattractive conditions of employment
d) Lack of career progression
e) Long/unsocial hours
f) High competition from other employers
g) Not enough people interested in doing this type of work
h) Staff don’t want long term commitment
i) Other

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SECTION 2E: Desirable questions on the firm’s structure and business model

QE1. Are your products or services primarily sold…

a) Locally – within an individual town or local area

b) Regionally – within a specific area of the country
c) Nationally
d) Internationally

QE2. Approximately what is the structure of your workforce? Please indicate the
percentage of the people in each category:

1) Blue collar
2) White collar
a) Managers
b) Professionals
c) Commercials
d) Clericals
3) Proportion of temporary employment
4) Proportion of self-employed collaborators
5) Proportion of workers who are 50 or older?

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Annex D. List of international experts

participating in the development of the
questionnaire design

• Gilles Bérubé – Canada Human Resources and Skills Development

• Andries de Grip – Netherlands Research Centre for Education and the Labour Market (ROA)
• Richard Garrett – UK Department for Education
• Nathalie Greenan – Centre d’études de l’emploi et du travail (CEET)
• Michael Horrigan – United States Bureau of Labour Statistics
• Edward Lorenz – Université de Nice GREDEG
• Fabio Roma and Michela Bastianelli – Italy ANPAL (National Agency for Active Labour Market
Policies).
• Mantas Sekmokas and Jan Varchola – European Commission DG Employment
• Johnny Sung – Singapore Institute of Adult Learning

Other participants to the group include:

• Sabine Gagel – EUROSTAT
• Dario Guarascio and Simona Mineo – National Institute for the Analysis of Public Policies (INAPP
Italy)
• Ivan Neville – Labour Market Research and Analysis Unit at the Australian Department of
Education, Skills and Employment
• Oliver Shaw – UK Department of Education

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Annex E. Sample characteristics

Table A E.1. Counts by country and firm size

10-49 employees 50-249 employees 250+ employees Total
Hungary 3 678 920 2 117 6 715
Italy 10 051 2 850 4 716 17 617
Netherlands 1 242 1 646 1 562 4 450
Portugal 1 731 575 1 113 3 419
Slovak Republic 1 163 393 831 2 387

Note: Data is unweighted.

Source: PIAAC Employer Module (2022).

Table A E.2. Counts by country and industry

Wholesale;
Transport; Comm; Real Estate;
Manufacturing Construction Accom Finance Services Total
Hungary 3 097 625 1 386 421 1 186 6 715
Italy 5 498 2 430 5 118 2 543 2 028 17 617
Netherlands 1 643 202 1 066 448 1 091 4 450
Portugal 1 141 326 1 213 268 471 3 419
Slovak Republic 1 176 134 654 266 157 2 387

Note: Data is unweighted; Manufacturing refers to NACE Rev. 2. F, Construction refers to NACE Rev. 2. F, Wholesale; Transport; Accom refers
to NACE Rev. 2. G, H, I, Comm; Finance refers to NACE Rev. 2. J, K, Real Estate; Services refers to NACE Rev. 2. L, M, N, R, S.
Source: PIAAC Employer Module (2022).

Table A E.3. Counts by country and firm age

Created 2000 or before Created 2001-2020 Total
Italy 11 125 6 492 17 617
Portugal 1 893 1 526 3 419
Slovak Republic 957 1 430 2 387

Note: Data is unweighted.

Source: PIAAC Employer Module (2022).

Table A E.4. Counts by country and market sector

Local Regional National International Total
Italy 2 894 3 639 7 843 3 241 17 617
Netherlands 506 644 1 869 1 431 4 450
Portugal 452 817 1 307 843 3 419

Note: Data is unweighted; Market sector refers to sector for which firm primarily sells their products or services.
Source: PIAAC Employer Module (2022).

UNDERSTANDING SKILL GAPS IN FIRMS © OECD 2024

OECD Skills Studies
Understanding Skill Gaps in Firms
RESULTS OF THE PIAAC EMPLOYER MODULE
In a global economy transformed by rapid technological advances, ageing populations, shifting global supply
chains, changing consumer preferences and efforts to achieve net‑zero emissions, firms’ skill needs are
changing. Skill gaps – the mismatch between workers’ skills and those required – pose a significant challenge
for firms to meet business needs in this changing environment. This report, based on results from the PIAAC
Employer Survey Module, examines the prevalence and impact of skill gaps in five European countries:
Hungary, Italy, the Netherlands, Portugal, and the Slovak Republic, and analyses how firms are responding
through strategies such as skills anticipation, training and targeted recruitment. The report finds that skill gaps
are widespread, especially in technical skills, teamworking and problem solving. These gaps lead to challenges,
including increased workloads for existing staff, higher operating costs and difficulties in implementing new
work practices. To address these issues, most enterprises focus on training and development, while fewer
choose to recruit new staff or change the way work is organised.

PRINT ISBN 978-92-64-31478-8

PDF ISBN 978-92-64-37984-8

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