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Forecasting Skills and Labour Market Needs

The Peer Review was held on 8th and 9th June 2006 in Helsinki, Finland, hosted by the Finnish Ministry of Labour, with inputs from the Ministry of Education and the Finnish National Board of Education. In addition to the host country, a further twelve countries participated in the discussions as follows: Austria, Bulgaria, Cyprus, France, Germany, Iceland, Latvia, Lithuania, Luxembourg, the Netherlands, Norway and the United Kingdom. In addition to learning about the Finnish approach to forecasting the supply and demand of labour from the Ministry of Labour, Peer Review participants had an explanation of how educational needs are anticipated in the Finnish model, from the National Board of Education, and a Finnish independent expert provided a critical perspective on the Finnish system.

The Finnish approach to labour market forecasting and the anticipation of educational needs

The approach presented to the Peer Review has two key components:

1) A long-term labour force model, which is constructed within the framework of a model of the national economy, and which produces both demand side (employment level by sector ) and supply side (labour force) scenarios. The interaction of the two sides of the model generates projections of unemployment. A distinction is made between the Œbasic‚ scenario (which describes the most probable path of the labour market), and the Œtarget‚ scenario (which describes the Œoptimal‚ path if effective policies are pursued to achieve high levels of employment and productivity with high quality jobs in the context of sustainable development).

2) A model for the anticipation of educational needs, which aims to achieve a better balance between the economy‚s need for a skilled workforce on the one hand, and the supply of vocationally-oriented education and training on the other hand. The model uses forecasts of labour demand by occupational category to generate estimates of demand by level and sub-field of education, which are in turn related to forecasts of the supply of young people coming through the education system, in order to indicate the required intake levels for new entrants to the system in the different fields of education. The outputs of the model are used both directly in planning the intakes of the education and training system, and indirectly in providing advice and guidance to individuals (especially young people) choosing their educational paths.

Aspects of Transferability
There was a consensus among participating Peer Country representatives that the Finnish experience offered significant learning potential. Many countries shared similar underlying labour market needs to those which the Finnish forecasting models addressed (and similar constraints such as an ageing population), although potential transferability was also, in several cases, limited by different social and institutional infrastructures, which stemmed in some cases from long-standing historical factors, and in others from major recent upheavals. Such differences meant that in some countries, while a similar approach could be adopted as in Finland, the uses to which it might be put would vary. Thus, in several countries, it would be difficult for institutional reasons to use forecasts to Œsteer‚ the intakes to the educational system, and the emphasis would be more likely to be on the indirect use of forecasts in providing advice and guidance to (potential) students (there was considerable debate at the Peer Review regarding the importance, in this context, of the accuracy of forecasts). Similarly, it was clear that the Finnish approach depended on a high level of co-operation and joint working between the ministries and authorities responsible for labour market issues on the one hand, and those responsible for education and training issues on the other; it would be harder to achieve such effective collaboration in some member states. Furthermore, in some countries the notion of orienting educational supply to labour market needs is less well-established than in Finland; and the underlying philosophy remains oriented towards serving the study preferences of individual applicants to the education system. Finally, it was felt that in some countries the utility of the approach would be very sensitive to the importance (and direction) of net migration flows, which played a relatively minor role in the Finnish context. Indeed many participants felt that in the future, this kind of forecasting approach should take place at an international or pan-European level. Such a need was already strongly apparent in some smaller countries with relatively large migration or commuting flows, but was seen as an emerging need more generally, given globalisation and the increasingly international perspective of young people in taking decisions relating to education and employment. The pioneering work of international organisations such as CEDEFOP in this respect was noted in the discussion.


Discussion Paper - Juha Honkatukia
Government Paper

Statements and Comments

Participating independent experts



Austrian Institute of Economic Research (WIFO)



Bulgarian Academy of Ciences


University of Cyprus

France Philippe MEHAUT

Laboratoire d'Economie et de Sociologie du Travail - LEST

Germany Kurt
Economix Research & Consulting
Iceland Stefan OLAFSSON University of Iceland
Latvia Andrejs JAKOBSONS Riga Business School
Lithuania Boguslavas GRUZEVSKIS Institute of Labour and Social Research
Netherlands Frank CÖRVERS Maastricht University

Norway Knut Arild LARSEN ECON Analyse AS
United Kingdom Rob WILSON University of Warwick

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