Remarks by Angel Gurría
1 April 2015
(As prepared for delivery)
Prime Minister, Ministers, Ambassador, Ladies and Gentlemen,
It is a pleasure to be in Lisbon to present the OECD Skills Strategy Diagnostic Report for Portugal. I am delighted to be welcomed by the Prime Minister and by Ministers Mota Soares, Nuno Crato and Poiares Maduro. Your presence here reflects the depth of our inter-ministerial collaboration, the strength of our partnership and the value and relevance of OECD advice to Portugal.
This report, conducted with the support of the European Commission, is the result of close cooperation between this dedicated inter-ministerial team here today, the OECD, and a wide variety of stakeholders across Portuguese society - from employers, to educators, students and trade unions.
We are all here because we share a common cause – to support Portugal as it meets the skills challenges of the 21st century. Skills are like a new global currency, you need them to boost productivity, to promote innovation, and to foster greener and more inclusive growth. Without proper investment in skills, people languish on the margins of society, technological progress does not translate into well-being, and countries can no longer compete in increasingly knowledge-based economies.
The Portuguese economy is already moving in the right direction. After three years of severe recession, the recovery of the Portuguese economy is now on firmer ground. GDP growth was 0.9% in 2014. The export sector is expanding, the current account has turned positive, debt levels are falling and bond markets are rewarding successful fiscal consolidation with access to financing at record-low yields.
These are important achievements indeed, and I want to congratulate this Government for its leadership and commitment to reform, which has helped bring about this recovery. But, there are still many challenges ahead. Improvements in productivity will be crucial to job creation and future wage growth. Unemployment has been on a declining path for two years now, but it remains unacceptably high. This is also true for income inequality.
Improving the skill set of the Portuguese labour force is essential in meeting and overcoming these challenges. This is where the OECD Skills Strategy can help. Our Skills Strategies provide a useful framework for countries to build effective and integrated skills policies.
This framework is supported by three pillars, which we think are essential to designing and delivering a national skills system:
The purpose of this diagnostic report is to outline major challenges faced by Portugal as it seeks to improve the skills of its citizens. I’d like to share with you some of our findings in each pillar.
The first challenge is to ensure citizens develop relevant skills from childhood to adulthood.
Portugal has taken significant steps to improve both access to basic education and the quality of the education system. It is one of the few OECD countries to see a simultaneous reduction in the share of low-performers and an increase in the share of high-performers in mathematics as measured by the OECD’s Programme for International Student Assessment (PISA).
Yet Portugal is also one of the OECD countries where students’ socio-economic background has an above average impact on their results. The number of early school leavers and the rate of grade repetition is also higher in Portugal than the OECD average. Increased efforts must be made to target adult education and lifelong learning towards the low skilled. In Portugal, 62% of 25-64 year-olds have not completed upper secondary education, which is the third largest share in the OECD area.
This brings me to challenges we have diagnosed around the second pillar of the Skills Strategy: activating the supply of skills in the labour market.
Portugal has the fourth highest youth unemployment rate among OECD countries at 33.6% and a large number of young people who are not employed or in education and training (NEET). Job creation is the biggest challenge to address unsustainably high levels of youth unemployment. Major investments to support young unemployed people have recently been made, including with the help of the EU Youth Guarantee Programme. This good work must continue if we are to avoid the risk of a lost generation.
But those in work also face major challenges developing their skills. A large share of workers – young people, in particular – are employed on temporary contracts. These workers face higher job insecurity, lower job quality and receive less training from their employers. Recent labour market reforms have sought to address these issues in Portugal, and some improvement can now be seen: in 2014, the majority of jobs created were on permanent contracts. However, there is still work to be done.
Targeted measures for retraining and job-search assistance are needed to ensure that the long-term unemployed do not become completely disconnected from the labour market.
And once developed and activated, people’s skills need to be used effectively, which brings me to our third pillar: using skills effectively in the economy and society.
Portugal has made significant efforts to improve the quality and flexibility of its Vocational Education and Training (VET) system, but further improvements are required to ensure that it responds to the needs of the labour market. These include a stronger component of work-based learning, and further strengthening the involvement of businesses and other relevant stakeholders. This means providing employers with incentives to engage in skills development, especially SMEs.
Skilled citizens also benefit society as entrepreneurs. Entrepreneurship is not only an effective use of skills, it is a vital ingredient for strong productivity and competitiveness. About a quarter of Portuguese exports today come from firms younger than 10 years old, and young firms generated almost half the jobs created in Portugal. Although significant progress in this area can be seen, continued efforts are needed to systematically promote entrepreneurship throughout the education system.
Stimulating innovation and creating high-skilled jobs is also necessary to ensure Portugal’s competitiveness in the modern global economy. Business R&D expenditure in Portugal is among the lowest in the OECD area. Taking further steps to improve the links between university research and business is vital to make full use of Portugal’s many highly-skilled people.
Prime Minister, Ministers, Ambassador, Ladies and Gentlemen: Here you have the diagnosis. But you will have to “pay for the cure”. At the OECD we are aware that financing a more equitable and efficient skills system can be particularly challenging with a tight budget. The report makes a number of recommendations to ensure the efficient use of limited resources, for example by targeting support for disadvantaged schools and students, by improving coordination across levels of government and by effective monitoring of implementation and evaluation of impact.
The challenge now is to move from diagnosis to action. This will require a ‘whole of government’ approach – because each ministry represented here today holds a piece of the solution. It will also require a ‘whole of society’ approach which engages with employers, trade unions, students and trainers. These are the people who each and every day invest in skills, see them grow, and put them to work.
I have seen your determination to confront the challenges set out in this Report. I am confident that your commitment and enthusiasm will make these efforts bloom. As the maestro Fernando Pessoa once said: “Tudo vale a pena quando a alma não é pequena”. And I will add: with the help of the OECD!
It is with great pleasure that I now hand the floor to the Prime Minister.