Skills Utilisation: Definition, Theories, Approaches and Measures

Skills have become a major competitive factor for many countries and have been emphasised in national economic and social policies (OECD, 2011). It is therefore not surprising that governments at all levels in the EU ? supra - national, national and sub - national ? have skills strategies. These strategies have typically centred on boosting the supply and stock of skills in the labour market. The European Commission?s Agenda for New Skills and Jobs (2012) is one such example, arguing for a higher - skilled workforce across the EU through investment in training and education. However, for most companies, skills, in the form of workforce development is a third - order consideration after business development and organisational development (Warhurst and Findlay, 2012). As a consequence, whilst many companies have business strategies that include skills, few have skill s strategies per se. Boosting the supply of skills on the labour market is therefore important but not sufficient: these skills need to be put to use within companies. Without considering how skills are used, the potential exists for creating a mismatch between skills supply and demand (Keep and Mayhew, 1999; Warhurst and Thompson, 1999). Indeed, this problem seems evident in the context of ongoing ?over - qualification? amongst the workforces of the advanced economies (Felstead et al, 2017; Livingstone, 2017) resulting in ?untapped talent? at best (Skills Australia, 2012b) or, at worst, a waste of human resources (OECD, 2011) within companies. As governments refresh their skill s strategies, there is an increasingly pressing need for a framework to assist the design and implementation of new policies that encompass both skill s supply and demand (OECD, 2011; EC, 2012). Understanding skill s utilisation has become important in this context. Skill s utilisation refers to the way that employers use the skills of their employees (Ashton and Sung, 2011). Employees? use of skills is shaped not only by their own abilities but also by the human resource practices adopted by companies, which in turn are shaped by the choices that managers, as employers in loco, make about how to manage and organise their workplaces (Ashton et al, 2017). These choices can lever or impede skill s utilisation and can have negative and positive outcomes for companies. Skill s under - utilisation can lead to a loss of human capital and reduced productivity and job satisfaction (OECD, 2011). Unused skills can also degrade or be lost over time (Clark, 1995). By contrast, better use of skills can improve companies? innovation, profitability and productivity as well as employee s? job satisfaction, engagement and retention (Skills Australia, 2012b). Significantly, skill use is not predetermined; choices exist and there is policy scope for government s to help support better skill s utilisation within companies (Warhurst and Findlay, 2012; OECD, 2017). Good information about skill s utilisation is therefore needed. Generating this information requires addressing two key tasks: defining and measuring skill s utilisation. This background paper focuses on these tasks. Its aim is to inform how the European Company Survey (ECS) 2019 can capture skill s utilisation at the company level in the EU. The paper has four main sections. The first focuses on the definition of skills utilisation. The second section identifies the theoretical drivers of skill use within companies. The third section reviews existing survey measures of skill s in companies, including in the ECS 2013. The fourth section offers recommendations for including measures of skills utilisation in the ECS 2019. Annex A lists the surveys analysed for this paper; Annex B lists possible questions about skill s utilisation for inclusion in the ECS 2019.