A highly skilled workforce is crucial to sustain competitiveness and contain the rise in income inequality. Recent surveys of adult skills and educational performance suggest that younger cohorts are doing less well than their predecessors. Many immigrants struggle both in school and in the labour market partly because of low skills and language difficulties. Educational outcomes could be improved through raising the attractiveness of the teacher profession, improving teacher education and increasing support for struggling students. A more flexible labour market would facilitate access to jobs for youth with low qualifications and immigrants.

This paper focusses on ways to improve average educational outcomes to ensure the availability of the high skills needed in a high-income innovative economy, on challenges facing disadvantaged groups, in particular immigrants, and on possible adjustments to labour market institutions which could facilitate employment. The first section outlines income inequality trends. The second investigates the causes and consequences of the fall in youth skills. The third analyses links between adult skills and labour market outcomes, exclusion and inequalities. The fourth looks at options to halt the decline in average skills and lift the basic skills of weaker individuals so they can get a foothold in the labour market. The paper ends with a discussion of the scope for labour market policies to improve matching and increase labour participation without sacrificing equity.

DOI: 10.1787/5js1gmp403q2-en