background and context

The prosperity of an economy depends on how productive it is. Productivity depends, in part, on the skills of its workforce—or human capital. Human capital can affect productivity both directly, by improving labour productivity, and indirectly, by facilitating innovation and investment.

The skills of a country’s workforce help determine the types of jobs and industries the economy can support. In the global economy, countries tend to specialise in areas where they have a comparative advantage. The comparative advantage of the industrialised world lies in more knowledge-based goods and services. For a country to be prosperous and successful, it must succeed in these knowledge-based goods and services by developing a skilled workforce.

Countries and their governments must ensure that labour markets function well, efficiently matching individuals seeking employment with employers seeking to meet their human resource requirements. This match must also fulfil the needs and aspirations of individuals and allow employers to function and operate resourcefully and effectively in a complex competitive environment, thus paving the way to economic prosperity. The availability of timely and reliable labour market information effectively facilitates and influences this process in several ways.

• Businesses, in partnership with industry associations, labour unions, sector councils, and regional development agencies, aim to develop a skilled workforce to take advantage of new technologies and production techniques. They also work collaboratively to adjust production strategies to create an increased supply of skilled workers. If they cannot make this adjustment, or if there is a shortage of skills in the economy, there are risks of adjusting to, or remaining in, competition with low value-added markets—leaving the economy in a low-skilled, low-income trap. In this respect, all these stakeholders work in concert to avoid such risks and— with governments—aim to address the needs of their industries and constituencies. By accessing, using and exchanging labour market information among them, they are able to inform and influence this process, positively affecting the strategies developed, directions set, decisions made, and actions taken.
   
• Moreover, employers need effective human resource policies to be competitive and able to respond to changing market conditions and new technologies. Employers also need to:
   
  • be aware of conditions in the labour market that affect their ability to hire employees with the appropriate skills, knowledge and abilities;
     
  • be capable of identifying training needs and potential mechanisms by which these needs can be met; and,
     
  • be actively involved in succession planning.

  All these elements are the product of employers being informed about the labour market environment in which they operate.

• Alongside businesses and employers, universities, community colleges and private career colleges require access to labour market information to make informed and responsive decisions about program development and offerings. These programming decisions help to shape the available supply of skills and knowledge in the future.
   
• Individuals make career decisions and pursue educational and training options that will shape their work experience and quality of life over many years. Over the course of their working lives, they must respond to a changing work environment by developing new skills, knowledge and abilities and seeking out new employment opportunities. Research shows that individuals are more likely to be employed and tend to be better paid if they are more highly skilled. The impact of skills on pay and job prospects is likely to further increase as international competition and technological change intensify and advanced countries specialize further in knowledge-based industries requiring high levels of human capital. Throughout these life-course transitions, access to labour market information matters—helping individuals to understand conditions around them, and to inform and affect decision making about skills development, training investments, career choices, and job searching.

However, the benefits of a well-functioning labour market and skilled workforce can be constrained or undermined by a lack of information.

In the absence of timely and reliable labour market information, individuals and businesses cannot correctly judge the benefits of skills development and learning and therefore, are unable to make decisions that best support goals aimed at contributing most effectively to the growth of productivity.

Thus, the development and dissemination of accurate and timely career and labour market information is an important public policy objective. This objective can best be achieved with a focus on the contributions that this information makes to economic prosperity, workplace skills development, labour market efficiency, and the social well-being of citizens.