3 Executive Summary 4 Introduction 7 Part I The economic impact of ICT 8 Part II
We ran a survey of 100 senior executives on the commercial challenges of harnessing ICT to deliver increased productivity and growth.
Second, we conducted a survey of 100 senior executives on the commercial challenges of harnessing ICT to deliver increased productivity and growth.
ICT in the public sector. The executives we interviewed and surveyed believe the best thing governments can do to promote effective ICT use is to practise what they preach.
Spain France Contributions to value added per employed person, in percentage points 1990 95 1996 2002 Source:
Skills to reorganise, skills to innovate Europe is skilled not short of technical workers. Schools and universities produce a steady flow of graduates trained in software programming, network design and other technical aptitudes,
In our survey, lack of ICT knowledge in senior management and the failure of IT and business management to work together effectively were cited as the two main barriers to maximising the benefits of ICT.
%respondents could provide a maximum of two answers) Lack of ICT knowledge in senior management 38 Business
and IT executives not working together effectively 34 Inadequate integration between different technologies in the business 30 Cost constraints 29 Inability to manage
or implementation 23 Lack of ICT skills in workforce 22 Employee resistance to change 22 Other 3 The Economist Intelligence Unit 2004 17 Reaping the benefits of ICT Europe
22 Policies to promote labour mobility 9 Policies to attract ICT skilled immigrants 10 Other 1
The issue of labour market regulation is more contentious. Many economists argue that Europe's labour market regulations are too restrictive
and that they deter companies from reorganising the workplace. Policymakers and economists diverge however, on the link between labour regulations and productivity growth,
and to give users (employees, suppliers and customers) the confidence to use them. Elie Simon, president EMEA of Sun microsystems, believes regulators must seek to develop unified security standards to protect Europe's network infrastructure.
of which is cited as a main external concern by 37%of the executives we surveyed. Common standards remove much of the risk associated with investing in competing technologies.
and are viewed by a majority of the executives we surveyed as important or extremely important to enabling firms to benefit from ICT.
Despite this, many policymakers (as well as executives judging from our survey) do not see labour market reform as a priority.
or support third-party initiatives to improve managerial and employee skills in ICT use. This is particularly relevant to staff in SMES,
It is therefore incumbent on executives to ensure, through training and other mechanisms, that their managers are fully aware of the potential benefits of an ICT investment,
quality circles and other mechanisms to promote employee involvement in decision-making; greater informationsharing; a more imaginative use of monetary incentives and other rewards;
But ultimate responsibility for using ICT more effectively to improve workplace productivity lies with the executives and staff of European organisations, public and private sector alike.
policy toward private enterprise, financing conditions, the tax regime, the macroeconomic environment and labour markets. The overall index is a simple average of the five category subindexes.
%respondents could provide a maximum of two answers) Lack of ICT knowledge in senior management 38 Business
and IT executives not working together effectively 34 Inadequate integration between different technologies in the business 30 Cost constraints 29 Inability to manage
or implementation 23 Lack of ICT skills in workforce 22 Employee resistance to change 22 Other 3
and higher education 10 Policies to attract ICT skilled immigrants 10 Policies to promote labour mobility 9 Policies to redress under-representation of women in ICT jobs 2 Other 1
%respondents) Improved management information 51 Communication and collaboration between employees 48 Customer relationship management 33 Integration of existing data/technologies 33 Remote/mobile working 23
%respondents) Improved management information 47 Customer relationship management 41 Communication and collaboration between employees 32 Supply chain integration 31 Integration of existing data/technologies 29
We operate schemes to encourage remote and flexible working 25 Senior management is briefed regularly on emerging disruptive technologies 20 How do you measure the benefits of ICT in your organisation?(%
Table of contents Foreword 3 1. Executive Summary 4 2. The origins of Smartgrids 6 3. Driving factors in the move towards Smartgrids 12 4. From today to tomorrow 15
Advances in simulation tools will greatly assist the transfer of innovative technologies to practical 1. Executive Summary 5 VISION AND STRATEGY I ELECTRICITY NETWORKS OF THE FUTURE application for the benefit of both customers
Job opportunities will be broadened as the networks require workers with new skills and integration across new technology areas.
I ELECTRICITY NETWORKS OF THE FUTURE GENERAL ASSEMBLY (Biannual Technology Platform Forum Member States'Mirror Group Advisory Council (Executive Group) 26 membres Group of Associations
. and Cambridge, UK Copyright 2015 RAND Corporation R is a registered trademark. 3 Abbreviations BEPA Bureau of European Policy Advisers EGDI e-government development
and transformations in the world of work and the labour market. Overall findings from all reports may be found in the Synthesis Report published by RAND Europe,
which was harnessed through a Delphi with international participants as well as through a series of semi-structured interviews with experts from academia and think tanks,
In 2012, the Bureau of European Policy Advisers (BEPA) commissioned RAND Europe to investigate further the theme of societal changes by drawing from the experience of the pilot project,
which stand in contrast to the consensus. The second phase of the research (expert consultation) harnessed the knowledge of leading experts worldwide for each of the themes studied through an approach based on the Delphi method.
Schummer 2010). 1 Experts consulted in the Delphi 1 Castells (2011) defines the network society as‘an informational society with networks serving as the basic structure of organisation pervading all spheres
and Robert Owen's approach to workers'welfare are social innovations the present turmoil and technological progress offer new opportunities to harness these initiatives to promote social-policy goals
Education is likely to become an increasingly critical national and personal asset in a globalised labour market,
& Sandford 2010). 4. 2. Uncertainties about the effects of a global education and eskills Although the globalisation of education and the diffusion of e-skills are projected often to be associated with better labour market prospects for graduates,
limited access to skilled positions by those with‘second tier'(not technologyoriented) skills could result in a loss of intellectual diversity in the labour market (Cave et al. 2009;
skills mismatch and polarisation of labour market outcomes Low Social innovation, enabled by ICTS among other factors,
unmet demand on labour market for certain skills++Medium term Need to make educational systems responsive to these developments,
and G. Moreno,"Patterns of labour market integration in Europe-a life course perspective on time policies,"Socioeconomic Review, Vol. 2, No. 2, 2007, pp. 233-260.
"Second career labour markets. Assessing challenges advancing policies..""from http://www. bertelsmann-stiftung. de/cps/rde/xbcr/SID-D9524723-CEBE39DA/bst engl/xcms bst dms 38023 38024 2. pdf. Bertot, John C, Paul T Jaeger,
and A. Kicinger,"Population and labour force projections for 27 European countries, 2002-052: impact of international migration on population ageing:
Bureau of European Policy Advisers, Empowering people, driving change: Social innovation in the European union, European commission, Buerau of European Policy Advisors, 2010.
Labour force by qualifications (in 000s), EU27+,"European Centre for the Development of Vocational training (Cedefop) website, 2012b.
and impact of financial crises",International Journal of Manpower,(2012), Vol. 33 (1): 76-95 Christensen, Henrik Serup,"Political activities on the Internet:
. and Melling, K.,Gender inequalities in the risks of poverty and social exclusion for disadvantaged groups in thirty European countries, Expert Group on Gender, Social Inclusion and Employment report, Luxembourg:
The Mismatched Worker. New york: W. W. Norton & Company. Keck, Margaret E, . and Kathryn Sikkink.
men and women participating in the labour force. RAND Report, RR-348-EC, Cambridge: UK. Report prepared for Justice DG, European commission.
A synthesis of research findings for policy-makers, An independent report submitted to the European commission by the NESSE network of experts, 2008 As of 21 august 2014:
Report to the Northern ireland Housing Executive, November 2010. As of June 2013: 54 http://www. nihe. gov. uk/analysis of the future need and demand for appropriate models of acco mmodation and associated services for older people published february 2011 . pdf Paxton, Pamela, Melanie M. Hughes,
A Comparison of Older and Younger Workers. American Journal of Industrial Medicine, 47: 104 112,2005.
REF 160614 In collaboration with A t. Kearney Fostering Innovation-driven Entrepreneurship in Europe 3 Contents Preface 3 Preface 5 Executive Summary 7 Section One:
in addition to 1, 132 survey respondents and numerous global and European experts from academia and civil society.
then Scale up A European Agenda to Foster Innovation-Driven Entrepreneurship 11 22 44 57 1 Innovation Fostering Innovation-driven Entrepreneurship in Europe 5 Executive Summary
innovation and employment opportunities they present. Figure 3 shows that SMES in different European countries have performed very heterogeneously,
or join a market innovator start-up or SME as an employee Start up Assessing the success factors for an entrepreneur in establishing an innovative organization and making it a viable venture,
and number of employees, in particular identifying and realizing win-win opportunities for collaboration between market leaders and market disruptors Employment (2014e relative to 2008 level) Valueadded (2014e relative to 2008 level) 0. 9 1
including licensing, tax and labour market regulations. Market framework refers to the availability of necessary inputs
advisers and enablers who transfer know-how and create opportunities for growth. Figure 4: A Life cycle Model for Entrepreneurship6 Source:
and only 41%perceived them as somewhat or very favourable (see Figure 7). These results are more positive than many experts engaged in the project expected.
or the willingness and ability to take the risk of joining an innovative start-up as an employee. 12 Figure 10 details a conceptual model for the factors influencing
%Concern about financial benefits is greater among respondents potentially joining an entrepreneurial venture as an employee (37%)than those starting their own venture (29%.
Employees of the Finnish start-up Rovio had developed 51 programmes, none of which was a commercial success. After going through this, their 52nd programme, Angry Birds,
with a clear majority in the European union (EU) now favouring work as an employee. Another is the prevailing attitude towards entrepreneurs
%since 2007 The EU is home to 19.0 million micro companies (those with less than 10 employees),
Many European venture capital experts say the sector is stronger than the long-term data indicate. Today
Martin Vollmer, Chief Technology Officer, Clariant Developing culture and organization Promoting an R&d setup with specific organizational structures integrating employees, partners and customers Barclays Open Innovation:
and Israel, led by a senior executive with enough credibility in the company to champion collaboration cases.
Second, BT involves senior executives early in the collaboration process, by organizing meetings with selected companies during dedicated off-site sessions.
Running an entire division aimed at providing digital services to UK SMES helps senior executives understand the perspective of smaller companies
A team of 15 ABB employees collaborated with Fastned to develop the concept. DSM/Provexis:
Could you estimate what proportion of SME employees in your country are working in innovation-driven SMES?
labour market interventions to improve access to talent, and projects to improve framework conditions for crossstakeholder or cross-regional collaboration between various actors.
grow faster and employ more workers. Fostering Innovation-driven Entrepreneurship in Europe 35 Toomas Hendrik Ilves President of Estonia The role of innovation-driven entrepreneurship in your economy:
Enterprise Estonia has established a network of salaried professional export advisers residing in major target markets,
The growth outlook and ambitiousness of enterprises is expressed by entrepreneurs'expectations concerning the increase in employee numbers as well as their ambitions on the international market.
expectations of early-stage enterprises concerning a fast increase in employee numbers (i e. more than 10 employees in five years and over 50%of growth) are lower,
remaining lower when compared with the respective indicators in Latvia and Lithuania. Key activities on an agenda to foster innovation-driven entrepreneurship in Europe:
poor links between universities and the labour market don't help. We should be giving tax incentives to start-ups.
they might encourage a corporate culture with spin outs and employee circulation; and they might view being located in a strong and innovative entrepreneurial ecosystem as a long-term value.
the continued improvement of our European workers'skills and knowledge; the access to adequately priced financing, in particular for SMES;
Recent successes by The netherlands in improving the conditions for innovation-driven entrepreneurship are the top sector approach, valorization grants and an action plan for skilled technical workers.
the importance of this issue decreases while the relevance of other difficulties increases, including severe competition, availability of skilled employees and managers,
Strengthening this connection has an effect for both the next generation labour force and the education system. Teachers and professors can be trained as entrepreneurship developers to inspire
Partner to encourage active engagement in start-ups as employees and as founders. Individual attitudes and skills can be influenced effectively by direct experience in a start-up environment, for example through internship programmes or employment opportunities.
These experiences build on school-based programmes and often lead to employees founding their own businesses.
Connecting and partnering to help entrepreneurs start up As outlined above, a key challenge for European entrepreneurs is accessing critical resources,
and direct it towards venture markets Supporting entrepreneurs to access skilled employees to join their ventures Providing mentoring to new founders Providing more opportunities for potential entrepreneurs to obtain practical experience in an innovative business
Global Shapers Hub, Lisbon We should create a board of mentors and advisers for young European changemakers.
among members about immigration or labour market issues, and on identifying avenues for consensus with external partners on the protection of personal data?
the first question for executives will be whether they can understand the direction and forces underlying current shifts.
please email europeentrepreneurship@weforum. org. 56 Enhancing Europe's Competitiveness Endnotes 1. The entrepreneurial life cycle is defined here as including the factors influencing an individual to turn an idea into economic activity or join a start-up as an employee,
while an equal number say it is challenging to find workers with the skills they need.
Papers, No. 9 Fostering Innovation-driven Entrepreneurship in Europe 59 Acknowledgements Adviser and Knowledge Partner:
-YE Europe Alumni Research+Data Insights, a Hill+Knowlton Strategies company David Iannelli, President Amber Ott, Senior Account Supervisor YES Dimitris Tsigos, President
Gavin Patterson, Chief executive officer Jean-Marc Frangos, Managing director, External Innovation, BT Technology, Services and Operations European Institute of technology Daria Golebiowska-Tataj, Executive Board member
Young Global Leader Luis Alvarez Satorre, Chief executive officer, Global Services, BT, United kingdom Tobias Schmidtke, Senior Consultant, A t. Kearney, Germany Bohuslav Sobotka
, European Investment Fund, Luxembourg Fostering Innovation-driven Entrepreneurship in Europe 61 Jeroen Van der veer, Executive Member of the Governing board, European Institute of Innovation and Technology, Hungary;
Co-Director, Centre on China Innovation, China Europe International Business school (CEIBS), People's republic of china Krisztina Z Holly, Adviser, National Advisory Council for Innovation and Entrepreneurship
, USA Daniel Isenberg, Professor of Entrepreneurship Practice, Babson Executive Education, Babson college, USA Guriqbal Singh Jaiya, Director-Adviser, Innovation and Technology Sector, World
Intellectual Property Organization (WIPO), Geneva Eric Kacou, Cofounder, Entrepreneurial Solutions Partners (ESPARTNERS), USA Harkesh Kumar Mittal, Adviser and Head, National Science
Healthnet one of the most widely implemented computer-based telecommunications systems in Sub-saharan africa, currently is being used in over 30 countries by around 10,000 healthcare workers to exchange ideas
Users mainly physicians and medical workers connect to the network through Enhancing healthcare delivery through ICTS 147 local telephone nodes to access services such as physician collaborations (Mozambique, Tanzania, Uganda.
Levels of motivation of health workers which is associated with level of facilitation, remuneration, workload, provision of quality training
Efficiency of health facilities which is affected by the availability of financial resources, availability of equipment, promotional activities and number of skilled health workers and proper management.
The key variables that play a key role in the provision of healthcare services are resources (health centres, facilities) and level of service which results from the motivation of health workers.
An increase in demand results in increased workload which reduces health worker motivation resulting in reduced level of service
An effective health system requires management of resources, effective monitoring and reporting as well as well-motivated health workers.
and minimizing missed opportunities due to stock outs. 2. Health worker motivation. The provision of immunization services requires highly motivated health workers who are trained well,
remunerated, facilitated and with acceptable workload. 3. Effective monitoring of immunization activities by carrying out regular supervisions of health units that provide immunization services. 4. Mobilization
Immunisation sessions which involve preparation of equipment, vaccines, safe injection practices, transport, management of human resource (health workers) and vaccine wastage.
mobilization of mothers, record keeping, routine supervision from the district officials, timely delivery of vaccines to avoid stock outs, training of community workers.
The majority of health facilities (5) stated that they needed to increase the number of health workers as well as training.
and tally sheets by the health workers. The tally sheets are forwarded to the health district level for entry into a computerized database Health Management Information system (HMIS.
Health workers will use the PDA to access immunization information (diseases, vaccines, side effects, immunization schedule, stock management) from the immunization content management system.
health workers as well as preparing requisitions and facilitate distributions of vaccines to the various health sub districts and health units.
side effects through online accessibility to the medical workers as well as the public improving their attitude towards immunization. 3. Timely reporting of disease outbreaks/epidemics will be made easier
A manual for operational level health workers. UNEPI/TRA. Borooah, V. K.,(2003. Gender bias among children in India in their diet and immunization against disease.
It draws from papers prepared for the OECD by a number of experts, in particular: David Audretsch, Bart Clarysse and Vincent Duchêne.
many experts predicted the demise of SME competitiveness as globalisation increased. While many SMES have succumbed indeed to a deterioration of competitiveness,
and inter-country labour mobility. But in order to answer how these 1. During the last five years, SMES were responsible for more than 80%of the jobs created (European SME coordination unit, CEC, 1999.
During the 1980s, one in about 25 workers lost a job, and in the 1990s the figured has risen to one in 20 workers. 9. Much of the policy debate about globalisation has revolved around a trade-off between maintaining higher wages at the cost of higher unemployment versus favoring higher levels of employment
at the cost of lower wage rates. Globalisation has rendered the comparative advantage in traditional moderate technology industries incompatible with high wage levels.
yet the number of workers who can contribute to producing and commercialising new knowledge is limited to a few areas in the world.
Furthermore, demand for less skilled workers has decreased dramatically throughout the OECD, while demand for skilled workers has exploded. 6 11.
Given the shift in comparative advantage towards more knowledge based economic activity, many scholars have predicted the demise of SMES.
For example, the Gellman (1976,1982) data base identified SMES as contributing 2. 45 times more innovations per employee than do large firms.
Audretsch (1995) identifies SMES as contributing 2. 38 times more innovations per employee than do large firms.
and research oriented consultancies which include engineering services, technology consultants, and (2) R&d boutiques. As shown in table 1,
Other key factors generating new economic knowledge include a high degree of human capital, a skilled labour force,
and other knowledge workers as agents endowed with new economic knowledge. 34. When the focus shifts from the firm to the individual as the relevant unit of observation
a knowledge worker may choose to exit the firm or university where the knowledge was created initially.
and in a worker. The firm is created endogenously through the worker's effort to appropriate the value of his knowledge through innovative activity. 35.
What emerges from new evolutionary theories and the empirical evidence on innovation as a competitive strategy, is a picture of markets in motion with a lot of new firms entering
An executive of a company that makes laboratory equipment explained that the typical Mittelstand strategy"
%while five-year employee growth was 9. 8%.44. One of the keys to the success of the German Mittelstand has been their strong commitment to global expansion.
Indeed, non-marketing employees in the German Mittelstand engage in direct contact with customers at twice the frequency as in the largest German corporations.
and financial employees in order to make sure innovative activities truly meet customer needs. WK1 15 The Network and Flexible Production Strategies 47.
which employees perform a wide variety of different tasks. 15 Porter (1990) provides examples of Italian ceramics and gold jewelry as industries in
On the one hand, new economic knowledge embodied in skilled workers tends to raise the propensity for innovative activity to spatially cluster throughout all phases of the industry life cycle.
which are made easier by the mobility of workers and technicians, the activity of technical consultants,
Two-dimensional plot of SMES according to their innovative capacity Leading Technology Users 10-15%of the SME population(>5 employees) Technology Developers 1-3%of the SME population
(>5 employees) Non-Innovative SMES about 40-45%of the SME population(>5 employees) Potential Innovators about 40%of the SME population(>5 employees) IIII IV
In most national technology programmes, technical consultants are permitted frequently not to participate as contractors, so this category of SME is excluded often national R&d grant programmes,
15 40 Firm size (employees) 47 43 73 R&d budget as%of turnover 21,7%32,1%10,9%Growth during 1996-1999 (in terms of employees) 89
These organisations are typically technical consultants and count R&d as a non-core activity. Looking at firm growth rates during the three-year period preceding the study,
and employ a highly educated labour force. Public agencies have strong incentives to adapt their strategies to meet the needs of this population of SMES.
(or have a network of technical experts) who are trained to perform technological due diligence. The venture capitalists are more specialised in assessing business potential than technological viability.
<250 employees and independent. 25 Including CRAFT-projects (14,5%without CRAFT-projects. 26 In respect of Belgian (Flemish) definition of the SME:
less than 200 employees. 27 SME according to the Anvar-classification: less than 50 employees. 28 Only related to equity financing organised by the main R&d granting institute!
WK1 26 budget in the following years. R&d grants seem to have substantial additivity to the size of the R&d investments of leading technology users
A typical such SME might have three employees out of thirty who spend part of their time on R&d activities,
Technical experts in public research bodies or institutions are not of much assistance as their speciality is high end,
Because the mind set separating the world of technical experts and that of entrepreneurs is so large,
In some countries such as the US, technical and business consultants are important carriers of innovation to SMES
We used the number of employees to account for the effect of differences in the size of the firm.
In addition to Marco Marchese and Jonathan Potter of the OECD LEED Secretariat, the review team consisted of the following experts:
Human capital and the labour market, by Karen Chapple and Sergio Montero-Muñoz. Chapter III: The contribution of research organisations, by David Wolfe.
6 Human capital and the labour market...6 Contribution of research organisations...7 Entrepreneurship...9 SME development...
HUMAN CAPITAL AND THE LABOUR MARKET...32 Introduction...32 Policy issues...32 Assessment of the region...
127 Human capital and labour market...128 Contribution of research organisations...128 Entrepreneurship and start-ups...130 SME development...
135 EXECUTIVE SUMMARY The OECD Local Economic and Employment Development Programme (LEED) has undertaken a review on entrepreneurship, SMES and local development in Andalusia,
The study was carried out by an international review panel consisting of 6 international experts and 2 members of the Secretariat of the OECD LEED Programme.
i) the impact of human capital and the labour market on entrepreneurship and SME development; ii) the contribution of research organisations to entrepreneurship and SME development;
Human capital and the labour market The Andalusia labour market is affected by structural weaknesses High levels of unemployment,
large numbers of temporary workers and low productivity undermine the performance of Andalusia‘s labour market. Although the overreliance of the region on the construction industry and the subsequent housing bubble has contributed clearly to these problems,
even the sectors that employ highly educated workers are affected by structural problems. Regional human capital needs to be upgraded
most pertinent for innovation, develop the pipeline of highly skilled workers that help transmit knowledge in regional clusters.
Both envisage attracting both talent (students, researchers, skilled workers, etc. and investment (national and foreign. Entrepreneurship Entrepreneurial culture is improving in the region There is a low but growing level of entrepreneurial culture in the region.
Although young people have seen traditionally the public sector as the natural route to the labour market, the sharp economic downturn in Andalusia may stimulate a greater willingness to embrace self employment and other forms of entrepreneurship.
SME development The Andalusian business structure lacks medium-sized firms The Andalusia economy is dominated by SMES with over 99%of firms having less than 500 employees.
between 50 and 500 employees demonstrates an underlying structural problem in growing local enterprises to a level that can contribute more significantly to employment creation and regional growth.
Box 1. Main policy recommendations Human capital and labour market Link training programmes more effectively with sectors in order to improve firm productivity and innovation
Work across the silos of business and employment agencies by connecting business incentives with job creation in strategic sectors.
offsetting only partially job losses and possibly accounting also for large numbers of self-employed workers in the construction and tourism industries.
The reliance on the temporary growth areas of construction and tourism also point to a major problem in the labour market.
and the Labour market It is recognised now well that the set of technical, cognitive, facilitative and operational skills competencies and knowledge,
often referred to as=human capital‘play a key role in the formation of a labour market and more generally in the development of an economy.
2008) Human Capital and the Labour market Research and development Institutions: Framework and Governance Start-ups/New Firm Formation Existing Firms Innovation, Entrepreneurship and Economic Development Networks Input Factors for Framework Conditions Key Drivers of Innovation
The propensity of firms to be innovative through technological development is inevitably dependent on the skills levels of its employees and its owner-managers.
there are four labour market-related factors most critical to entrepreneurship in all its forms:(1) higher education;(
i) human capital and labour market issues affecting entrepreneurship and SME development; ii) the contribution of research organisations to entrepreneurship and SME development;
Review panel visit The OECD Secretariat led an international panel of experts in a one-week peer review visit in Andalusia from 12 to 16 april 2010.
i) human capital and the labour market; ii) contribution of research organisations; iii) entrepreneurship and new start ups;
R&d as a%of GDP (2007) 0. 2 0. 2 University R&d as a%of GDP (2007) 0. 3 0. 4 Secondary education as%of labour force (2008) 20.7 16.8
Tertiary education as%of labour force (2008) 29.8 24.9 High-tech manufacturing as a%of employment (2008) 4. 8 2 Knowledge-intensive services as%of employment (2008) 28 9 26.9 Active
population (thousands)( 2008) 31 143 5 562 Labour market participation rate (2008) 73.4 68.9 Employment rate (2008) 65.1 56.6 Unemployment rate (2008) 11.3
What was traditionally a region of outmigration 1. 6 million Andalusians migrated between 1955 and 1985 has recently become a region of immigration of mainly low-skilled workers.
This is in part the result of the influx of low-skilled migrant workers, but also a consequence of the growth of low added-value sectors that do not require high-level qualifications.
since 2008 the labour market situation has deteriorated strongly, with unemployment rising from 11%to 27.2%in early 2010(+16.2%)compared to+12.7%for Spain as a whole.
and labour market structures of the region. On the one hand construction which had been one of the main sectors driving the economy in the booming period,
Micro firms (less than 10 employees) dominate the economy, representing over 90%of the total. This is typical of Figure 3. Andalusia's foreign trade and trade balance (1990-2008)( € 000s) Imports Exports Trade balance Source:
Defence is an important subsector, with a turnover of more than EUR 1 500 million and over 11 000 workers employed.
Consultancies, joint research projects and university training programmes for employees were also relatively common involving between 15%-25%of the surveyed enterprises.
HUMAN CAPITAL AND THE LABOUR MARKET Introduction Human capital development and labour market dynamics play a key role in a knowledge-based global economy.
with a particular focus on the labour market characteristics of successful regional innovation systems. It then outlines the complex landscape of education and training
Policy issues A rich literature debates the role of human capital formation and labour market dynamics in fostering entrepreneurship and innovation.
then turning to the debates about labour market preparation for entrepreneurship. A final section describes the Spanish context.
Debates in the literature Higher levels of human capital create returns not only in terms of worker productivity but also of higher wages (Becker, 1965.
and the growth of these industries has altered fundamentally the labour market (Aoyama & Castells, 2002). In this new informational mode of development the source of productivity lies in the technology of knowledge generation, information processing,
resulting in rising demand for college-educated workers relative to their supply (Katz & Murphy, 2002).
wages are bid up for those workers who possess high levels of human capital while, due to falling demand,
wages fall or stagnate for less educated workers. Yet, institutions also play a role: national policies and international bodies regulate trade flows
The technical qualifications of employees (among other factors) even affect a company‘s attitude toward innovation (Coronado, Acosta, & Fernández 2008.
Not surprisingly, then, investment by firms in their employees‘human capital has been shown to encourage innovation and entrepreneurship (Sevilier, 2006.
Human capital that combines education and experience gives employees the adaptiveness so key to entrepreneurship (Wright, Hmieleski, Siegel and Ensley, 2007.
Increasingly, researchers interested in regional innovation have focused on the role of labour mobility, particularly transnational immigration patterns.
To wrap up, the four labour market-related factors most critical to entrepreneurship appear to be: 1) higher education;
The Spanish labour market differs somewhat from that of most European countries. Immigration to Spain from Latin american and EU15 countries has increased rapidly in the last decade.
A 2005 opinion survey of the Spanish public found significant opposition to loosening immigration laws for workers, particularly among less-skilled Spaniards (Martínez i Coma and Duval-Hernández
Historically, Spanish labour market regulation has been notoriously rigid; the high costs of terminating employees are in part responsible for a shift towards temporary hiring contracts,
which are easier to end. As of June 2010, major labour market reform became provisionally effective; this will reduce the cost of permanent contracts and increase that of temporary contracts.
Employers will also have more flexibility in reducing working hours (and salary) of employees. These reforms may force Spanish labour market regulation to begin to converge with that of its northern European neighbours.
Although labour and immigration policies and programs come under the purview of the national government,
regions can still take action to attract immigrants by fostering a positive climate. For instance, the regional government of Madrid produced a business plan supportive of immigrants called New Madrileños,
) Assessment of the region Local labour market conditions The Andalusian labour market contains several structural weaknesses that distinguish it from the rest of the Spanish economy, namely:
even the sectors that employ highly educated workers are experiencing structural problems. Andalusia presents an example of=badly used human capital‘:
‘as the educational attainment of resident workers has increased, this is not employed appropriately enough to contribute significantly to economic growth (Cuadrado-Roura, 2010).
The unemployment rate is closely related to the impermanence of much of the labour market: in 2007,45%of employed residents were in temporary jobs, 13.5%above the national average (Granados-Cabezas, 2010.
In addition, the changing demographic structure in the region has affected labour market dynamics. The regional workforce is aging,
which uneducated workers out-migrate to one which attracts immigrant workers to work in unskilled occupations.
The immigrant population has increased from less than 1%of the total population in the early 1990s (mostly British and German retirees) to 8. 8%in 2009, mostly Latin americans (32%),African (24%)and EU-15 (20),
despite having responsibility for employment policies, skills training for unemployed and employed workers (Formacíon Profesional por el Empleo FPL),
and integration of immigrant workers. Figure 8. Regional Agencies involved in human capital development Source: Personal elaboration based on the competencies of the three regional ministries as listed in www. juntadeandalucia. es as of July 2010.
Vocational training for employment (Formación Profesional para el Empleo or FPE) serves either dislocated or incumbent workers.
Unions also collaborate in the training of workers with the Ministry of Employment. 6 Recently,
For instance, in 2009 they took part in an initiative of the Regional Ministry of Employment to train more than 1 000 students, workers and redundant workers of the aeronautic sector. 7 Spanish Minister of Education discourse in the Congress
. While the university offerings focus mostly on connecting high-tech workers and start-ups to entrepreneurship skills,
and low-skilled workers gain the capabilities they need to innovate more effectively. Below is a description of
most pertinent for innovation, develop the pipeline of highly skilled workers that help transmit knowledge in regional clusters.
While hiring Phd-level workers might be key for highly innovative companies in IT or biotechnology sectors
while others will benefit from skilled workers trained in energy efficient technologies. Bolstering the production chain of the cluster via training strategies will allow the expansion of the local market for these services
and structures how regional actors think about labour markets, innovation, and training in the region. The regional innovation system separates itself from the general education
This contradicts established best practices about sector-based workforce development that tailors training to employer needs in specific industry sectors (Zandniapour and Conway
which taught SME executives how to develop innovative ideas for their businesses. Digital Cluster Program:
It utilized FUNDACION EMPRENDE s schools as well as a network of 250 consultants. The main IT solutions offered were antivirus (to 29%of clients), business management software (to 28%)and web and email (to 19%.
but also by fostering low-tech innovation. 10 Policy recommendations In the area of human capital and the labour market,
trying to create a win-win situation by restructuring employment practices in a way beneficial to both employers and low-skilled workers (Marano and Tarr, 2004).
Connect business incentives with job creation Work across the silos of business and employment agencies by connecting business incentives with job creation in strategic sectors.
Fostering entrepreneurship alone does not guarantee that Andalusia can capture the benefits for its distressed labour market.
Job training seeks to help economically or educationally disadvantaged people access employment opportunities, while economic development programmes must help businesses become more competitive
and expand, often through productivity increases that will require high-skilled workers. Training workers can take months or years
while firms need quick and flexible access to labour to compete in the global market.
not only attempt to improve wages and advancement potential for workers, but also try to change internal labor market practices such as management and mentoring in order to make workers more productive (Giloth 2000).
Because they focus on a single sector, these types of programs offer economies of scale and scope. They organize groups of firms that require similar worker skill sets,
obtaining economies of scale by working across a variety of different firms in one industry. Additional synergies come from bringing employers together to share concerns and best practices,
as well as help design appropriate curricula. When employers are involved directly in programs, curricula focus on the most appropriate skills,
trainees become more familiar with workplace practices, and the intermediary may act as an employment broker, introducing workers to prospective employers.
An impressive set of evaluations has shown that these initiatives have significant and positive impacts on the employability
In particular, research spin-offs and industry-university knowledge transfer (labour mobility, research collaborations, technology transfer agencies, university technology licensing programs, etc.)
as well as to the=thickness‘of the local labour market (Gertler and Vinodrai, 2005). Second, in addition to the conduct of basic research, universities provide both formal and informal technical support,
The DUI mode of innovation builds upon the skills and knowledge of employees throughout the firm, not just its research department.
had few employees with higher education degrees and few of them had R&d departments. Among the remaining 305 firms that collaborated with universities,
Use or renting of facilities 8. 1 Training of firm workers by the Universities 15.2 Other types of collaborative activities 1. 9 Source:
especially when compared to other leading industrial countries in the OECD. More than three quarters of Canadian firms have less than 10 employees.
and the total share of business expenditures on R&d from firms with more than 250 employees is significantly lower than the OECD average.
The University of Waterloo currently has the largest cooperative education program in the world, with over 11 000 students (60 percent of the student body) and 3 000 employers, 281 of them local, involved
At Sybase, an enterprise software company that spun-off from the original WATCOM Corporation, with over 250 employees in its Waterloo campus alone,
15 per cent of its current employees are Waterloo co-op students, and more than half of their Waterloo staff consists of former co-op students.
9. Improve the adaptability of workers and enterprises, and the flexibility of labour markets; 10. Invest more in human capital through better education and skills.
The recent global crisis has however called for another major rethink of the Lisbon Strategy. The result was Europe 2020,
which require employees to have completed a year of full employment before qualify. Many under-25s are unable to demonstrate 12 months‘worth of unbroken employment (The Leader, Andalusia Suffering Most from Unemployment
According to anecdotal evidence, the impression is that young Andalusians continue to prefer the relative labour market security of the public sector. Nevertheless,
although young people have seen traditionally the public sector as the natural route to the labour market, the sharp economic downturn in Andalusia may stimulate a greater willingness to embrace self employment and other forms of entrepreneurship.
Moreover, the focus on entrepreneurship should not be restricted to future labour market entrants. The region could promote the establishment of dedicated (re) training programmes for existing business people (in employment
and generally equipping those already in the labour market with the latest business concepts, tools and techniques.
or regional employment office in order to ensure that the social security system is aligned with the new regional priorities designed to facilitate a higher level of entrepreneurial activity.
the German government prioritised active labour market policies, including vocational educational training, employment subsidies, job creation schemes and self employment schemes targeting the registered unemployed.
Baumgartner and Caliendo, 2007, p. 26) Reasons for success Business experts must examine the start-up concept
Such experts could include the Chambers of Industry and Commerce, Chambers of Crafts, Professional organisations, Expert Associations such as Business Development Service Providers and Financial institutions.
Assessment of the region SMES in the Andalusia economy The Andalusia economy is dominated by SMES with over 99%of firms having less than 500 employees (see table below.
of mittelstand firms, medium-sized firms between 50 and 500 employees, demonstrates an underlying structural problem.
Table 7. Size structure of firms in Andalusia, 2008 Size of firm%of total enterprises%change 2007-8 Micro-enterprises 95.06-1. 73 Self employed (no employees
) 51.57 0. 38 1-9 employees 43.48-4. 3 Small firms (10-49) 4. 31-13.95 Medium sized firms (50
In the future, any regional organisation interested in relaunching this professional profile may want to widen the circle of advisers to include those with more business experience in particular sectors who are able to provide specific industry knowledge and practical problem-solving abilities.
the plan recognised that there were important forms of traditional skill and knowledge of products embodied in the workers and owners of SMES themselves.
The fur industry is dominated also SME with over 2 000 independent producers in a labour intensive sector that has 3 000 direct employees but around 25 000 indirect jobs in supporting and dependent
Maskell, 1998): 80 percent of workers are in trade unions while members of employer associations account for 55 percent of private sector employees (Anderson and Mailand, 2005).
High levels of knowledge exchange between SMES are underpinned by close-knit business communities in each sector. Denmark is characterised by a plethora of networks and strong industry associations,
the Danish labour market model often referred to as=Flexicurity‘also provides generous provision for vocational training and retraining both for those in work and the unemployed.
Additionally, new firms tend to be established by skilled workers already with a background of working within particular industries, rather than those with professional managerial experience or entrepreneurial motives from the outside,
although its=flexicurity‘labour market model whereby employers are given flexibility over the hiring and firing of labour while employees are given generous social protection
and rights to retraining has been attributed as a major factor in the resilience of Danish SMES through past crises (Anderson and Mailand, 2005, Madsen, 2006).
the Scottish universities have produced generations of well-trained graduates to service the life sciences labour market: indeed Scotland produces a proportionately larger number of graduates from its universities than other parts of the UK.
i) human capital and labour market; ii) research organisations; iii) entrepreneurship and start-ups; iv) SME development.
Human capital and labour market Three key issues have emerged in the area of human capital and labour market:
and prompt more redundant workers and employees to set up their own businesses. Here, the regional government could work closely with the Technological Corporation of Andalusia (CTA) to undertake a review of current levels of company spinoffs
As of 2008, micro enterprises (less than 10 employees) accounted for 95, %and small firms (10-50 employees) for 4. 3%of the whole enterprise population,
thus making up altogether over 99%of the total. The paucity of medium-sized firms (50-250 employees) points to an excessive business fragmentation that undermines the competitiveness of the region.
Innovation and internationalisation are both key to the growth of Andalusia‘s small firms. Three key policy issues have arisen in this area:
while others will benefit from skilled workers trained in energy efficient technologies. Identifying and implementing programmes across the production value chains should help identify opportunities for new products, new connections,
Box 6. Main policy recommendations Human capital and labour market Link training programmes more effectively with sectors in order to improve firm productivity and innovation,
Work across the silos of business and employment agencies by connecting business incentives with job creation in strategic sectors.
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