Vidmantas Tūtlys (1)
Aušra Rutkienė (2)
Organisation affiliation/position(s):
Vytautas Magnus University / assisstant professors, researchers
Address:
K. Donelaičio 52, 401-402
LT-44244 Kaunas
Lithuania
E-mail addresses:
1)
2)
Stream:
7- HRD, Evaluation, and Learning
Submission type:
Working paper
Supply and demand of high skills in the labour market of Lithuania: challenges for human resource development and talent management
Vidmantas Tūtlys, Aušra Rutkienė, Vytautas Magnus University
Abstract
The paper discloses the main factors of supply and demand of high skills in the labour market of Lithuania, exploring their implications to the human resource development and talent management approaches and practices in the enterprises.It includes analysis of the historical pathway of development of supply and demand of high skills in the labour market of Lithuania with consideration of socio-economic, institutional, political and cultural factors, as well as critical overview of the main features of the demand and supply of high skills in the labour market and the main factors that influence existing mismatches between the supply and demand of high skills in the labour market of Lithuania. The article contributes to the wider and deeper understanding of the specificties of the supply and demand of high skilled human resources in the labour market of transitional economies. It also explains the issues which are important for the development and implementation of the measures of educational and labour market policies, as well as for the policy learning in the fields of labour market, higher education, continuing training and skills development.
Keywords: high skills, supply and demand of high skills, over-qualification, human resource management, transitional economy, Lithuania
Introduction
High skills and talent management play crucial roles in the nowadays human resource management and development of enterpises competing in the global market. This is also true for the enterprises and human resources in the transitional economies, such as Lithuania. However, human resource development and talent management in enterprises of transitional economies face important specific challenges and problems, that are not sufficiently researched and discussed amongst researchers and policy makers. One of such challenging issues is supply and demand of high skills in the labour market of transitional economies, influenced by many specific factors of socio-economic development, such as intesive workforce migration, insuffient potential of enterprises to compete for high skills in the international and global labour market, mismagaments and policy failures in the intensive reforms of initial vocational education and higher education, etc. Therefore this paper seeks to disclose the main factors of supply and demand of high skills in the labour market of Lithuania, exploring their implications to the human resource development and talent management approaches and practices in the enterprises. This goal is achieved by:
- analysing the historical pathway of development of supply and demand of high skills in the labour market of Lithuania with consideration of socio-economic, institutional, political and cultural factors;
- critically overviewing the main features of the demand and supply of high skills in the labour market and disclosing the main factors that influence existing mismatches between the supply and demand of high skills in the labour market of Lithuania;
- disclosing the specificities of the development of high skills needs and their satisfcation approaches in the enterprises of Lithuania.
There are applied the following research methods:
1. Critical review of statistical data and available theoretical and empirical studies in the field of high skills formation, human resource development and talent management.
2. Empirical research is based on the in depth interviews with the representatives of employers organisations and enterprises responsible for human resource management and development.
1. Theoretical aspectsand models of supply and demand of high skills
This research is based on the several theoretical approaches and models.One of these theoretical approaches is the political economy of high skills. Here there can be mentioned the researches executed by Brown, Green, Lauder (2001), Brown and Hesketh (2004), Brown, Lauder and Ashton (2011). This theory looks into the implications of economic globalization to the development of knowledge-driven capitalism and important structural changes of national and global labour markets, such as, important increase of the supply of highly-trained people in certain sectors and fields of labour markets. Other implications of these processes concern the changes of the work nature and skills demands leading to the development of the new configurations of skills. This theoretical approach presumes, that development of high skilled work does not necessarily leads to the widening employment opportunities for all and raises important social conflicts in the field of skills acquisition and employability. Development of mass higher education and increasing supply of high skilled workforce is not responded by the expansion of the demand of high-skilled workforce in the labour market, creating situation when people ‚leaving the world of mass higher education find themselves in scramble for jobs with increasingly high stakes for the winners and losers‘ (Brown, Hesketh, 2004).
Development of the global auction in the international labour markettogether with the wars for talents amongst enterprises andpositional competition for the attractive employment positions amongst learners and job seekers create fundamental shift of power in favor of international corporations and emerging economies leading to development of the new global high-skill and low-wage workforce (Brown, Lauder, Ashton, 2011). Referring to these research based facts there emerge important research questions concerning development of high skills economies in the post-soviet transitional countries. How the enterprises and institutions supplying high skills workforce in the transitional economies react to the challenges of global auction? How these challenges influence the appropaches of high skills supply, talent management and human resource development in the transitional economy?
Other important theoretical background of research is the critical approaches to the theory of varieties of capitalism and theories of institutional change. “Varieties of capitalism’ theory presumes, that the variety of the institutional pathways and orientations of training and skills development is created by the diverse features of industrial relations, vocational education and training, corporate governance, inter-firm relationswith suppliers, customers and technological partners, technology transfer, relationships between enterprises and employees in human resource management and development, etc. (Hancké, 2009). This theory attributes the orientation to development of generic knowledge and key skills to the liberal market economies and orientation to the development of specific skills to the coordinated market economies. The biggest shortage of this theoretic approach in applying it for the research of specificties of supply and demand of high skills in transitional economies is that it fails to consider the increasing institutional mix of the skills development models and patterns in these economies. Nevertheless, the theory of varieties of capitalism can be applied in analysing and understanding the emerging patterns of high skills development in the post-soviet economies and outlining the specificities of these patterns comparing to the established patterns in the liberal and coordinated market economies.
The critical approaches to the theories of institutional change (Streeck, 2010) suggest the idea of invoking historical-institutional analysis of social phenomena by opening and exploring different often unconsidered features of these phenomena, such as their uniqueness and contingency, irreversibility of their change, historical givenness and the impact of legacy, emphasising the dynamic nature of the social phenomena as processes, as well as consideration of the importance of the trends of development. Such approach is very helpful for the analysis and understanding of the pathway of development of supply and demand of high skills in the transitional economies and societies, where the irreversibility of the institutional change and the legacy of the previous models of economy and society highly influence both the current situation of demand and supply of high skills and the trends of it‘s development.
2. Analysis of the historical pathway of development of supply and demand of high skills in the labour market and economy of Lithuania
The historical pathway of development of supply and demand of high skilled human resources in Lithuania since the beginning of the XXth century was influenced by the different factors. One of the most important factors is the domination of the agrarian economy until the middle of the XXth century and abrupt industrialisation executed under regime of planned centralised economy during the Soviet occupation. Underdeveloped industry and tertiary sector with the domination of agriculture in the structure of national economy in the period of the first Republic of Lithuania (1918-1940) could not create the constant and important demand for skilled workforce and created important restrictions for the socioeconomic development of the country. The domination of agriculture in the national economy did not permit to integrate into labour market the graduates of universities with the exception of the public government sector. Therefore development of industry and services was regarded as one of the most important challenges and tasks seeking for the strengthening of the national identity, social stability of society and solution of the main social problems such as poverty and emigration. In the fourth decade of the XXth century the Government of Lithuania made rather significant efforts to develop the food industry as a main exporting branch and light industry, metalworking, woodworking and other branches to satisfy the internal market needs. There were introduced different measures in the policy of customs duties, state provided credits and direct inverstments of the state financial capital to the development of industry. However, the development of industry was very much restrained by the global economic crisis of that period. Analysing the features of the industry in that period there can be mentioned quite strong merger of the industry with crafts. Crafts and industry were very closely integrated without any strict differentiation between these two sectors of economy. Such industry could not invest in the training and skills development of high skilled workforce and specialists and in the same time it became one of the reasons of the shortage of skilled workforce of the shopfloor and middle level, what also precluded the further development of the industry itself:
We have a lack of highly skilled workers for construction, woodworking, joiners, electric fitters; it is difficult to find a good specialist for the processing of leather or skilled sewer. We, engineers, constantly hear the claims, that there is shortage of good craftsmen in the almost all fields (Amatininkas, 1937, own translation).
The state policy in 1918-1940 towards the education and training was quite ambivalent. The press of employers of that period criticised the lack of attention of state policy to the training of specialists.There was also noticed the problem of disballance of the flows of youth to the higher education and vocational education and training:
Our youth seeks for education and science. It is evident from the overly big rush and congestion of youth to the gymnasiums and other schools of general education. Maybe also the craft schools could be similarly congested, maybe there would be even bigger possibilities to choose the education, if there would be established suitable schools specialised in (vocational) education. Today in the crafts schools of Kaunas learn mostly the children from the poor families, while normally crafts shools should attract also the children from the middle class families (Andriūnas,1935, own translation).
Social critics of the end of XIXth century (V. Kudirka) anf beginning of the XXth century rather openly point to the problem of very narrow and limited understanding of the patterns of social progression amongst the farmers and peasants. Their promoted models of the occupation and career of their children were limited to several ‚intellectual‘ occupations providing higher social status and economic rewards to their children, such as priests, medical doctors, pharmacists or lawyers. Such mentality and behaviour was favourable for the development of the elite oriented higher education, that in principle had no connections with the real needs of the labour market and occupations. However, there were also certain ideas for the development of the coherent and balanced model of education and skills development that were not implemented due to the dramatic historical changes in the middle of the XXth century:
(…) We need to systemise the education in the way, that there would be continuity in the education and training of crafstmen, masters, technicians and engineers. Speaking in another way, we need to achieve, that engineers and technicians would not be trained exclusively in theoretical field and craftsmen or masters – exclusively by practical training. There has to be established continuous chain in training from the lowest level to the highest. Young apprentices after the graduation of three lower levels of qualification would be able to study more productively at the technical faculty of the university, than the graduates of gymnasiums. Therefore we suggest to introduce the system of technical schools: lower technical schools would prepare the craftsmen, middle technical schools – masters and higher technical schools - technicians. Special attention today should be focused not so much on the training of craftsmen, but on the education of masters. It is very important, because before receiving the title of craftsmen apprentices have to undergo theoretical course and practical training at the well prepared masters, who would be their only teachers and educators (Gėgžna1935,1936, own translation).
The forced industrialization in the conditions of centralised planned economy and totalitarian Soviet regime in the middle of the XXth century significantly changed the direction of the development of high skilled workforce. Centrally planned economy and subordinated education and training system permited to achieve comparatively high rates of educated and skilled workforce (Gylys, 2008). Centralised planning of human resources in the planned economy also implied rather close linkage between the provision of theoretical knowledge and practical skills, which was ensured by strictly regulated ‚co-operation‘ between the providers of vocational and higher education from the one side and state enterprises from the other. Provision of knowledge and skills in the initial vocational and higher education was strictly oriented to the workplace needs. It also facilitated the development of thinking in society, that the acquired skills should necessary lead to the employment in certain workplaces and that these skills could be acquired exclusively in the formal initial education and training (Analysis of the current state of qualifications in Lithuania, 2006).
Very important part of skilled workforce was occupied in the big industrial enterprises, their skills profiles and professional experience were shaped by the bureaucratic industrial work organization and oriented to the execution of the prescribed functions and tasks. The basic and most important part of skills and qualifications consisted of specialised professional knowledge and skills. One of the typical features of the Soviet planned economy and work organisation wasthe lack of the motivation for the development and growth of productivity, because there was no interest to increase the plans of production. It facilitated the development of the attitude amongst the workforce and functionnairies of economy, that skills and qualifications were‘stable’ capacities provided mainly in the initial vocational training and higher education system. Despite of the strong promotion of the official propaganda and certain cult of workers‘ work and occupations (for example, by the policy of salaries more favourable to the workers‘ occupations and qualifications, than to the occupations and qualifications requiring higher education and intellectual work), workers faced certain cultural divide causing their lower social status and low prestige of VET in the society (Aleksandravičius, 2010). It significantly contributed to the development of current attitude on the importance of enrolment to higher education for the sake of future career and social status.
The process of transition to the market economy and democratic society after the collapse of Soviet Union marked new challenges for the development of high skills, because the inherited practices and experience from the Soviet period were not suitable in the new conditions. Most experiences, approaches and institutional settigs of skills development from the period before the Soviet occupation could not be restored and applied.The development of attitudes and approaches to high skills and high skilled human resources in this transition process was influenced by the different specific factors outlined below.
- Specificities of the privatisation of the former Soviet enterprises and their restructuring.Very often the privatization of the former state owned enterprises did not facilitate the establishment of the new owners with the new business ideas and possessing the capital for their implementation, because in the most cases the nominal owners of privatized enterprises were the employees of the enterprise keeping the factual control of such enterprises in the hands of their former administration (Norkus, 2008). Besides, the establishment and evolution of capitalist relationships in Lithuania took top-down approach, when the former political-bureaucratic elite took important part in privatization process. Such situation did not bring new capital or managerial competences and caused the processes of economic involution which manifested itself as decline of industry, barter exchanges, delays in payment of wages or their payment in kind, outflow of capital abroad (Norkus, 2008). These conditions neither facilitated the development of strategical approaches in the human resources development accumulation of the capacities, nor enabled accumulation of capacities, incentives and interests of enterprises to invest in the development of skills and competences of their employees.
2. The domination of the competition on prices and low cost of workforce due to the lack of financial resources and capital for investment in technologies and human resources.Most of the Lithuanian companies since the beginning of transition to market economy did not have sufficient capacities and resources to compete on the quality and innovations and exploited their only competitive advantage - low labour costs. The economic downturn which started with the restructuring of the economy after 1990 had influenced the orientation of many enterprises to the low-way strategy of survival by competing on price and low labour costs leading to the very reserved and limited hiring of the high skilled workforce and unattractive perspectives for career and skills development for the graduates and young employees.