The Problem of Skills Mismatch: Why Is It Serious?

Skills mismatch is a discrepancy between the skills sought by employers and the skills that individuals possess. This means that education and training are not providing the skills demanded in the labor market, or that the economy does not create jobs that correspond to the skills of individuals.

Skills mismatch has become a major challenge in the world, affecting all layers of society, from the productivity and efficiency of businesses. It has led to an increase in unemployment and affected competitiveness and attractiveness to investors. This means lost opportunities on the pathway to productive transformation and job creation. Public or private resources are invested in training with the assumption that achieved qualifications will yield positive results in terms of employment insertion or wages. Yet, if skills mismatch is present, these expectations often do not materialize, leading to returns on investment that are lower than expected.

👤 On the individual level

Individually, significant wage penalties — particularly overqualification — impact both work and life satisfaction. Employees receive training but are unable to find work that matches their skill level, implying they are not employed to reach their full productivity potential.

👥 On the Company level

The problem of skills mismatch eventually results in a loss of profits and markets. Moreover, it can lead to a rise in unemployment in various countries and regions — affecting competitiveness and investor attractiveness and resulting in missed opportunities on the path to productive transformation and job creation.

When a skills mismatch occurs, expectations frequently do not materialize and thus result in a lower-than-expected ROI. Therefore, employers must first recognize a problem in order to reduce the risks associated with this distinct challenge. Unfortunately, the issue remains under the radar despite its potential for disengagement and higher turnover rates.

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