Workforce skills and patents granted

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Human capital

A high-quality education at primary, secondary or tertiary level may not generate faster economic growth if the skills acquired during formal schooling do not match the demands of employers or the needs of the economy. According to some estimates, up to one-third of people in employment are either under- or over-qualified for the work that they do, and skills mismatches are increasing.¹ Highly educated people in many countries cannot find good jobs – or any jobs at all.

The Business Environment and Enterprise Performance Survey (BEEPS) conducted by the EBRD and the World Bank, which focuses mainly on small and medium-sized enterprises in most countries in the transition region, is one source of employer perceptions. In the 2008-09 survey round, having an inadequately educated workforce was judged the main business environment obstacle in Estonia, Kazakhstan, Romania and Uzbekistan, the second largest obstacle in Belarus, Croatia, Lithuania, Russia, Slovak Republic and Tajikistan, and the third largest in Latvia, Moldova, Montenegro and Poland. Across the 30 countries, having an inadequately educated workforce was, on average, the third largest business environment obstacle (out of 14), after informal sector competition and electricity.²

The fact that private sector firms in Estonia ‒ the transition country with the best secondary schools in terms of quality – viewed workforce skills as the main obstacle appears puzzling. This could indicate that skills obtained during education are not meeting the requirements of businesses or that businesses are not willing to offer sufficient remuneration to attract workers with the skills they need.

Another indicator of the quality of human capital is innovation, coupled with intellectual property rights and access to finance. Patenting activity in transition countries has accelerated on average in the last decade, but it remains significantly behind that seen in advanced economies³(see Charts 4.5a and b, which are based on World Intellectual Property Organization (WIPO) and European Patent Office (EPO) data).⁴ SEMED countries trail other regions.

Among the countries in the transition region, Slovenia is the best performer on a population-adjusted basis (18.5 and 87.7 patents per million inhabitants according to the WIPO and EPO respectively), followed by the Czech Republic, Hungary, Estonia and Latvia. Jordan is the best performer among the SEMED countries according to both EPO (0.2 patents per million) and WIPO (3.7 patents per million) data.

1. See World Bank (2012). [back]
2. For details of the methodology behind these figures, see EBRD (2010), Chapter 5. The analysis controls for the characteristics of companies and respondents. [back]
3. The top 10 countries and territories are dominated by those commonly regarded as tax havens (such as Barbados, Bermuda, the Cayman Islands, Liechtenstein and Luxembourg) and those with low tax rates (such as Switzerland). The EPO list includes Germany and Sweden, while the WIPO list includes Japan, Finland and the Netherlands. The data need to be interpreted with caution. [back]
4. The EPO data are better in terms of comparability, but proximity and country-specific interests clearly play an important part. [back]

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