The effects of highly skilled employees

The Organization for Economic Cooperation and Development (OECD) released a working document that includes an analysis on the effects of highly qualified employees.

While the most productive companies are more intensive in high skills, low and medium skills are still indispensable.

According to the document, the largest proportion of highly-skilled employees in more productive companies occurs primarily at the expense of low-skilled employees, although the proportion of employees with average qualifications also decreases slightly as you approach the border.

The analysis was performed by Chiara Criscuolo, Giuseppe Nicoletti, Peter Gal, and Timo Leidecker.

They concluded that the combined ratio of low and medium skills decreases from 85% to just under 70%, moving from the least productive companies to the most productive ones.

Thus, even in the most productive companies, the vast majority of employees are less than highly skilled, with only mid-skilled employees accounting for roughly half of the workforce at the productivity frontier.

Obtaining similar results for measures of competencies based on occupations and educational attainment suggests that the company’s competency structure is closely related to its organizational structure.

Highly qualified employees

In other words, the most productive companies differ from the least productive in that they employ more qualified employees and perform more complex tasks.

Thus, the close link between these two aspects implies that the improvement of competencies entails more complete changes than the simple fact of employing more qualified employees.

In fact, improving productivity through improved skills requires companies to change what they do and how they carry out their activities, as well as who does them.

Productive activities

From another angle, the mix of high-medium, and low-skilled labor varies substantially across sectors.

On average, across countries, high skills are more important in knowledge-intensive services (ICT and professional services), while low and medium skills are more important in manufacturing and less knowledge-intensive services (wholesale, retail , transportation, hotels and restaurants), where they represent more than three-quarters of the workforce in the distribution of productivity.

In contrast, knowledge-intensive services rely much less on lower skill levels, and low- and medium-skilled employees combined account for less than half of employees.

Specifically, low-skilled employees make up about a quarter of the workforce in manufacturing and between a fifth and a third of the workforce in less knowledge-intensive sectors.

Likewise, they are less important in knowledge-intensive services, where they represent only about 5% of the workforce in the distribution of productivity.

Analysts indicate that these differences are likely to reflect primarily sector-specific technology patterns and capital intensities, with the differences implicit in the complementarities between capital and labor.