The upgrading of workforce skills is key to the competitiveness of SMEs. In today’s business environment there is a premium on innovation that enables firms to develop new products and services, new production processes and new business models. This requires both in-house innovation and the ability to absorb knowledge from other firms and organisations, both of which call for a skilled labour force. Skills are also a critical but understated resource for entrepreneurship seen in the sense of business creation. Similarly to workforce skills, entrepreneurship skills will boost the competitiveness of local businesses thanks to the improved strategic and management competences of the entrepreneur.

1. International Workshop
Skills Development for SMEs and Entrepreneurship
Danish Business Authority - OECD LEED Programme
Copenhagen, November 28th 2012
Sergio Destefanis
destefanis@unisa.it
(Università di Salerno and CSEF, Italy)
Local levels of skills and local initiatives to promote
skills development in Italy’s small businesses

2. Outline of the presentation
- Italy's structural situation (Dualism, Decline, size)
- Mapping the skills policy framework in Italy
- Some new evidence from 2 OECD-LEED projects
Skills for Competitiveness: the diagnostic tool
Local Job Creation: a dashboard
- Problems and Best Practices
- Emerging policy issues

3. Italy's structure:
the well-known dualism influences skills demand;
these are the hi-tech local districts

4. Italy's structure: the Decline
GDP per hour worked, selected European countries:
1997-2010 (average annual rate of change)
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5. Italy's structure: growing share of temporary workers

6. Italy's structure: High share of (very) small firms, of self-employment
% e m p lo y m e n t in fir m s < 2 0 e m p lo y e e s in m a jo r E u r o p e a n c o u n tr ie s
UK IT A FRA G ER DNK
m a n u fa c tu rin g 8 ,3 3 0 ,3 17 1 1 ,3 1 6 ,1
b u sin e s s s e rv ic e s -- 4 6 ,3 1 2 ,1 3 3 ,8 3 3 ,4
S o u r c e : B a r te ls m a n n e t a l. (O E C D E D w p 3 4 8 , 2 0 0 3 )
V a lu e -a d d e d , w o r k e r s a n d n . o f c o m p a n ie s in m a jo r E u r o p e a n c o u n tr ie s -Y e a r 2 0 0 4 (p e r c e n ta g e
UK IT A FRA GER SPA
N . F ir m s 1 3 ,1 3 2 ,1 1 9 ,1 1 4 ,6 2 1 ,1
N . E m p lo y e e s 2 2 ,4 1 8 ,2 1 7 ,7 2 5 ,7 16
VA 2 5 ,5 15 19 2 8 ,3 1 2 ,1
S e lf-e m p lo y e d in m a jo r E u r o p e a n c o u n tr ie s - Y e a r 2 0 0 4 (p e r c e n ta g e s )
U K IT A FR A G ER SPA
m a n u fa c tu rin g 3 ,4 1 6 ,6 2 ,2 2 ,2 5 ,5
b u sin e s s s e rv ic e s 1 0 ,8 4 3 ,8 4 1 3 ,9 1 9 ,3
T o ta l 7 ,6 3 3 ,2 5 ,1 8 ,3 1 7 ,4
S o u r c e : I s ta t e la b o r a tio n s o n E u r o s ta t S tr u c tu r a l B u s in e s s S ta tis tic s

7. Mapping the skills policy framework in Italy (1)
National and, especially, regional policy makers have only
recently begun to focus on skills in Italy, with varying degrees of
success.
Resources and attention are devoted to developing skills supply
(training) and demand (R&D, innovation), rather than promoting
a supply-demand balance. Indeed, the 2010 Labour Plan from
the Ministry of Labour announced that Italy, more than other
countries, presents a marked mismatch between labour demand
and supply. Then went on blaming the “total inadequacy of the
training system” for this state of affairs above anything else.
The lack of a robust socio-economic infrastructure able to bring
together workers and firms is also evoked but is seen as a lower
contributing factor.

8. Mapping the skills policy framework in Italy (2)
Ederer (2006): Human Capital Endowment is strongly determined by on-
the-job and adult learning, both are relatively low in Italy

9. Mapping the skills policy framework in Italy (3)
skills supply (vocational training):
strong territorial differentiation in the workings of training levies

10. Mapping the skills policy framework in Italy (3)
skills supply (apprenticeship training): similar territorial differentiation

11. Mapping the skills policy framework in Italy (4)
Skills demand (R&D, innovation)
Aid focuses on small firms, less developed regions (?), environment-
related investments, R&D activities, applied research.
There are good funding opportunities for research commissioned to
private and public entities, initiatives to promote the temporary in-
house assignment of researchers and technicians, acquisition of
patents.
Yet, the available evidence (Gabriele et al., 2006; Brancati, 2010;
Martini & Trivellato, 2011) suggests that this kind of aid has no
positive impact on profitability, technical change or productivity. The
lack of effective selection procedures has often been blamed for this
outcome.

12. Mapping the skills policy framework in Italy (5)
Supply-demand balance & skills matching (PES):
relatively few resources are devoted to them in Italy.

13. The OECD-LEED Projects
Skills for Competitiveness &
Local Job Creation:
for methodology and other features, please refer to:
http://econpapers.repec.org/paper/oeccfeaaa/2012_2f9-en.htm
http://econpapers.repec.org/paper/oeccfeaaa/2012_2f4-en.htm
http://econpapers.repec.org/paper/oeccfeaaa/2012_2f17-en.htm

14. Sk for C: the “OECD diagnostic tool”
Multinomial Logit evidence for Italian provinces (TL3), years 2001 and 2009.
What determines a province's location in a given quadrant?
SKILL SHORTAGE: HIGH-SKILL EQ.:
Strong 2-ary sector Strong 3-ary sector
Large population Large population
“Attractive University”
Lower share of temps
LOW-SKILL EQ.:
baseline SKILL SURPLUS:
“Attractive University”

15. Sk for C: taking stock of problems
There is still relatively little awareness about skills
utilisation in Italy. The growth of temporary work
did not improve this state of affairs.
Firms' small size makes R&D + innovation, policy, and
inter-firm, co-ordination, diffusion of information,
more difficult. The famed distretti did not solve
these problems.
Skills policy ineffectiveness is enhanced by lack of
effective selection procedures in aid provision, and
by lengthiness of bureaucratic procedures.

16. LJC: taking stock of problems
The Agenzia del Lavoro from Trento is doing fine, but
- more needs to be done about skills utilisation (even
in this rich and relatively dynamic area, virtually
nobody cares about high-performance work
practices).
- Better communication and co-ordination among
public entities, ex-post evaluation and forward
planning of policies, should be put in place.

17. Best practices #1
The Distretto Calzaturiero del Brenta.
A long-standing reality, characterised by ACRIB (a local
employers' association) and by Politecnico Calzaturiero (a
very important private school of arts and crafts).
Highly successful product innovation, enacted by a network of
fairly small firms.
it tied firms from the provinces of Venezia and Padova in one
single organisation, opened the way for co-operative
mechanisms uniting employers and workers, and for the
establishment of an innovative Territorial Council (Consulta
Territoriale).

18. Best practices #2
The 2011 Development Pact (Patto per lo
Sviluppo...) from Treviso province.
This is a young reality, also exemplifying what is happening in
other areas (especially in Italy's North-east).
It is characterised by territorial joint (NOT firm-level) wage
bargaining and from a co-operative employers-worker
approach to employment and development.

19. Best practices #3
The Borsino delle professioni (Stock Exchange
of Occupations).
Employment agencies in Veneto and Trento's province provide a
dynamic tool following the evolution of the labour market,
facilitating supply - demand matching and simplifying bureaucratic
procedures.
Firms and potential workers lodge on-line their job vacancies and
CVs. The Borsino offers monthly information on local labor market
trends and developments detailed by occupational profile.
In the near future the agencies are planning to use this service to
assist career choice and job-search guidance.

20. Best practices #4
Dual Apprenticeship
A dual system of apprenticeship combines workplace practice with
vocational education in training schools. It exists in several countries,
notably Germany, Austria and Switzerland. Apprentices are trained in a
company 3-5 days a week. The other part of the dual system involves off-
the-job education at a vocational school.
This system appears to have worked well across European countries.
Interestingly, a similar system is enacted in Trento's neighbouring
province, Bolzano, possibily being one contributing factor to its current
low rates of youth unemployment.
A potential disadvantage of starting dual training too early is that young
people may fail to pick up the generic transferable skills which will help
them in being mobile later in their careers. Support for employment
progression from Labour Agency should also be provided.

21. Emerging policy issues (1)
In Italy, successful traing and higher skills utilisation
needs co-operative worker-employer approach with
strong role of local employers' associations. A current
reform of industrial relations is going somehow in this
direction.
More decentralisation could help in achieving a closer
relationship between local public authorities and
local development. However, if social capital is
scarce, giving a freer rein to local public authorities
may be conducive to more rent-seeking rather than
to more proactive behaviour. North-South divide???

22. Emerging policy issues (2)
The public sector can in any case fulfil an important role in
providing more information at a territorially disaggregated
level. There is in Italy a lack of local data on skills supply and
demand of skills. The Borsino IS very useful.
Reconciliation of a more flexible and decentralised public sector
with some control over rent-seeking practices could be
attempted by finding a new and stronger role for public
employment service at the local level. The current reform of
labour-market policies MAY be useful (introducing much more
pervasive unemployment insurance and making job centres
responsible for it).