1. Employability, The Labor Force And The
Economy
By Nicolas Pologeorgis, Ph.D., LUTCF on November 16, 2012
Filed Under: Employment Report, Macroeconomics, Post-Secondary Education
Employability is based on a set of individual characteristics. It is not equivalent to employment, but
rather a prerequisite for (gainful) employment. It pertains to someone's relative ability to obtain and
maintain gainful employment, as well as make successful transitions from one job to the next, either
within the same company or field or to a new one as the individual choices, circumstances or
economic conditions may dictate. Employability will vary with economic conditions, although there
are some exceptions in professions "insulated" from economic fluctuations, such as healthcare,
education, defense, etc.
Definition of Employability
An amalgamated definition of employability views it from a narrow and a broad perspective.
Narrowly defined, employability is a product consisting of a specific set of skills such as soft, hard,
technical, transferable etc. The broad perspective includes the narrow definition and enhances it
further by viewing employability as a life-long, continuous process of constantly acquiring
experience, new knowledge (purposeful learning) and skills that contribute to improving one's
marketability and subsequently ability to obtain and maintain gainful employment in the various
labor markets. Further, employability can be defined both as a product - a set of skills - that "enables"
and as a process that "empowers" an individual to acquire and improve marketable skills that can
lead to gainful employment.
Employability and Its Impact on the Labor Force
Employability applies to almost everyone who is part of the labor force, as the ability to obtain,
maintain and switch employment over time is imperative to anyone's survival as well as success in
life, thus one has to be able to possess a set of skills that are either prerequisites or requisites in the
labor market.
Employability and the Economy
Each factor of production is used differently, and labor or human capital can be used either in the
process of manufacturing a product or providing a service within an economy. The distinction
between labor and capital may lie on the fact that labor usually refers to blue-collar laborers/workers
and human capital to white-collar workers. Labor or human capital is in limited and scarce quantity.
For labor/human capital to be used efficiently, it warrants the acquisition of knowledge, skills and
capabilities that employers need in our current economic times and knowledge-driven economy.
Firms and businesses are running leaner, with fewer organizational layers and prone to rapid
restructuring, striving to adapt to their shareholders profit-maximizing goals (stock price appreciation
and dividend growth), meet their constituents' needs and the challenges of the ever-changing internal
and external environments. This changes and limits the need for redundant and bureaucratic careers
even in government-held jobs. An individual's employability is of high importance, since it not only
provides gainful employment but it is also a contributing factor to the individual's personal wellbeing and growth.

2. From a macroeconomic perspective, a lack of or a lower employability contributes to frictional
unemployment, to structural unemployment and affects the productivity of the labor force, which
subsequently impacts a country's standard of living measured by the GDP per capita and its potential
for economic growth measured by the aggregate demand and the GDP. The component that has the
largest impact on GDP and economic growth is consumer spending, because if consumers are not
spending on purchases of goods and services, businesses do not invest in capital and labor or try to
expand to meet the consumer demand. This translates into an economic slowdown and increasing
unemployment, conditions that set the stage for the creation or deterioration of an economic
recession.
Therefore, employability is vital to any nation's labor force and society's well-being. Economists and
policy makers argue that upgrading one's skills can prevent either occupational classification - blueor white-collar workers - from crowding out. Low-skill, manual labor/task (blue-collar) workers
working indoors or outdoors can also benefit from changes in the demand for skills if they receive
additional training. This also applies to human capital or white-collar workers - who usually have a
higher academic attainment and possess skills and perform tasks in professional jobs, in an office
setting - by pursuing additional higher education and professional development such as certifications,
or other credentials related to their respective field.
Meeting the Needs of the Labor Force
One component of employability that impacts it directly, is the ability of workers to meet the demand
or the needs of the labor force that requires the continuous upgrading of skills, especially in sectors
that experience rapid technological and organization change, thus avoiding obsolescence of their
human capital or labor force.
The skills mostly sought are: high IQ workers, with higher education/academic skills; broader
transferable skills; increased self-awareness about an employee's strengths and weaknesses; strong
work ethic; positive attitude; analytical/critical thinking and problem-solving; communication;
cultural competency; social and computing skills; team players with self-confidence who have the
ability to learn from criticism; and flexible, adaptable workers who can work well under
pressure/stress.
One should pursue the acquiring of a specific skill set based not only on what is in demand but also
considering her/his personality, likes and dislikes, their field of work/profession etc., otherwise his or
her career will be short lived if the only motivation is based on monetary compensation.
Actors and Components of Employability
There are a number of actors concerning employability and they are divided into primary and
secondary. Primary actors are considered the employers and the workers or employees. Secondary
actors are the educational system and its representatives (schools, colleges - both
technical/community and four year - and universities), as well as their constituents and the existing
and future legislation that will have an impact on employers, workers and educational institutions.
Are labor unions considered also an actor of employability? The answer lies on whether they have an
impact (positive or negative) on workers' (blue-collar) employment based on union negotiations with
employers/management, as well as the type of profession that may or may not be impacted by labor
unions such as white-collar workers, management, etc.

3. Components of Employability
Employability consists of numerous components or skills, such as technical, nontechnical,
transferable, nontransferable, context dependent, context independent and metacognitive. Technical,
often referred to as hard skills, are skills and knowledge necessary for effective participation in the
workforce. These skills tend to be more tangible, specific to certain types of tasks or activities that
can be defined and measured, such as being considered an expert in a field. Examples of hard skills
include (but are not limited to) proficiency using software applications such as spreadsheets, typing
skills, operating machinery, speaking foreign languages and efficient use of calculus.
Non-technical skills, also referred to as soft or transferable, are skills and knowledge necessary for
effective participation in the workforce such as personality traits (optimism, common sense,
responsibility, a sense of humor, integrity, enthusiasm, attitude, ethics) and skills that can be
practices such as empathy, teamwork, leadership, communication, good manners, negotiation,
sociability, ability to teach, attention to detail, etc.
Transferable skills are high-order skills that enable someone to select, adapt, adjust and apply other
skills to different situations, across different social contexts and across different cognitive domains.
Transferable skills can be utilized in almost any type of job or profession and do not limit someone to
a specific type of job or industry, which means that a transferable skill is one that can be taken from
one type of job and applied successfully to another job. Those skills can be improved and enhanced
and they are external to, and independent of, the education/academic process. Examples of
transferable skills would be social skills, working well in groups and with others, etc. A transferable
skill set involves skills that are very sophisticated and personal/intellectual achievements that are
more attuned to professional behavior than an atomistic list of competencies. Specifically,
disciplinary content, disciplinary skills, workplace experience, workplace awareness, generic skills,
etc.
Non-transferable skills place limitations on their applications to specific types of jobs, industries or
sectors of the economy, thus limiting the number of jobs on which they can be applied. One example
would be certain types of computer skills pertaining to a specific type of software or computer
program.
Another set of skills that is both soft and transferable is cultural competence of the work force. This
refers to an individual's ability to function and work harmoniously and productively with people from
other cultures as labor force becomes more diverse with globalization. Linguistic skills also tie well
with cultural competency skills and they assist in its development, since they provide the ability to
speak a foreign language and converse in another culture's native tongue, read books, newspapers,
poetry and literature, which facilitates the process of understanding another culture's mentality and
way of thinking, etc.
A set of skills engaged in everyday activities are metacognitive skills, which are associated with
intelligence and enable individuals to be successful learners. Skills metacognitive in nature are
transferable and refer to higher-order thinking skills that involve active control over the cognitive
processes engaged in learning, such as planning how to approach a given learning task, monitoring
comprehension, evaluating progress toward the completion of a task, taking appropriate and effective
action, explaining what they are seeking to achieve, living and working effectively with others and
continuing to learn from experiences, both as individuals and in association with others in a diverse
and changing society and globalizing world.

4. Technical progress and evolution in communication have re-emphasized and facilitated the use of the
need for social and business/career networking skills. Developing and/or belonging to a social or
business network - preferably both - can advance one forward and facilitate the changing of jobs or
the pursuit of the same or a new career.
One's employability is also affected by the degree of employability of others, since how employable
someone is creates a pecking order on how one stands relative to others within the hierarchy of job
applicants. Therefore, a high supply of candidates with similar qualifications does not improve one's
employability when competing for a specific type of job or position (positional competition).
Employability as a Process
Is employability considered to be a process, a product or both? Employability can be thought of as a
product in a specific point in time, however over time it is a process. As a product, employability can
be perceived as a final product in a specific point in time or at certain time intervals that serve an
individual - usually every time s/he reaches a higher skill level by accomplishing a specific
educational or professional goal resulting in the individual's improvement of her/his marketable
skills.
As a process, employability is an ongoing, life-long investment in marketable and gainful
employment, which does not stop until an individual's retirement. One of the most important
components of the employability process involves continuous self-assessment and evaluation of one's
skills, compared to what is in demand at any given time. From the ongoing, life-long process
perspective, employability is not a final product since the individual keeps improving her/his skills
until retirement age or an age where the individual deems further skill advancement is no longer
necessary.
The employability process can be divided into three areas, each entailing different competencies such
as: personal management, referring to building and maintaining a positive self-concept, interacting
positively and effectively with others, and changing and growing throughout life; learning and work
exploration, involving participating in life-long learning supportive of career goals, locating and
effectively using career information, and understanding the relationship between work, society and
the economy; and career building, pertaining to security (creating and maintaining work/job), making
career-enhancing decisions, maintaining a balance between life and work roles, understanding the
changing nature of life and work roles, and also understanding, engaging and managing the careerbuilding process.
The Role of Education
The views on the role of education on employability differ, resulting in reducing the cause and effect
between education and obtaining gainful employment, thus transferring the burden of capitalizing on
the process and maximizing its benefits on each individual involved in the process. The academic
view holds that there is at least some relation - and not a direct correlation - between education and
successful job finding/gainful employment, while the employers' view is that schooling does not
adequately prepare students to meet the various demands of the labor market.
Further, another view holds that getting a higher education may not necessarily lead to a better job
and the acquiring of more or new skills or upgrading existing ones, starts to lose some of its validity
when the number of people who also get an education and learn the same things increases, since this
can create conditions of high competition for the applicants of a certain job. Additionally, further
training and specialization may limit one's employability for other jobs.

5. The Role of Work Experience
Work experience can be both a transferable and non-transferable skill, depending on the type of job,
field, etc., and it can cover a wide array of activities, including part-time work, voluntary work,
internships, etc. For students, work experience can be curricular (work within an academic subject
area), co-curricular (skills and experienced gained while being a student, such as tutoring, team work,
etc.,) and extracurricular (any activity that can provide skills or experience such as part-time work,
holiday work, etc).
Work experience can be a tricky component since, as a prerequisite for some jobs, it can prevent job
applicants from consideration if they are lacking it, or if prospective job seekers are perceived as
overqualified, given the compensation level of that type of job as set by the employer.
The Role of Socioeconomic Status
Do individuals who belong in the upper level classes and status measured by income tend to find jobs
easier? Studies have shown that individuals', especially college graduates', socioeconomic status as
measured by their family income is related to their employability both soon after graduation as well
as two years later, while individuals from lower income classes have a harder time finding jobs in the
struggle to break through the middle class.
The Netherlands Phenomenon of "Flexicurity"
The realization that job flexibility is not a monopoly of employers and neither is job security a
monopoly of employees, has led to flexicurity, a term developed and used in the Netherlands, which
combines both job flexibility and job security. Job flexibility comes in four forms: numerical,
working time, functional and wage. Job security also comes in four forms: ability to stay in the same
job, staying employed not necessarily in the same job, income security and combining or balancing
work and family life.
As a concept, flexicurity holds that job flexibility and security are not contradictory nor mutually
exclusive. They can coexist based on employers' realizations that there are benefits to providing
stable and long-term employment to loyal and highly qualified workers, and to employees becoming
aware of the benefits of adjusting their work life to more individual preferences in organizing work
and balancing work and family life. Thus, the combination of job flexibility and security produces
win-win outcomes for both employers and workers/employees and results in reducing
unemployment.
Some Tough Questions Regarding Employability
Is employability really just a competition of credentials in the process that employers engage in to
screen applicants and acquire only highly qualified applicants or is it something broader?
Who bears the responsibility to promote employability of the work/labor force? Is it only the
responsibility of specific actors or should it be a collective effort?
Is there an employability process at the K-12 or the community college levels? Post-baccalaureate
levels? If so, how effective is it in assisting students to obtain jobs?
Does our educational system, from the K-12 to higher education levels, prepare students to develop
cultural competency skills?

6. Should people diversify their skills and abilities and stay flexible, thus maintain a high marketability
within the labor market? How should such professional diversification be pursued?
Would the Netherlands developed model of "flexicurity" be successful if adopted and replicated in
the United States to reduce unemployment? Does the U.S. institutional, social and academic
infrastructure allow for the adoption and application of such model?
Should immediate family and socioeconomic (income level) status play an important role in
successfully obtaining gainful and continuous employment?
Does political affiliation (or lack thereof) impact one's employability? Should it matter?
Should age, gender, religious affiliation, sexual orientation and looks, affect (positively or
negatively) employability?
How does globalization impact employability? Does it exert pressure on employers, as well as the
labor force, for more diverse and global skills related to social and people skills dealing with other
cultures (cultural competency), sets of values etc., with verbal and written communication in a
"common" language?
Does employability lead to the democratization of capitalism, or a post-capitalism phase, where the
power and control is no longer exclusive to the employers and there is a lower degree of dependency
on any specific company for career progression or long-term loyalty to the same company?
Is the fact that a high number of employees, on average, change jobs every three to four years, yet
their employer-retirement plans require a minimum of five to seven years of service for fully vesting
of the funds earmarked for retirement, a manifestation of this change in the status quo or the new
post-capitalism phase? Does the portability of the various retirement plans also contribute to this
trend?
Does the rapid expansion of a non-meritocratic higher education, which neglects or ignores student
academic ability and institutional quality of knowledge, and arguably grants degrees of mediocre or
below average quality, contribute to credential inflation, as students extend their education in
expectation of improving their skills and job prospects in anticipation of more easily obtaining
gainful employment and a better job? Could that be one contributing reason for the employers belief
that educational institutions are not doing a good job preparing students to meet the demands of the
labor force?
What is the remedy for the fact that education and academic success do not necessarily provide
cultural capital to the labor market?
Is it the responsibility of employers, educational institutions, labor unions, etc., as well as societies,
to serve, nurture, protect and enhance employability's components to better serve workers, the
economy and society as a whole?
Conclusion
Employability's fluid nature makes it is a very complicated and highly controversial concept with
various actors and components, some having direct and others indirect impact on an individual's

7. ability to find, obtain and maintain gainful employment over time. Employability seems to be
affected by numerous factors such as level of training, education, individual IQ, culture,
socioeconomic biases, political affiliation, etc. Since education seems to be the one factor/component
that can be used to greatly influence employability, can it be utilized to improve individuals'
employability if all or most of employability's components are incorporated in the educational
curriculum? If so, can this be measurable using both quantitative and qualitative methods to show the
possible improvement by exposing students to those components and provide training for them?
It appears that capable people with a high degree of employability tend to possess the following
traits: they have confidence in their ability to take effective and appropriate action, they can explain
clearly their goals and what they are seeking to achieve, they live and work effectively with others,
and they continue to learn from their experiences, both on an individual basis as well as in
association with others (synergistically), in a diverse and ever-evolving and changing society.