Pathway dependency
Turning qualifications into jobs

How technology can help in myriad ways

Special reportJan 12th 2017 edition

UNIVERSITY EDUCATION IS designed to act as a slipway, launching students into the wider world in the expectation that the currents will guide them into a job. In practice, many people get stuck in the doldrums because employers demand evidence of specific experience even from entry-level candidates. Whether this counts as a skills gap is a matter of debate. “If I cannot find a powerful, fuel-efficient, easy-to-park car for $15,000, that doesn’t mean there is a car shortage,” says Peter Cappelli of the Wharton School of the University of Pennsylvania. But whether the fault lies with the educators or the employers, there is a need for pathways that lead individuals into jobs.

Sometimes those pathways are clearly defined, as in medicine and the law. Vocational education combines classroom and work-based learning to prepare young people for specific trades. In many European countries, one-third to half of later-stage secondary schoolgoers are on a vocational path (see chart). Britain is due to introduce an apprenticeship levy in April.

But pathways are needed to smooth transitions in other countries (America, for example, lacks a tradition of vocational education); in less structured occupations; and when formal education has come to an end. The nanodegree is an example of such a pathway, as is General Assembly’s bootcamp model. Both rely heavily on input from employers to create content; both use jobs rather than credentials as a measure of success.

That is particularly important in the early stages of people’s careers, which is not just when they lack experience but also when earnings grow fastest. An analysis of American wage growth by economists at the New York Federal Reserve showed that the bulk of earnings growth took place between the ages of 25 and 35; on average, after the age of 45 only the top 2% of lifetime earners see any earnings growth. So it is vital for people to move quickly into work once qualified, and to hold on to jobs once they get them.

That is the insight behind LearnUp, a startup that works with applicants without college degrees for entry-level positions. Users applying for a job online can click on a link and take a one-hour online training session on how to be a cashier, sales clerk or whatever they are after. Employers pay LearnUp a fixed fee to improve the pool of candidates. Recruitment and retention rates have risen.

Generation, a philanthropically funded programme run by the McKinsey Social Initiative, a not-for-profit arm of the consultancy, uses a bootcamp approach and some typically McKinsey-esque thinking to train people from difficult backgrounds for middle-skilled positions in industries like retailing and health care. The programme starts by going into workplaces and identifying key events (how an IT helpdesk handles a call from an irate customer, for example) that distinguish high performers from the rest.

Curriculum designers then use that analysis to create a full-time training programme lasting between four and 12 weeks that covers both technical knowledge and behavioural skills. The programme has gone live in America, Spain, India, Kenya and Mexico. By the end of 2016 it had 10,000 graduates, for whom it claims an employment rate of 90% and much higher retention rates than usual. The trainees pay nothing; the hope is that employers will fund the programme, or embed it in their own training programmes, when they see how useful it is.

A little help from your friends

Such experiments use training to take people into specific jobs. In the past, an initial shove might have been all the help they needed. But as middle-skilled roles disappear, some rungs on the job ladder have gone missing. And in a world of continuous reskilling and greater self-employment, people may need help with repeatedly moving from one type of job to another. Vocational education is good at getting school-leavers into work, but does nothing to help people adapt to changes in the world of work. Indeed, a cross-country study in 2015 by researchers at the Hoover Institution suggests that people with a vocational education are more likely than those with a general education to withdraw from the labour force as they age. The pattern is particularly marked in countries that rely heavily on apprenticeships, such as Denmark, Germany and Switzerland.

Large companies may have the scale to offer their employees internal pathways to improve their skills, as companies like AT&T do. But many workers will need outside help in deciding which routes to take. That suggests a big opportunity for firms that can act, in effect, as careers advisers. Some are better placed than others to see where the jobs market is going. Manpower, which supplies temporary workers to many industries, last year launched a programme called MyPath that is based on the idea of an iterative process of learning and working. It allows Manpower’s army of temporary workers in America to earn a degree from Western International University at no financial cost to them. The degree is structured as a series of three or four episodes of education followed by periods in work, in the expectation that Manpower has a good overview of the skills leading to well-paid jobs.

LinkedIn is another organisation with a decent understanding of wider trends. The professional-networking site likes to call the data it sits on “the economic graph”, a digital map of the global economy. Its candidate data, and its recruitment platform, give it information on where demand from employers is greatest and what skills jobseekers need. And with LinkedIn Learning it can now also deliver training itself.

The firm can already tell candidates how well their qualifications for any advertised job stack up against those of other applicants. In time, its data might be used to give “investment advice”, counselling its members on the financial return to specific skills and on how long they are likely to be useful; or to show members how other people have got into desirable positions.

The difficulty with offering mass-market careers advice is finding a business model that will pay for it. LinkedIn solves this problem by aiming itself primarily at professionals who either pay for services themselves or who are of interest to recruiters. But that raises a much bigger question. “There is no shortage of options for folks of means,” says Adam Newman of Tyton Partners, an education consultancy. “But what about LinkedIn for the linked-out?”

This article appeared in the Special report section of the print edition under the headline "Turning qualifications into jobs"

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