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Key Approaches to Labor Market Assessment:
An Interactive Guide
Module 2: Demand for Skills
Tools and approaches in this section help the user analyze the current and potential demand for specific skills, knowledge, and qualifications within and across economic sectors. Jump to the full Module 2.
Why are these tools and approaches important?
Once we better understand economic demand, we can begin to ask what the impact on specific occupations—and more importantly, on the demand for certain skills and knowledge—might look like. The tools and approaches in this group build on the economic context approaches to support the user in analyzing specific current and potential future skills needs in an economy.
Approach 2a: Value Chain Mapping with Workforce Overlay
A value chain map shows the range of activities required to bring a good or service from conception to the end user and beyond, that is, design, input provision, production, marketing, and disposal. It helps understand how actors in an industry are related to each other, what their functions are, how they are organized into alternative channels of production and distribution, and how products or services move through these channels in a given economy. By identifying the nature of existing employment as well as possible investments in the value chain, a Workforce Overlay to a Value Chain Map adds a layer of analysis to give the user a sense of the current and future demand for skills in a sector. It can also help identify opportunities for individuals to upgrade their skills within a sector. Jump to the full Approach 2a.
A value chain map shows the range of activities required to bring a good or service from conception to the end user and beyond, that is, design, input provision, production, marketing, and disposal. It helps understand how actors in an industry are related to each other, what their functions are, how they are organized into alternative channels of production and distribution, and how products or services move through these channels in a given economy. By identifying the nature of existing employment as well as possible investments in the value chain, a Workforce Overlay to a Value Chain Map adds a layer of analysis to give the user a sense of the current and future demand for skills in a sector. It can also help identify opportunities for individuals to upgrade their skills within a sector. Jump to the full Approach 2a.
Why is this tool important?
After we have a good understanding of the economic, demographic, and human capital trends in the country, and after sectors have been selected, a further analytical tool used to get to key information is value chain mapping. Adapted from agricultural economics to broader uses in development, value chain mapping is often the first step for economic growth programs wishing to increase the incomes of a particular group of firms or individuals (for example, smallholder farmers or contract workers).
How do I use this tool?
First, search for existing maps of the value chain for the market you are assessing: there’s no need to re-invent the wheel. However, the user should validate the map with stakeholders to make sure it is accurate. If maps exist of the value chain from a similar economy, have local stakeholders take a look and provide feedback for adapting it. Learn more about how to create a value chain map.
Where can I find more information on this tool?
The Value Chain Development wiki pages on USAID’s Microlinks site codify good practice in value chain development and emerging learning in inclusion market systems development, providing a wealth of well-organized background resources and tools as well as extensive in-depth, how-to, and application-specific information.
The World Bank’s “Sector Competitiveness Analysis Tools: A Reference Guide” provides value chain mapping conventions. USAID’s Leveraging Economic Opportunities (LEO) project has developed a document on “Including Wage Labor in Value Chain Analyses,” providing guidance in the areas of desk research, fieldwork, analysis and interpretation, and application of findings. It includes sample survey instruments, an illustrative scope of work, and an annotated resource list.
Where can I find additional approaches and tools to understand the demand for skills?
Governments and private sector actors around the world have developed a number of tools—qualitative, quantitative, and mixed method—to analyze the demand for skills in the labor market (see employment forecasting tools below). Wage data and online job postings can also provide information about short-term demand. Quantitative tools for developing countries are scarce since models, techniques, and data are not always available. A recent paper published by the Inter-American Development Bank details several of these methods as well as challenges specific to the LAC region.
Employment Forecasting Tools
After we have a good understanding of the economic, demographic, and human capital trends in the country, and after sectors have been selected, a further analytical tool used to get to key information is value chain mapping. Adapted from agricultural economics to broader uses in development, value chain mapping is often the first step for economic growth programs wishing to increase the incomes of a particular group of firms or individuals (for example, smallholder farmers or contract workers).
How do I use this tool?
First, search for existing maps of the value chain for the market you are assessing: there’s no need to re-invent the wheel. However, the user should validate the map with stakeholders to make sure it is accurate. If maps exist of the value chain from a similar economy, have local stakeholders take a look and provide feedback for adapting it. Learn more about how to create a value chain map.
Where can I find more information on this tool?
The Value Chain Development wiki pages on USAID’s Microlinks site codify good practice in value chain development and emerging learning in inclusion market systems development, providing a wealth of well-organized background resources and tools as well as extensive in-depth, how-to, and application-specific information.
The World Bank’s “Sector Competitiveness Analysis Tools: A Reference Guide” provides value chain mapping conventions. USAID’s Leveraging Economic Opportunities (LEO) project has developed a document on “Including Wage Labor in Value Chain Analyses,” providing guidance in the areas of desk research, fieldwork, analysis and interpretation, and application of findings. It includes sample survey instruments, an illustrative scope of work, and an annotated resource list.
Where can I find additional approaches and tools to understand the demand for skills?
Governments and private sector actors around the world have developed a number of tools—qualitative, quantitative, and mixed method—to analyze the demand for skills in the labor market (see employment forecasting tools below). Wage data and online job postings can also provide information about short-term demand. Quantitative tools for developing countries are scarce since models, techniques, and data are not always available. A recent paper published by the Inter-American Development Bank details several of these methods as well as challenges specific to the LAC region.
Employment Forecasting Tools
- In the United States, the Bureau of Labor Statistics’ 10-year occupational and industrial employment projections are complemented by the O*NET skills database.
- In the European Union, CEDEFOP, the European Centre for the Development of Vocational Training, has developed a model
for forecasting labor demand (and supply) by sector, occupation, and qualification.