Skill Gaps in the Workplace: Measurement, Determinants and Impacts

Optimal training decisions require employers to have accurate information about
their workers’ training needs. However, little is known with regard to the key factors
determining the accurate transmission of worker training requirements. Using one of
the few linked employer–employee surveys in the world, the 2006 Irish National
Employment Survey, this article identifies the key factors determining the correct
identification of skill gaps within firms. The impact of skill gaps on average training
expenditures and labour costs is also measured. The research finds that both HRM
and collective bargaining arrangements are important factors in facilitating the
accurate identification of skill gaps within firms. The analysis confirms that skill gaps
are a key determinant of training expenditures and tend to raise average labour costs.
Finally, the evidence suggests that employee perceptions of skill gaps may be prone to
higher levels of subjective bias relative to those based on the employers’ views.