In a globalised economy, where both capital and labour are highly mobile and technology evolves rapidly, workforce development institutions have a key role to play in improving prosperity and living standards. An analysis of local drivers of growth shows that human resources are a fundamental source of economic development in a knowledge-based economy. Policy makers within the field of labour market policy and training have a major contribution to make, not only in providing the pool of skills that the economy needs locally, but also in fostering innovation, entrepreneurship and social cohesion. Labour market institutions may tackle a wide range of issues locally, from the attraction and retention of talent to solving skill deficiencies, integrating immigrants, incorporating the disadvantaged into training and employment, improving the quality of the workplace, and enhancing the competitiveness of local firms. They have a unique capacity to contribute in view of the scale of their programmes and services, and their presence throughout the national economy and at a number of layers within the administration.

There is currently a debate as to whether labour market policy would serve its economic and social goals better by concentrating on its core business or by widening its perspective. Should the goal of employment and training policy be purely the efficient functioning of the labour market, or should it serve wider economic and social purposes? In a globalised economy, labour market policy has a unique contribution to make in tackling a wide range of issues, from attracting and retaining talent to enhancing the competitiveness of local firms. Labour market institutions can have a significant impact in these areas given their unique capacity as a source of expertise, programmes and services and their presence throughout the national economy and at a number of layers within the administration. However to achieve this, a new broader goal for workforce development has to be set: The comprehensive management of human resources, so as to meet better the demands of a global economy through improving economic competitiveness and social cohesion.

The experience of seven OECD countries illustrates the issues that emerge when a narrow implementation approach is taken that is not adapted to local strategic needs. It shows that there is now a more accurate appraisal of the difference in impact between short-term top-down employment measures and more flexible policies supporting economic and social development in a longer time frame. The lessons from this experience suggest that a balance of efforts is necessary at both the national and local levels in order to maintain the efficiency and accountability of the policy framework. The implementation of programmes should be allowed to receive strategic orientations locally, in a process that ensures greater local differentiation while at the same time ensuring that aggregate national policy goals continue to be met.

Partnerships are constantly evolving as they try to position themselves to meet the changing needs of businesses and workers in order to generate or retain jobs for their constituents. They can be powerful catalysts for improving workforce development and economic development programmes. In the United States, partnerships are formed vertically among the various levels of government and horizontally among government agencies and nongovernment entities. As a result, they devolve more responsibility for the design and provision of workforce services from central governments to local organisations, which can lead to service delivery systems that are more responsive. This chapter identifies key criteria for developing successful partnerships, and offers several examples in the United States that highlight the lessons learned and the challenges encountered.

In France, as in many other countries, devolution of labour market policy and training has been a continuous trend. During the past 20 years, statutory decisions and financing regulations intervened to give greater weight to the interventions of regional and local actors and to increase their level of responsibility in training and employment. But the French experience differs from that in other countries on a very specific point: the devolution of training policies there did not coincide with devolution of employment and labour market policies. The levels of responsibility do not correspond, since the former was organised on a regional level and the latter on a departmental or municipal level. The advantage of these differences is that the regional perspective widens the local prospects so as not to define in too narrow a way the needs for training of the workers – thus supporting their chances of later adaptation and mobility. Disadvantages include a top-heavy administration with overlapping and rather high organisational costs.

The recent reform of the public employment service has greatly expanded the role of the local authorities in providing comprehensive labour market services for unemployed welfare recipients. It does not, however, create a unified local job centre as initially envisioned, but in fact splits the delivery of employment services into two organisational units based on benefit entitlement rather than on their service needs. In addition, the focus of the reform is on the governance or mode of implementation of labour market programmes and not on innovation in programmes with a regional development focus. In this context, special intermediary organisations at regional level play a useful role in enhancing the institutional capacity to assist with the practical implementation of various programmes for promoting employment. The most important tasks these organisations have are to provide the actors of labour market policy with professional consulting services and to work at the state level to co-ordinate programmes and projects co-funded through the ESF.

It is in cities that full employment will ultimately be achieved or missed. Full employment in our largest cities will create the most socially inclusive society. To be in a position to achieve this outcome, cities need local government to have more powers over the processes that drive economic competitiveness and social cohesion. These needs are reflected in the government agenda for cities, employment and skills governance in the United Kingdom, which is changing rapidly with major reviews and announcements. Yet the changes to be made are significant and have implications for the way policies are designed and implemented across several government departments, and involve regional and local organisations. It is clear that major policy changes are being implemented, but the United Kingdom also needs to learn directly from best practice in other countries as new policy frameworks are developed and implemented.

Designing employment strategies is a complex issue in Australia, a vast continent with different labour market policy scenarios. One of the scenarios is found in the seven capital cities. These cities grow into extended metropolitan regions, where hubs of skills and knowledge-intensive activities coexist with suburbs of social disadvantage. Other scenarios are found outside these capital cities: in regional centres and remote communities. On the one hand are the booming, prosperous towns where there is a fierce demand for skilled workers, and on the other are the shrinking towns and declining regions, where simply retaining people is a major task for local agencies. These different scenarios indicate the challenges of applying centralised labour market policy instruments to areas with very different market and lifestyle conditions. They also show the important role of local knowledge relevant to local needs, and essential to the design of local employment strategies.

In Japan, fiscal measures for expanding public works have played an important role in creating jobs in rural areas. However, as financial conditions have deteriorated, there is less room for increasing regional employment through macroeconomic policies such as greater fiscal spending. Meanwhile, economic globalisation and changes in labour supply are widening divergences among regions. Regional communities therefore have all the more need to take the initiative in implementing employment strategies for creating jobs, developing employability and avoiding skills mismatch. This has implications for the distribution of fiscal resources as well for the technical and strategic capacities at local level.

Macroeconomic policy challenges that range from economic growth and unemployment to inflation and social polarisation issues call for a dynamic and healthy labour market. Job-skill mismatch in the changing economic environment can be minimised by building an economic and social system that provides equal opportunity to nurture “knowledge workers” and improve job skills, and by creating a Learning and Job Information Centre (LJIC) to reduce asymmetric information flow in both the labour market and the education sectors. Regional Economic and Social Advancement Partnerships (RESAP) should be designed to develop human resources in a knowledge economy.