Ukraine's economic progress since its independence in the early 1990s has been uneven, in part due to the slow pace of reforms, unfavorable demographic factors, and low productivity. One of the key factors limiting success is the inadequacy of the skills of Ukraine's workforce with the needs of a modern economy. While the country demonstrates a strong record of educational attainment and acquisition of foundational skills, the post-secondary education and training system fails to equip workers with the right advanced skills for labor market success. This study provides new evidence on the nature of skills valued in the labor market, reviews the institutional constraints hindering the development and use of workforce's skills, and proposes a set of policy options. This study argues that, to improve skills formation and use, Ukraine needs to renew its public policies on post-secondary education, labor-market intermediation and information, and labor regulations. Drawing on household and firm surveys, the study finds that workers need a mix of advanced cognitive skills (like problem solving and communication), socio-emotional skills (like self-management and teamwork), and technical skills (like computer programing or sale skills) to be successful in the labor market and meet employers' demand. These skills are not necessarily explicitly taught in traditional learning settings. Policy makers should therefore rethink the content of post-secondary education and training to focus on the development of skills for the labor market rather than only attendance. To do so, establishing steady links between education institutions and enterprises, by setting up occupation standards and adapting curricula to firm demand, is crucial. An essential instrument to identify the demand for skills and facilitate fruitful investments in skills formation is a labor market information system--which provides reliable information on labor market prospects across post-secondary education fields and institutions and job requirements and characteristics to students, their families, and jobseekers. Nonetheless, a better formation of skills would only be beneficial if most of the workforce can put them at use in jobs, promoted by better labor regulations.

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