Only one-fifth of Italians aged 25-34 are university educated and Italian graduates are among the most illiterate and innumerate in the 35-member Organisation for Economic Co-operation and Development, OECD said on Thursday.
The 20 percent of Italians aged 25-34 who are graduates compares to an average of 30 percent for the OECD, while Italian degree-holders achieved some of the lowest average literacy and numeracy scores of any OECD country, the Paris-based think-tank said.
It described Italy as being trapped in a "low skills equilibrium".
"Italy is currently trapped in a 'low-skill equilibrium," said OECD secretary-general Angel Gurria, presenting the report.
In this vicious circle, businesses do not demand higher skills from their workers, so their workers don't invest in acquiring them, OECD noted.
"The low supply of skills is accompanied by low demand from firms," Gurria said, noting that low skills are holding back Italy's development.
"Italy is struggling more than other advanced economies to make the transition towards a thriving and skills-based society."
Low literacy and numeracy skills affect over 13 million people in Italy - or 40 percent of the population, according to the OECD report.
A skills mismatch also afflicts Italy with 18 percent of workers over-qualified for their jobs and 35 percent employed in a field that is unrelated to their studies, OECD said.
Italy is the only G7 country with a higher share of tertiary educated workers in routine occupations than in non-routine ones involving more complex tasks like creative problem solving and decision making, according to the report.
OECD urged the Italian government to invest more in higher education and training, improving the quality of teaching and giving greater access for poorer students.
OECD also recommended policies to improve the entrepreneurial and managerial skills of employers, especially in family owned enterprises and in small-to-medium-sized firms, and performance-linked pay-scales.
