Skills for the Future: The UK experience Ian Kinder Chief Executive UKCES

UKCES Commissioners

IMPACT Our ambition is to transform the United Kingdom’s approach to investing in the skills of people as an intrinsic part of securing growth About the UK Commission for Employment and Skills Investing in Standards & Innovation Research and Intelligence Commissioner Insights

LMI For All UKCES Labour Market Intelligence Products UKCES Employer Perspectives Survey 15,000 interviews Employer views and interaction with the external skills system Working Futures Labour market projections Picture of UK employment, productivity, labour supply and skills for the next ten years UKCES Employer Skills Survey 90,000 interviews Employer investment in training and skills challenges

Context : Growth Through People The economy is recovering and recent employment growth has been impressive – but there remain deep-rooted challenges that must be addressed if growth is to be sustained and competitiveness improved. That’s why in November 2014, UKCES published Growth Through People, backed by the CBI and TUC. Building on our previous work and a substantial evidence, we have identified 3 deep-rooted skills and employment challenges, and 5 priorities for action.

Sustaining the recovery: 3 challenges Productivity and employment, 2012, UK and selected advanced countries Growth in productivity is the most important factor for sustaining the recovery and improving pay and social mobility. But productivity has remained subdued since the recession, and is 2.2% below where it was in We have identified 3 challenges in sustaining recovery and achieving growth through people, using the metaphor of rungs on the career ‘ladder’: getting in, getting on and moving up.

The challenge: Getting in to work Youth unemployment is falling, but securing a foothold into a good career is still harder than it was twenty years ago. The UK is particularly unusual in that the ratio of youth unemployment to adult unemployment is 3.6, significantly higher than other leading economies. This is a structural problem that has been around since before the recession, reflecting a long-term decline in entry level jobs in industries that young people traditionally go into, and fewer opportunities to combine earning, learning and to progress. Employment by age group,

The challenge: Getting on at work Globalisation, new technology and longer working lives are changing the labour market. Traditional middle-skilled jobs such as clerical and secretarial trades declined by £1.2m in , alongside the emergence of a new ‘middle’ requiring higher skill levels than before. Meanwhile, low skill jobs grew by £1.3m and high skill jobs grew by £4.6m. As a result there are growing opportunities for highly skilled people in both employment and wages, but longer pathways and greater competition for those in low skill roles.

The challenge: Moving up to higher skilled jobs The workforce is getting better educated - by 2020 nearly half of the workforce will be qualified to degree level and above, overtaking the USA. But in certain sections of the economy businesses face long-standing skills shortages. At the same time there are significant portions of the workforce with skills that are under-utilised – this equates to 4.3 million workers or 16% of employees.

The complexity These deep-rooted challenges are not new – and there is no easy win. They vary by sector, locality and business size. They also impact disproportionately on different communities within society. Pressures on public and private finances, and a changing world of work, mean that traditional models of skills investment are unsustainable. To effectively tackle these challenges we will need sustained leadership and collaboration on the part of government and industry over the long term.

How to deliver growth through people: 5 priorities Building on a substantial evidence base, we have identified 5 priorities for action: 1.Employers should lead on skills and government should enable them 2.Improving workplace productivity should be recognised as the key route to increasing pay and prosperity 3.‘Earning and learning’ should be the gold standard in vocational education 4.Education and employers should be better connected to prepare people for work 5.Success should be measured by a wider set of outcomes, not just educational attainment

Sector Skills Councils : History 1970’s State Intervention model  Industrial Training Boards – Levy /Grant model 1980’s Volunteerism  All ITBs abolished except Construction Industry Training Board and Engineering Construction,  70+ National Training Organisations develop National Occupational Standards, (NOS). 1990’s Engagement  Business Link and Investors in People 2000’s  Sector Skills Councils Prospectus, “Influence”  25 SSCs established by industry and licensed by Government. Supported by £2m grant each /year

Sector Skills Councils : History 2006: Leitch review of Skills - Established the UK Commission Role of SSCs focussed on qualifications development; Power to approve all vocational qualifications before funded by Government. Called for re-licensing of SSCs –concern about “patchy” performance Demanded tougher performance management : Relicensing against new Standard and performance framework, 7 SSCs closed or merged with other bodies. Development of National Skills Academies as SSC delivery arms. 2011: Focus moves from Demand to Market led. From Grant aid to competitive investment model. 2016: SSC Network now reduced to 14 SSCs and 5 Standard Setting Bodies

18 Sector Skills Councils: Sector Skills Councils: 2016

From Employer Engagement to Employer Ownership Employer Investment Fund: A competitive fund to develop skills solutions, create capacity & develop the underpinning skills infrastructure in sectors & localities. * Sector Skills Councils only * UK Wide Growth & Innovation Fund: A competitive fund to develop skills solutions, create capacity & develop the underpinning skills infrastructure in sectors & localities * Any employer-led body * England only Employer Ownership of Skills Pilots: A competitive fund of £340m over 4 years. Employers can develop proposals to create jobs, raise skills, drive enterprise & economic growth in England and look for joint investment from government to meet the costs * Employer-led * England only

Industrial Partnerships What are Industrial Partnerships?  A voluntary collaboration of business leaders  Have a shared ambition to shape the skills and learning needs of their sector  Focused on growth and productivity: aligned to sector based economic strategies.  Form and function of each Industrial Partnership is defined by the sector  Take end-to-end responsibility for the skills and training in their sector: have a long term vision  Attract investment from the sector: sustainable

Industrial Partnerships What can they do?  Championing skills and learning and its importance to remaining innovative and competitive in a global market.  Inspiring and engaging the wider sector; across the UK and at all levels of the supply chain to invest in workforce development.  Challenging and supporting the development of skills policies that are fit for industry; working with government nationally and locally.  Demonstrating and sharing best-practice; collaborating to strengthen the quality of skills standards and provision for the whole sector.

Who are the Industrial Partnerships? Nuclear Industrial Partnership Tech Partnership Science Industrial Partnership Aerospace Industrial Partnership Creative Industries Partnership Automotive Industrial Partnership Tunnelling & Underground Construction Industrial Partnership Energy & Efficiency Industrial Partnership

Standards and Trailblazer Apprenticeships UK wide National Occupational Standards - Advice to Governments on which standards will achieve the best outcomes and impact - Securing standards, on behalf of employers and four nations, to underpin apprenticeships and vocational qualifications - Managing the quality assurance and approval of standards - Reporting on the impact of standards across four nations Apprenticeship Trailblazers -New employer led definition of high level standards for apprenticeships in England -New assessment models including end tests -Focus on quality -UKCES advice on which Trailblazers should be developed. UKCES Role

Apprenticeship levy

Employer Policy Direction We need a new level of leadership from employers to take responsibility for competitiveness and growth. Governments should commit to supporting employer leadership on skills, individually and in partnerships, as a central part of long-term growth plans and a way of aligning public and private resources Employers should raise the bar on skills in sectors, regions and supply chains. Collaboration is vital to building the skills we need for competitiveness.

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