EDUCATION FOR GROWTH: NECESSARY BUT NOT SUFFICIENT? KEN MAYHEW SKOPE

PRODUCTIVITY, GROWTH, EDUCATION AND SKILLS Skills are the simplest, best, most direct way to boost productivity …… Skills investment is the quickest way to maintain productivity. Skills investment is the only way to maintain productivity. Skills are the simplest, best, most direct way to boost productivity …… Skills investment is the quickest way to maintain productivity. Skills investment is the only way to maintain productivity. Mark Fisher, chief executive of the Sector Skills Development Agency, Mark Fisher, chief executive of the Sector Skills Development Agency, 2006.

THE MACRO EVIDENCE ON EDUCATION AND GROWTH Chevalier et al (2002): Chevalier et al (2002): Growth and the LEVEL of education and training Growth and the LEVEL of education and training Growth and the RATE OF CHANGE of education and training Growth and the RATE OF CHANGE of education and training

THE EXAMPLE OF HIGHER EDUCATION I New Zealand and Egypt New Zealand and Egypt Scotland and Switzerland Scotland and Switzerland England England

THE EXAMPLE OF HIGHER EDUCATION II Private rates of return Private rates of return Social rates of return Social rates of return Social externalities Social externalities Economic externalities (Krueger & Lindahl, 2001) Economic externalities (Krueger & Lindahl, 2001)

PRODUCTIVITY Measurement Measurement Resonance with private sector managers? Resonance with private sector managers? Long term versus short term: Buchanan for Australia; Lloyd for the UK Long term versus short term: Buchanan for Australia; Lloyd for the UK Productivity and competitiveness Productivity and competitiveness

IF, PRODUCTIVITY WHY SKILLS? I Leitch Review Leitch Review OMahoney and de Boer: OMahoney and de Boer: Germany and the UK – one fifth of the gap Germany and the UK – one fifth of the gap France and the UK – one eighth France and the UK – one eighth USA and the UK – almost none USA and the UK – almost none

IF, PRODUCTIVITY WHY SKILLS? II UK Productivity and Competitiveness Indicators UK Productivity and Competitiveness Indicators The Five Drivers: The Five Drivers: Skills Skills Investment Investment Enterprise Enterprise Competition Competition Innovation Innovation What is missing? What is missing?

THE UTILISATION OF SKILLS Work organisation Work organisation Management of the employment relationship Management of the employment relationship To move forward, the Government will have to To move forward, the Government will have to lose its current fixation with boosting the supply lose its current fixation with boosting the supply of skills and integrate the promotion of productive of skills and integrate the promotion of productive people management within all public bodies people management within all public bodies offering organisations advice and support on offering organisations advice and support on learning and skills and business development, learning and skills and business development, including management skills training with a major including management skills training with a major people management component. people management component. (CIPD, 2006: 29). (CIPD, 2006: 29).

SKILLS AS SCAPEGOAT The old scapegoats; the new scapegoats The old scapegoats; the new scapegoats Massive increase in the supply of skills Massive increase in the supply of skills Why so little pay off in terms of productivity? Why so little pay off in terms of productivity? If current supply of skill is in balance with demand, what contribution to productivity can further increases in the supply of skill make? If current supply of skill is in balance with demand, what contribution to productivity can further increases in the supply of skill make?

TWO PROPOSITIONS Attempts to boost skills have to be accompanied by other policy measures Attempts to boost skills have to be accompanied by other policy measures They have to be the right sort of skills They have to be the right sort of skills How does current policy connect with these two propositions? How does current policy connect with these two propositions?

IF, SKILLS, WHAT SKILLS? Impact of product market strategy Impact of product market strategy

PRODUCT SPECIFICATION The concept of product specification: The concept of product specification: - the number of characteristics - the number of characteristics - customisation - customisation - frequent changes of characteristics - frequent changes of characteristics Associated production processes Associated production processes

WHAT SKILLS? The futility of the stocktaking approach The futility of the stocktaking approach Level Level Quality Quality Breadth Breadth

CONCLUSIONS Competence and Competition, 1988 Competence and Competition, 1988 Leitch Review of Skills, 2006 Leitch Review of Skills, 2006 Policy churning Policy churning

HOW CAN POLICY BE IMPROVED? A more subtle appreciation of product strategy, of employment relations and of linkages A more subtle appreciation of product strategy, of employment relations and of linkages Expertise of policy makers Expertise of policy makers Degree of centralisation and relationship with other actors Degree of centralisation and relationship with other actors