The right skills for the job Department for Work and Pensions, UK

Introduction Skills have become the global currency of 21st century economies. Improving skills is essential to building sustainable growth and stronger communities. A strong further education and skills system is fundamental to social mobility. Employers drive skills demand – they should be leading or heavily involved in the skills system. This presentation draws on material from the OECD and UK Skills Strategy.

Skills shortages Skills shortages can affect growth through their adverse effects on labour productivity. At the firm level, shortages can affect the hiring cost per skilled worker and hinder the adoption of new technologies. Identifying skills shortages is not easy - genuine skills shortages exist when vacancies remain unfilled despite attractive working conditions. Cyclical skills shortages: during growth, when unemployment is low and the pool of available workers is reduced to a minimum. Structural skills shortages: when certain skills are not immediately available in the labour market, even when unemployment is high (e.g. when new technology is adopted).

Skills mismatch Over-skilling: a worker whose skills are under-used. May lead to skills loss and a waste of the resources used to acquire those skills Over-skilled workers are less satisfied, generating more staff turnover and affecting productivity. Under-skilled workers lack the skills needed for their job, and affect productivity. Skills policies should support employers in making better use of the skills available to them. Relevant adult education and employer- provided training can help tackle skills mismatch, especially under- skilling.

New and emerging skills Over the past 50 years there has been: –a rise in the demand for non-routine cognitive & interpersonal skills; –a decline in the demand for routine cognitive and craft skills, physical labour and repetitive physical tasks. Current projections see this continuing. Employment among low-skilled workers will decline, while employment among highly skilled workers is projected to increase, with a shift from manufacturing to service-based economies. Very difficult to forecast skills needs beyond general trends – so it’s crucial that education systems rapidly respond to new demands, which needs involvement from employers in forecasting skills needs.

Addressing skills shortages Education and training systems need to have access to information on the demand for skills and the drivers of changes in skills demand. Employers need to work with education and training systems to provide that information and design training that meets their demand. A long-term perspective on skills development, even during economic crisis, may reduce skills shortages and their impact on economic growth. Facilitating entrance for skilled migrants can also help deal with skills shortages in the short term if focused on occupations for which vacancies are hard to fill.

PES role Skills strategy needs to be a collaborate approach, from demand, through training design, to supply. PES can contribute to the overall strategy in various ways, depending on institutional configuration in each country. In many cases it will be supplying clients to appropriate training. Examples The PES can work with employers to understand what they are looking for in the labour market – both nationally and locally - and tailor their services to clients and the training offered/bought accordingly. The PES can work with individuals to understand their skills, understand what work they are looking for and whether they have the right skills for the job – especially basic employability skills for those furthest from the labour market. Effective co-operation with other Ministries (e.g. education, industry), training institutions and businesses is crucial.

UK Skills Strategy

UK Skills Strategy - Principles Fairness: those first in line for help must be those least able to help themselves. We are paying special attention to young people and those without basic literacy and numeracy skills. Responsibility: while Government has a role, employers and citizens must take greater responsibility for ensuring their own skills needs are met. Government can provide good quality information, the opportunity to influence the system to provide the training they need, and access to finance. Freedom: Control should be devolved from central government to citizens, employers and communities so they can play a greater role in shaping services to ensure that they meet their needs efficiently.

UK Skills Strategy - Vision In the UK, the Government has been given a clear message from business: employers want stronger literacy and numeracy skills, greater ownership of the skills system, and a system that is more responsive to their needs. We want employers to lead the skills system, rather than merely advising on its direction. This means giving businesses the power and responsibility to define the vocational skills needs of different sectors and also develop new ways to meet them. OBJECTIVE - a skills system driven from the bottom up, able to respond to the needs of individuals, communities and an increasingly dynamic economy.

What we’re doing in the UK (1) Training providers now have greater freedom to tailor training to the needs of the local community and economy. Jobcentre Plus (the PES) is playing an important role in influencing local training, engaging with employers, colleges and providers. Setting up sector-based work academies to provide focused pre- employment training in areas of local labour demand (e.g. care).

What we’re doing in the UK (2) Fully funding English and Mathematics courses for those who left school without basic reading, writing and mathematics skills; and reforming provision to increase the programme’s impact on economic growth. Initiating a demand-led growth and innovation fund of up to £50 million of government investment a year, to support employer-led initiatives within sectors. Improving the UK’s performance in Science, Technology, Engineering and Mathematics (STEM), raising the profile of occupations in the STEM industry with undergraduates, and improving the quality of science teaching in schools.

What we’re doing in the UK (3) Increasing employer ownership of work-based training to drive up the quality and relevance of publicly funded training. A £250m pilot over two years to test employer appetite for skills investment if given increased control of design and delivery. Created an improved careers information portal as part of the new National Careers Service. Across the board, Government is committed to reducing dramatically the bureaucratic burdens that taking part in skills development places on employers.

Skills Anticipation – Occupational Barometer An occupational barometer shows a forecast of shortage and surplus occupations in a region based on the expected future labour market development. UK Sector Employment Forecast 2012 (Manpower)

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