Skills for the 21st Century

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Skills for the 21st Century

• Presentation at a workshop organized by the
  Regional Skills Partnership as a contribution
  towards the South West's 'Level 3 Review,
  Dillington House, October 17th 2006.
• Rob Wilson
• Institute for Employment Research
• University of Warwick

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Skills for the 21st Century

• Introduction
• Major challenges and key drivers of change
• Why skills matter
• Supply and demand trends
• The future demand for and supply of skills
• Skill gaps priorities
• Implications for individuals, employers the
  state
• Concluding remarks

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Skills 21st century buzzword

• National Skills Task Force (NSTF)
• Learning and Skills Council (LSC)
• Sector Skills Development Agency (SSDA)
• Sector Skills Councils (SSCs)
• The LSCs Skills in England
• Future Skills Scotland (and Wales)
• Leitch Review ( identifying the UKs optimal
  skills mix.

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But what do we mean by Skills?

• attributes of individuals their formal
  qualifications, and/or the skills that they
  possess
• the characteristics of the jobs that people do
  their occupational titles or employers
  assessment of the work that they do
• Occupations
• Qualifications
• Key, core, generic skills

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The demand for level 3 skills

• Conflicting views?
• NSTF and others - main gap is at level 3
• Keep and others - more sceptical, hour glass
  effect squeezing out the middle
• Humphries, highlighting vocational gap
• Leitch, a more balanced view?

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Major challenges

• Productivity and competitiveness
• Intensifying competition in the provision of
  goods and services
• Need to keep improving productivity
• Still a gap in productivity levels and growth
  rates
• Skills are one of the keys to maintaining growth
  and prosperity

• Social Exclusion
• Much recent growth has been polarized in its
  benefits
• Major risks of social division and exclusion
• Skills are also a key factor in avoiding social
  exclusion and division

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Key drivers

• Demography
• Ageing migration
• Technology
• ICT and related revolutions
• Together these are also driving globalisation
  political change

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Global shifts a smaller, flatter world?

• The growing economic power of China and India
  ability to compete across the board
• Shifts in employment structure by sector and by
  occupation
• Skills at a premium (at all levels)

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Changing balance in the world economy
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The demographic challenge

• Increase in the average age of the population and
  workforce
• Falling numbers of young new entrants from the
  domestic population
• But migration flows rising

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An aging population..
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and an ageing workforce
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with rising migration flows
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Why skills matter

• Individuals improved pay and increased
  probability of employment
• Employers greater productivity, higher profits
  and improved share prices
• Society - social cohesion
• The State - productivity and growth
• BUT skills are not a panacea and investing in the
  wrong areas can be costly

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Higher pay
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Social inclusion
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Skills are also crucial to employers

• Higher productivity
• Attractive for investors
• Improving shareholder value

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and to competitiveness
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Changing demand for skills Recent trends by
sector
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Changing demand for skills
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Polarisation?

• Policy aimed at NQF level 4 and level 2
• Trends are towards polarisation at the top and
  bottom - hollowing out in the middle (the hour
  glass effect)
• the 21st century still demands quite a lot of
  people who can flip burgers, collect refuse,
  clean your house, mind your kids, wait table,
  care for the sick and elderly, clean your office,
  guard your buildings/cars/airports, serve behind
  the counter or at checkout in stores, or pull
  your pint Ewart Keep, 2003
• BUT this trend may have been exaggerated
• AND do we want them to be unqualified and
  unskilled? We need to raise standards

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Hour glass or top heavy?
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The supply of skills is improving -an
increasingly well qualified workforce
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But significant problems remain

• Need to improve
• Basic skills
• generic transferable skills
• Maths. science
• Intermediate technical
• Higher level skills

• Leitch emphasises
• Still many with no formal qualifications
• Low levels of literacy and numeracy are still a
  major issue
• Poor international rankings

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High proportion of unskilled adults
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Future trends by sector
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Future trends by occupation
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Projections of occupational change and
replacement demands
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Skill shortages by occupation
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Skills lacking in connection with skill-shortage
vacancies
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Further improvement in qualifications
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But others are not standing still- need to
identify gaps and Priorities

• Measuring Gaps
• International comparisons
• Market signals
• Employer perceptions
• Getting the right balance vocational versus
  academic

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Possible returns from future investments in skills
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Efficiency versus equity
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The Gap at level 3?
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Implications

• Individuals competing on attitudes and skills -
  but the bar is rising
• Employers competing on productivity, innovation
  and responsiveness need to raise sights
• The State competing through investment in
  education, skills and knowledge - ambitious plans
  but probably not ambitious enough

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Key points

• Skills matter they are the key to addressing
  intensifying international competition and social
  exclusion.
• The overall demand for skills is projected to
  continue to rise
• The key drivers affecting the demand for and
  supply of skills are technology and demography.
• There have been improvements in UK skills levels
  but other competitors have increased at faster
  rates.

• There are a number of significant skill gaps,
  which need to be addressed.
• Not just more of the same more emphasis on
• adults and basic skills
• on vocational as opposed to academic
  qualifications
• on training to meeting future skill needs.
• Perhaps the most difficult challenge of all is to
  raise the demand for skills from employers -
  supply side intervention by itself is likely to
  be ineffective,

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Outstanding problems

• Much talk of raising sights and ambitions, but
  there are few policy levers currently in play to
  achieve this
• Need to raise standards by (for example)
  increasing minimum wage and introducing policies
  such a licences to practice
• Employer engagement, diagnosis and response is
  crucial, but only 50 million of 3.3 billion to
  SfB network
• A key problem remains the poor skills of those
  already in the workforce

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Concluding remarks

• The skills challenge is a complex and significant
  issue
• It is becoming better understood, but still
  conflicting views
• Skills are not a panacea
• More of the same (evolutionary change) may not do
• Need for some radical rethinking
• Raising aspirations minimum standards
• Getting the balance right academic / vocational,
  equity versus efficiency
• Engaging employers (sectors, SMEs, reporting
  incentives)
• Engaging learners (LMI, careers guidance,
  entitlements, licences to practice)

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Further reading

• Skills In England
• http//www.lsc.gov.uk/National/Documents/SubjectLi
  sting/Research/SkillsinEngland/sie-2005.htm
• Working Futures
• http//www.ssda.org.uk/ssda/default.aspx?page28
• Leitch Review
• http//www.hm-treasury.gov.uk/independent_reviews/
  leitch_review/review_leitch_index.cfm