Skills gaps must be ad­dressed

Western Mail - - BUSINESS WALES - DY­LAN JONES-EVANS

AS WE en­ter the fi­nal phases of ne­go­ti­a­tion for ex­it­ing Europe, it is crit­i­cal that the UK puts it­self in the strongest com­pet­i­tive po­si­tion pos­si­ble to make the best of any op­por­tu­nity that may arise for the econ­omy as we look to de­velop new trad­ing part­ner­ships glob­ally.

One of the great­est con­cerns of busi­nesses re­mains the avail­abil­ity and devel­op­ment of skills, es­pe­cially in a fast-chang­ing global en­vi­ron­ment and a study from the UK Gov­ern­ment sug­gests that ad­dress­ing this is not go­ing to be easy go­ing for­ward.

The re­port, Fu­ture of Skills & Life­long Learn­ing, demon­strates un­equiv­o­cally that there needs to be some dra­matic im­prove­ments across the whole spec­trum from not only in rais­ing the level of qualifications across the pop­u­la­tion but in us­ing those qualifications ef­fec­tively within the work­place.

One of the key is­sues raised is the fact that not only do young adults have poor lit­er­acy and nu­mer­acy but that the UK is fall­ing fur­ther be­hind in­ter­na­tional com­peti­tors. In­deed, lit­er­acy for 16 to 19-year-olds in the UK is ahead of only Chile and Turkey among a group of 24 OECD coun­tries.

Given this, it is not sur­pris­ing that many em­ploy­ers are of the view that new en­trants to the labour mar­ket are not prop­erly pre­pared for the work­force al­though this is not only about lit­er­acy and nu­mer­acy skills but also en­sur­ing that that they have the right qualifications and rel­e­vant train­ing as well as softer skills such as pos­i­tive at­ti­tudes to­wards work.

This can be im­proved if em­ploy­ers them­selves ac­tu­ally work more closely with ed­u­ca­tional providers to en­sure that those leav­ing full-time ed­u­ca­tion have the skills needed within in­dus­try.

In par­tic­u­lar, there is a grow­ing ap­pre­ci­a­tion by both col­leges and uni­ver­si­ties that work place­ments and other sim­i­lar ex­pe­ri­ences can help many stu­dents to gain the vi­tal non-aca­demic skills that em­ploy­ers are de­mand­ing. Yet many busi­nesses sim­ply are not en­gag­ing on this agenda with only a third of em­ploy­ers of­fer these op­por­tu­ni­ties and these are mainly lo­cated in the south east of Eng­land.

An­other key is­sue high­lighted by the re­port is the rel­a­tively large mis­match be­tween the de­mand for and sup­ply of skills to busi­nesses. This can re­sult in two ma­jor prob­lems namely skills short­ages (when de­mand ex­ceeds sup­ply) and un­der­util­i­sa­tion (when the skills sup­plied by the work­force ex­ceed the skills in de­mand by em­ploy­ers).

Of course, skill short­ages will al­ways hap­pen across any econ­omy and will vary by sec­tor and occupation but the chal­lenge is to en­sure they are man­aged ef­fi­ciently so not as to un­duly af­fect or­gan­i­sa­tional pro­duc­tiv­ity. This can be im­proved if there is more ac­cu­rate labour mar­ket in­for­ma­tion so that stu­dents can be di­rected to­wards those cour­ses that match the skills needs of em­ploy­ers now and in the fu­ture.

Re­search also shows skills un­der­util­i­sa­tion is higher in the UK than for other EU coun­tries over 50% of adult em­ploy­ees in the UK re­ported that they have higher skills than re­quired to per­form their cur­rent job, the sec­ond high­est af­ter Aus­tria.

This can re­sult in lower pay and poor job sat­is­fac­tion for em­ploy­ees which, in turn, can lead to lower pro­duc­tiv­ity and qual­ity of work in em­ploy­ers.

In­deed, it has bene es­ti­mated that a full util­i­sa­tion of skills in the UK could boost pro­duc­tiv­ity by as much as 3% of the labour share of GDP (equiv­a­lent to £25bn).

A ma­jor con­cern for some parts of the UK is that they are cur­rently in a state of “low skills equi­lib­rium”. This oc­curs when the avail­abil­ity of lowskilled jobs is matched by a lowskilled work­force, such that stu­dents have lim­ited in­cen­tives to gain higher skills (or to re­main in that place if they have them) and em­ploy­ers adapt to but are con­strained by the skills sup­ply.

This can only be changed if sup­ply and de­mand for skills are ad­dressed to­gether i.e. if only the sup­ply of skills im­proves, not the de­mand, it will cre­ate sur­plus and un­der­util­i­sa­tion or prompt mi­gra­tion to where those skills are in de­mand.

Many parts of Wales have been iden­ti­fied as hav­ing this prob­lem which can lead to low pro­duc­tiv­ity, low wages and low em­ploy­ment es­pe­cially in sec­tors which are vul­ner­a­ble to ei­ther com­pe­ti­tion or au­toma­tion. To deal with this, it’s been pro­posed that there should be closer part­ner­ships be­tween em­ploy­ers and train­ing providers to avoid the mis­matches be­tween sup­ply and de­mand, a chal­lenge which still needs to be over­come across the poorer parts of the Welsh econ­omy.

Fi­nally, there is the is­sue of adult learn­ing, which seems to be off the radar for not only the UK and Welsh Gov­ern­ments but also em­ploy­ers and ed­u­ca­tional providers. Given this, it is not sur­pris­ing that re­search shows that not only is adult learn­ing in de­cline but par­tic­i­pa­tion by poorer and lower skilled in­di­vid­u­als is also fall­ing de­spite the fact that they ben­e­fit the most from this type of train­ing.

Of course, em­ploy­ers – es­pe­cially smaller busi­nesses – will cite cost and time as the main ob­sta­cles to par­tic­i­pa­tion al­though those in poorer, less-qual­i­fied com­mu­ni­ties also need to over­come at­ti­tu­di­nal bar­ri­ers in­clud­ing lack of con­fi­dence, lack of in­ter­est and feel­ing too old to learn, some­thing which all stake­hold­ers can help to ad­dress.

In­deed, there is a strong case, cur­rently ig­nored by pol­i­cy­mak­ers, for in­vest­ing greater re­sources in life­long learn­ing es­pe­cially given that an in­creas­ing pro­por­tion of older age groups have tra­di­tion­ally had a lower up­take of learn­ing ear­lier in life.

There­fore, there re­main con­sid­er­able chal­lenges for the UK in ad­dress­ing some of the gaps that ex­ists in de­vel­op­ing skills and learn­ing for em­ploy­ment.

More im­por­tantly, these chal­lenges are not only about im­prov­ing pro­duc­tiv­ity across the econ­omy but, through life­long learn­ing, en­abling in­di­vid­u­als to cre­ate a bet­ter fu­ture for them­selves go­ing for­ward and im­prov­ing so­cial in­clu­sion and mo­bil­ity, es­pe­cially within the less pros­per­ous parts of the na­tion.

> Wales needs to im­prove its pro­duc­tiv­ity says Prof Dy­lan Jones-Evans

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