In a major speech at the iconic Battersea Power Station on 6th December, the Secretary of State for Education, Damian Hinds set out the Government’s plans to get more people into skilled jobs. Beginning his speech by setting out that perennial problem of the British economy, low productivity, and how this is hampering economic growth, and consequently the realisation of higher living standards, he then focussed on one particular aspect as being at the heart of the problem:
“Clearly, there is more than one factor associated with low productivity, but today I want to focus on a critical one that I believe underpins everything else: Skills.”
The skills problem, he said, is “hourglass shaped,” with a large number of well-educated people at the top in high skilled, high paid jobs, and another large number of people at the bottom, under-educated and working in low skilled, low wage jobs. According to Mr Hinds:
“If we’re ever going to close the productivity gap then we need more people getting into the top half of the hourglass, and essentially we need to change the shape of the hourglass so it bulges out in the middle.”
Although he mentioned a number of challenges that serve to exacerbate the issue — uncertainty around Brexit and automation, for instance — the nub of the skills challenge lies in improving the vocational system of education, and in changing attitudes to it, so that it is no longer seen as a second class option for other people’s children. Addressing this will require partnership, particularly between Further Education Colleges and employers, with special focus on the following:
- Matching skills with labour market need
- Clear paths to a job
- A clear path to higher skills
- Parity of esteem (that is, people seeing technical education as a viable alternative to a more academic path).
The last of these four, he suggested, is a consequence of successfully addressing the first three. Improve the quality and relevance of technical education, then “employers and young people themselves will genuinely value it.”
As for the second and third challenges, the Government hopes that the new T-Level system will go a long way towards achieving clear paths to employment by simplifying the whole system of vocational learning, and it also hopes to establish a system of employer-led national standards for higher technical education, which will be set by employers themselves in order to provide a clear path to higher skills.
But what of his point about matching skills with labour market need? He was surprisingly candid when it came to identifying the problem:
“Right now, we have a training market that is driven by the choices colleges and other training providers make… For the people putting on the training there is good reason to go for cheap, popular courses that are easier to put on, easier to pass… We know, for example, that Germany trains around 11,000 hairdressers per year — in England, around 40,000 people train in hairdressing each year, in a country with fewer actual heads. At the same time, employers in the construction sector struggle to fill over a third of their vacancies because they are unable to recruit people with the required skills.”
And he was equally clear in pointing to the solution:
“We need a strategy that means both the individuals choosing their courses and the colleges putting the courses on are incentivised to develop skills that match the labour market needs of the future… We need a plan to better ensure supply matches demand; a plan to make sure people are going to be able to find productive, remunerative jobs at the end of their courses.”
All well and good, but what is the Government proposing to do about it? According to Mr Hinds:
“As a starting point, today I’m publishing Guidance on the role of our Skills Advisory Panels — local partnerships between public and private sector employers, local authorities and colleges and universities — setting out how they will work together to decide what skills are really needed in each local area. I want this done well — so today I am announcing new support for every local area to fully understand and assess their skills needs now and in the future… Each Panel will get £75,000 to analyse their local skills needs, which could include employing a labour market analyst.”
The guidance and the funds show that the Government clearly sees the mismatch between skills taught and skills needed as a serious problem, and is equally serious about wanting to tackle it. Furthermore, the fact that the Government has identified that the issue of national skills shortages is essentially a series of local problems, which must be addressed at the local level, is to be welcomed.
We have made this point many times before, for example in this piece, which we wrote for the Institute of Economic Development:
“One of the mistakes that is often made around skills is to try to fix the problem without first getting acquainted with what the skills gaps actually are and where they are. Instead, there is a tendency to make assumptions about what is needed across the nation, and then to apply the apparent solutions with a broad brush to all regions. “We need more engineers,” for example, is a perennial cry that we hear. Perhaps we do, but what type of engineers is it that we need and where is it that they are needed?”
The mandate given to the Skills Advisory Panels is to identify and analyse the specific technical skills needs within its area, rather than simply assuming that what is needed is, for instance, “more engineers”. As the Government’s guidance states, this will require a detailed analysis of their local labour market, and we would only add to this the following specifics about the type of insight that will be needed to do this analysis properly. That is, insight which can:
- Identify occupation trends and projections down to the most granular 4-Digit (SOC) level.
- Unpick the occupational make up of industries at the most granular 4-Digit (SIC) and SOC levels.
- Determine this insight right down to the LEP and Combined Authority level.
- Establish the skills needs of employers by analysing the soft and hard skills they are looking for.
These elements of any analysis of the labour market are not trivial. Indeed, if the mandate given to Skills Advisory Panels to better understand the skills needs of employers in their area, and to work with local partners to meet that demand is to be fulfilled, they should be considered fundamental since it is only with this level of granular detail that a proper understanding of local skills needs can be identified.
So the Government’s initiative and commitment to seeking local solutions to the skills shortage is commendable, since at heart the problem is not a national one, but a series of local ones. Yet it will only be by using insight and analysis that truly gets to the heart of these local skills gaps — in the details and the specifics — that we will really start to see success in tackling the shortages that are hampering growth and productivity.
If you’d like to find out how we can carry out an analysis of your area to help you understand its skills needs, contact us now.