Business leaders are growing increasingly concerned about gaps and weak spots across the skills spectrum: from youngsters fresh out of school to those who have been in the workforce for decades, and from the shop floor right through to management. We need to do more, and fast.
This summer, education ministers will look to exam results improving to show that schools reforms are working. However, in an age of league tables and grades statistics, there are millions of people whose abilities are not recognised by government, and who fall below the skills radar.
Every year, UK businesses spend some £33bn training their staff. As a share of payroll this was the highest in the EU and considerably more than Japan and the US. But this huge investment falls out of sync with the national system for recognising skills, because training by individual businesses is often measured through improved ability in the workplace, while the government uses qualifications as its yardstick. In fact, only a third of employer training is recognised with a formal qualification.
The two streams need to meet. In some instances they do – for example, in-house training at Nissan can be used towards a foundation degree with Sunderland University – but in far too many cases, high-level training undertaken in the workplace does not translate into a recognisable qualification that can be used elsewhere. This is wasteful, inflexible and gives the impression that British workers are lower-skilled than they actually are, which could discourage inward investment. In the international league table of staff with intermediate qualifications such as NVQs, just 40 per cent of British adults have such a qualification, compared to 57 per cent in the US and 63 per cent in Germany.
We agree with the Leitch Review of Skills, which found that the government should reform the qualifications framework so that high quality training given to staff by their employer is recognised. What if companies like Tesco, BP and Cadbury could become known brand names in the training business, within a new qualifications system? What if the great work being done by smaller businesses could be properly supported, badged and certified? This is now happening in Australia, and it could be applied here.
Sector Skills Councils are already playing a vital role in ensuring that qualifications are led by the shared needs of employers, individuals and society. E-skills was established as the Sector Skills Council for the IT and telecoms industry in 2000 and, with strong buy-in from IBM, Fujitsu, Microsoft, Accenture and others, it has helped universities to adapt their computing courses to the frontline needs of business. This approach deserves to be more widely reflected.
Businesses must be prepared to do their part and that is why we encourage employers to sign up to the government’s skills pledge to support people in taking responsibility for their talents. It is right that firms back their staff in this, and they will reap the benefits of greater productivity and job satisfaction. However, it is a real regret that employers often have to sort out literacy and numeracy problems that should have been covered in school. Attaining grades “C” or above in maths and English at GCSE is a basic benchmark of the “Three Rs”, but last year only 45 per cent of school leavers achieved this. Meanwhile, one-fifth of the workforce currently lacks the basic literacy and numeracy expected of an 11-year old, and a CBI report revealed that one in three firms sends staff for remedial literacy and numeracy lessons.
Nowhere is the skills logjam clearer than in London, where the City plays a vital role. Three-quarters of firms which responded to the latest CBI/KPMG London Business Survey reported problems finding skilled staff, up from half in January 2005. Unless we improve our bedrock of skills, we are in for a struggle to keep our place on the global stage, particularly as China and India ramp up their higher education systems. By 2020, the number of unskilled jobs in the UK will fall from 3.4m today to 600,000, according to the Leitch Review. Not only will there be fewer unskilled jobs – the report also says that 40 per cent of the workforce will need to be qualified to degree level or above by 2020, compared with 29 per cent now.
Already many businesses are finding it difficult to find these higher-level skills, most notably in science, technology, engineering and maths (STEM). In 1984, A-level physics was the most popular subject, now it is the least. The STEM subjects are the foundation for innovation in key sectors like IT and construction, but they are also popular with City and financial employers for their analytical background. We are concerned that STEM disciplines are attracting insufficient take-up at universities, even though demand for these skills is increasing.
In the face of so many challenges, this is also a time of great opportunity. We wish Sir Michael Rake the very best in his role as chair of the new Commission for Employment and Skills. We hope he will help simplify the system and make it more demand-led and responsive to employers’ needs. And Gordon Brown’s opening move to split education and skills among two new departments is a clear signal of intent. We are optimistic that the new Department for Innovation, Universities and Skills, and a more streamlined Department for Schools, will both take forward many aspects of the Leitch Review, but only if they are driven by the skills needs of the economy. This would be a more sensible approach than failed solutions of the far past, like forcing firms to train under a system of compulsion threatened for 2010, which will not deliver for individuals or employers.
Businesses, government and individuals have to rise to the skills challenge together. We know what needs to be done. Let’s get on with it.
