Britain needs more than a skills boost to survive Brexit

26 Jan 17

When Britain leaves the European Union, our skills shortages will be laid bare. In order to prosper post-Brexit, we must offer training in areas that employers actually value

Theresa May has made it clear that in Brexit Britain we will rely less on foreign talent and more on our own. Whatever you make of this position, its implications are profound: overseas workers will no longer be able to mask skills shortages, nor will we be able to ignore our mediocre performance in international league tables when it comes to even the most basic skills.

This is why the nation’s skills are a key focus of the industrial strategy policy the prime minister launched last week. The problem is that, up to now, the government has shown little understanding of why the skills system has failed.

In response to the seismic economic changes brought on by globalisation and technological change over the past few decades, successive governments have invested heavily in education and training. Ambitious targets were set in the Leitch Review in 2006 to drive up skills across the workforce. By 2020, the target was to have 40% of the working age population qualified to graduate level or above (NVQ 4) and 90% qualified to GCSE equivalent level (NVQ 2).

Performance on NVQ Level 4 has been outstanding, with the UK on course to reach this target two years early in 2018. Progress has been slower on NVQ Level 2; though there has still been an 11 percentage point increase in the proportion of people qualified to that level in the decade since 2006.

However, the wider impact of this impressive boost to the population’s skills levels has been negligible. Over this same period, productivity has stagnated, growing by just 1% in a decade. Pay too has stalled, and one in five employees are still stuck in low-paid work. Regional disparities in productivity, pay and skills levels are largely unchanged. Put simply, too many people are receiving training employers do not value, or are investing in developing skills that aren’t then being used by their employer.

This is true across educational divides. The proportion of graduates in highly skilled work is in long-term decline: while 61% of graduates aged 21-30 were employed in high-skill occupations in 2008, only 56% are today. Employers in lower skilled sectors, such as in the hotel and restaurants, leisure and retail sectors, are the most likely to say they do not fully use the skills of their employees – and three in ten UK employers admit to this overall. And employers invest far less in training their workforce than in other countries – the average volume of training per worker has halved between 1997 and 2012. The UK is 25th in the European league table for employee participation in training at work.

The government claims the UK is well positioned for our post-Brexit future because it is investing in apprenticeships, focusing on skills in high growth sectors and reforming further education. But as long as we keep investing in skills without ensuring these are of economic value or are being effectively used in the workplace, this approach is likely to fail, just as the past few decades of reform have failed to boost productivity.

This time however, the stakes are higher. We won’t be able to depend on migration to paper over the cracks as before. And while the PM talked last week of the need to reform our schools to ensure children can thrive in post-Brexit Britain, we can’t rely on this alone. Two-thirds of the workforce of 2030 have already left full time education. Yet with boosting adult skills more important than ever before, the government has slashed the adult skills budget.

The good news is that translating the nation’s skills improvements into higher productivity and growth needn’t cost the earth. It is good to see the government investing in technical education and testing new approaches to lifelong learning. But for these skills to be harnessed, the key is to ensure that the system both encourages employers to invest in their workforce, and supports them to make better use of their skills as part of a high-productivity competitive strategy. This should be central to a modern industrial strategy that seeks to boost innovation, not just in our high-tech but also in sectors scarred by low-pay. Without this, we will continue to be closer to little Britain than global Britain, wasting the talents of too many of our people.  

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