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In May 2009, the UK Commission for Employment and Skills published a report highlighting major challenges for the skills and employment system. It warns that the UK is slipping behind major competitors in the skills league. However, moving away from previous policy thinking, the report emphasises the need for measures to improve employer demand for and utilisation of skills, and for skills policy to be integrated with economic development and innovation strategies.
On 7 May 2009, the UK Commission for Employment and Skills (UKCES) published a report, Ambition 2020: World Class Skills and Jobs for the UK (799Kb PDF), which warns that without concerted action the UK will not achieve its goal of becoming a world leader in skills by 2020.
UKCES was established on 1 April 2008 and was one of the main recommendations of the 2006 Leitch Review of Skills (UK0612049I). The Leitch report drew attention to considerable weaknesses in the UK’s skills base – as measured by qualifications held by the workforce – and highlighted the danger of the UK slipping further down the world’s skills league. It put forward a series of ambitious qualification targets designed to make the UK a ‘world leader’ in skills by bringing it into the ‘upper quartile’, or ‘top eight’, of 30 Organisation for Economic Co-operation and Development (OECD) countries at every skill level by 2020.
Achieving such ambitions was believed to be crucial if the UK was to tackle problems such as relatively low productivity, rising income inequality, declining levels of inter-generational social mobility and serious regional disparities. Failure to achieve these targets, Lord Leitch insisted, would leave the UK confronting a bleak future.
One of the main roles of UKCES is to produce an annual report commenting on the progress that the UK is making towards the Leitch targets and to offer advice to policymakers across the devolved nations of England, Scotland, Wales and Northern Ireland. Ambition 2020 is the first annual report by UKCES and is published alongside its Five Year Strategic Plan for 2009–2014 (1.2Mb PDF).
According to the report, the UK is currently positioned 11th in the world in relation to productivity levels, 10th on employment and 14th on income inequality, and, on these measures, clearly has ‘some way to go’ before becoming ‘world class’.
Skills are seen as having a critical role to play in addressing these issues and the report identifies significant improvements in the UK’s skills base over the last decade, with the numbers of people qualified to level 4 (degree level) increasing by more than a third and the numbers without any sort of qualification falling by a quarter.
However, the report warns that, with other countries also investing in skills, the UK is not currently progressing at a rate sufficient to deliver the Leitch ambition. On current projections, 77% of the workforce will be qualified to level 2 (equivalent to five ‘good’ General Certificates of Secondary Education (GCSEs) at grades A*–C) in 2020, which is below the 90% target set by Leitch. The UK will also fail to obtain the desired improvement in level 3 (intermediate level) skills, with 58% of the workforce expected to reach this level by 2020, compared with the Leitch target of 68%. The UK will, however, achieve the higher level skills target, with 41% of UK workers expected to be qualified to level 4 by 2020, one percentage point higher than the target set by Leitch.
The UKCES report also warns that the UK’s relative international position is set to worsen by 2020, with the UK sliding from 17th to 23rd position on level 2 skills, and from 18th to 21st position on intermediate level 3 skills. While the UK will move up from 12th to 10th place on higher level skills, even this will not be enough to place the UK in the upper quartile of the OECD rankings as other countries are progressing at a faster rate. Indeed, the UK will ‘not be in the top eight countries of the world at any skill level’. Achieving such an ambition would require individuals to acquire an additional 20 million qualifications over the next 11 years, or more than one for every second adult of working age.
‘Skill shortages’ – jobs that are difficult to fill because of a lack of suitably skilled applicants – are found to be low, numbering around 170,000 across the UK, and tend to be concentrated in particular occupations, sectors and localities. ‘Skill gaps’ – where employees lack the skills needed in their current jobs – are more significant, affecting around 1.8 million people throughout the UK. The UKCES report also finds that the growth in the numbers of high skilled people is rapidly outpacing the growth in the number of high skill jobs, with ‘an emerging gap between the supply of and demand for graduates as well as an increase in the proportion of workers who are “over-qualified” for their current jobs’.
The report’s authors argue that these findings imply a ‘demand-side weakness’, with the UK having ‘too few high performance workplaces, too few employers producing high quality goods and services, too few businesses in high value added sectors’. Consequently, ‘the future employment and skills system will need to invest as much effort on raising employer ambition, on stimulating demand, as it does on enhancing skills supply.’ According to the report, this will require concerted action with the aim of reshaping the structure of the economy as well as addressing ‘a relatively long tail of managers who are not well qualified and do not apply accepted management practices’.
The report recommends that, to achieve the aim of bringing the UK into the top eight of 30 OECD countries for jobs, productivity and skills by 2020, the UK government and the devolved administrations should pursue ‘five key priorities’:
Launching the report, the Chair of UKCES, Sir Michael Rake, commented that, with the country in the grip of recession, ‘the key to our economic renewal is to invest in human capital now – to deploy energy and resources in building the UK’s skills base.’ He added:
But skills are only half the equation. If the UK is to continue to wield economic clout way above its physical size, then we must exploit our human capital resources to the full. At the moment, we have too few employers producing high quality goods and services and too few businesses in high value-added sectors. We need to make sure that the vast untapped resource of talent latent within the UK workforce is developed and turned into skills, jobs and productivity.
The report drew an immediate response from the General Secretary of the Trades Union Congress (TUC), Brendan Barber, who said:
While this report highlights significant progress in raising people’s skill levels over the last decade, it warns that the government’s ambition of climbing up the skills league for the world’s leading economies remains a huge challenge. The government, unions and employers must continue to invest in training to protect as many jobs as possible during the downturn.
He further stated: ‘Government must also take note of the finding that improving skills is only part of the solution. Too few businesses are operating in high value-added sectors and too many employees are over-qualified for their job. Tackling these challenges requires a wider economic strategy.’
At the time of writing, the peak employer organisation, the Confederation of British Industry (CBI) had yet to give any public reaction to the UKCES report’s recommendations.
Ambition 2020 is arguably one of the most significant official reports on skills policy to be published during the current Labour government’s 12 years in office. Its significance lies in its attempt to shift the current balance of skills policy away from a relatively narrow preoccupation with boosting the supply of qualifications, which is particularly entrenched within UK policy circles, towards a more integrative approach that takes issues of skills supply, demand and usage more seriously. Indeed, researchers in the field have been arguing in favour of such a policy realignment for many years.
However, the timing of the report is hardly fortuitous. With the UK economy in recession and public finances under severe pressure, it will be interesting to see how much progress can be made in forging a new agenda for skills policy. While the report has been welcomed by the TUC, it is significant that it has drawn no immediate response from its counterpart on the employer side, the CBI. With a general election looming and a fourth-term Labour government in doubt, the report’s fate seems uncertain.
Jonathan Payne, SKOPE, Cardiff University