Skills and Employment
Action to improve skills levels and help more people into sustainable employment is crucial to economic success and social cohesion. We live in a changing global economy and for the UK to maintain its position, we need to develop skills which are relevant and necessary in the modern world. The right kind of skills development not only helps people into employment but also stimulates business growth and success through a highly-skilled, well-qualified workforce.
In 2004, following the publication of Skills in the global economy, the Government commissioned Lord Leitch to undertake an independent review of the UK’s long-term skills needs: to identify the UK’s optimal skills mix in 2020 to maximise economic growth, productivity and social justice, and to set out the balance of responsibility for achieving that skills profile including the policy framework required to support it. In addition, in 2006 the Chancellor asked the Review to report specifically on ‘how skills and employment services can complement each other even more effectively in supporting labour market flexibility, better employment outcomes and greater progression in productive and sustainable jobs for those with skill needs.’
The final report, Skills, Prosperity for all in the global economy – world class skills, was published on 5 December 2006 in which the Review sets out a compelling vision for the UK. It shows that the UK must urgently raise achievements at all levels of skills and recommends that it commit to becoming a world leader in skills by 2020, benchmarked against the upper quartile of the OECD. This means doubling attainment at most levels of skill. Responsibility for achieving ambitions must be shared between Government, employers and individuals.
Delivering world class skills
The background is one of economic strength and stability in the UK, with 14 years of unbroken growth and one of the highest employment rates in the developed world. The UK has significantly improved the skills base with rising school and college standards and strong growth in graduate numbers. But in a rapidly changing global economy, with emerging economies such as India and China growing dramatically, the UK cannot afford to stand still. Despite good progress over the last decade, aspects of the UK's skills base remain weaker than those in other developed economies. The UK should set out to become a world leader in skills by 2020. This means increasing skills attainment at all levels by 2020 so that:
• 95% of working age adults have basic skills in both functional literacy and numeracy - rising from 85% and 79% respectively in 2005
• more than 90% of adults are skilled to GCSE level or to vocational equivalents - rising from 69% in 2005
• the number of Apprentices in the UK is boosted to 500,000 each year, with improved quantity, quality and esteem for intermediate skills; and more than 40% of adults are skilled to graduate level and above - up from 29% in 2005
Skills deficit
Currently, the UK skills base is mediocre by international standards. The OECD finds the UK lying 17th out of 30 countries on low-level skills, 20th on intermediate and 11th on high-level skills. 7 million adults lack functional numeracy and 5 million lack functional literacy. 17 million adults lack Level 1 numeracy – equivalent to a low level GCSE. The proportion of people with low or no qualifications is more than double that in Sweden, Japan and Canada. More than 50 per cent of people in countries such as Germany and New Zealand are qualified to intermediate level, compared to fewer than 40 per cent in the UK. The proportion of people with high skills is internationally average, but not world leading.
The UK invests 1.1 per cent of GDP in higher education compared to 2.9 per cent in the USA and 2.6 per cent in South Korea. Even if current targets are met, by 2020 the UK's skills base will be inferior to that of many other developed nations.
Someone with 5 GCSE’s grades A*-C and 2 or more A levels, will earn on average 38% more than someone with no qualifications. Half of those with no qualifications and who are not in full-time education are either unemployed or economically inactive.
People with low levels of skills and qualifications are more vulnerable to loss of employment as technology changes and traditional jobs either cease to exist or move to other parts of the world. The skills gap cannot be addressed solely through reform of the educational system. Adults will increasingly need to update their skills in the workplace.
There is a direct correlation between the economic success of a region and the number of graduates employed by companies in that region. The wider potential benefits to society include reduced crime, improved health, social cohesion and higher standards of living.
Key priorities from the Leitch Review that link into the Equal programme are:
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Skills and social inclusion • Engaging with employers to invest in skills
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Adult participation in learning
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Skills issues related to small and medium sized enterprises and social enterprises
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Qualifications and multiple disadvantage
Progress towards targets
Data confirms that real progress has been made in recent years towards these tough targets. Progress towards the apprenticeship targets has been steady. For instance in the rapidly-expanding creative industries traditional apprenticeship models are not compatible with predominance of small firms and the high levels of self-employment. Modern apprenticeships have now been extended to some 180 occupations. In terms of numbers, in 1997 there were only 76,000 people in apprenticeships. In 2005 this number had risen to 256,000. These figures suggest the target is achievable, but it is also clear that more traditional models of apprenticeship are proving hard to apply to some sectors (the creative industries is one).
Government commitment to raising the age of compulsory learning to 18, and the provision of free training to Level 3 to everyone under the age of 25 are both significant moves. There has also been clear progress in terms of training in small and medium-sized companies.
Train to Gain has achieved some 22,000 training contracts, and 80% of the companies involved in them were new to training.
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