Skills drive growth

PEYE  100913KB1  0122 The UK Commission for Employment and Skills’ Lesley Giles explained that business leaders have to take a more pro-active role in skills policy as government budgets become more constrained.

Firms which don’t invest in training are, on average, twice as likely to fail, according to 10 years of research by the UK Commission for Employment and Skills and its predecessors.

As Deputy Director of the commission, Lesley Giles manages its research work and drew out some key lessons at the Northern Ireland Economic Conference.

“When we talk about the skills system,” she explained, “we don’t just mean the publicly funded system – in other words what funding goes to schools and colleges and universities. We’re actually talking about the skills system in the round, which is the whole economy.”

In the commission’s view, skills policy must be led by business in order to maximise its potential for the economy. Investing in skills “has to be at the very heart” of economic strategy and any individual growth strategy.

Giles did not make a pitch for more public investment in skills but instead wanted to ensure that existing funding in the system was “optimised and used effectively”. The commission is a government agency but has been set up as a social partnership.

Its commissioners are important key players from large and small employers, trade unions, the voluntary sector, the public sector and further and higher education. UKCES uses investment funds to encourage employers to come forward and “trial and test out” new ways of delivering skills investment and tackling deficiencies.

Construction companies, hotels and restaurants are the businesses that are most at risk of failure if managers do not invest in training. The case for investment though hasn’t been “sufficiently made to drive action in scale across the economy” in the way that UKCES would like to see.

Investments

“Too often, skills investment is treated as a cost – in accountancy terms – to be cut in hard times,” Giles added. The 2011 Employers Skills Survey found that 63 per cent of Northern Ireland businesses invested in training over the last year but the trend is down from 68 per cent in 2005.

Across all participating companies, the survey found that:

• 31 per cent would like to do more training;

• 22 per cent did sufficient training to meet their needs;

• 22 per cent felt that they had no training need;

• 15 per cent had a perceived need but had encountered barriers;

• 9 per cent did training but did not know if they wanted to do more.

In addition, training does not necessarily reach all staff and just 17 per cent of employees undertake training that leads to a qualification.

PEYE  100913KB1  0034 Northern Ireland businesses spend a considerable amount on training: an estimated £1.36 billion per year. However, £558 million of this is used to cover labour costs i.e. the wages of those involved in training. The remaining £805 million goes into trainers’ fees and the costs of training centres and materials.

Despite large investments, pockets of skills deficiencies are still “persistent and are growing in some parts of the economy as well”. In 2011, just 13 per cent of companies offered apprenticeships and only 6 per cent were employing an apprentice at that time.

“We’re not making the full use and potential of some important programmes,” she remarked, pointing out that youth unemployment increases their importance. However, Giles was pleased that nearly a third of Northern Ireland employers were providing work experience for young people – above the UK average.

UKCES wants to share more “sector stories” to highlight the importance of training among specific groups of employers.

The UK Government and devolved administrations needed to shape skills policy for the long term rather than focusing on current difficulties. The policy environment needed to be less reliant on government leadership and finance, and public investment should create incentives for better private investment.

“We need to be taking a view on what business communities are important to future economic growth,” Giles added. There is a consensus that the business service, financial services, digital and creative sectors will be important to the Northern Ireland economy. There will be “persistent demand” for low service jobs in retail and hospitality but the public sector will be “hard hit”.

The commission is chaired by Sir Charlie Mayfield (also chair of John Lewis) and includes 24 other commissioners. The Northern Ireland Executive is represented by Bill McGinnis, who chairs the McAvoy Group (a construction firm) and is Northern Ireland Adviser on Employment and Skills.

Impact of skills shortages

• Delays in developing new goods and services

• Struggling to provide customer services

• Increased workload for other staff

• Losing business to competitors

• Increased operating costs

Share of employers undertaking training

• Public administration: 92%

• Hotels, restaurants and retail: 60%

• Manufacturing, utilities and transport: 54%

• Mining and quarrying: 15%

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