Why skills matter in economic development

PEYE 161111KB3 032 Stephen Farry MLA • Minister for Employment and Learning

Higher skills levels will give Northern Ireland a better competitive edge and would also complement lower corporation tax, Stephen Farry writes, as he outlines his approach to this vital policy area.

There is a widespread consensus that a high and appropriately skilled workforce has a crucial role to play in raising employment, improving productivity and driving an export orientated economy. Skills help economies make the most of new opportunities in high value-added activities, they encourage greater investment and innovation, they help businesses compete in export markets and ultimately they support economic growth and enhance productivity.

It is against this background that the Programme for Government and the Northern Ireland Economic Strategy identified skills as a crucial ingredient to both rebalance and rebuild our economy. In order to achieve our long-term economic aspirations, we must both rebuild the labour market in the wake of the global economic downturn and rebalance the local economy.

With this in mind, I launched the new skills strategy for Northern Ireland, known as ‘Success through Skills – Transforming Futures’, in 2011.

The strategy clearly demonstrates that our economy will require higher skill levels. For example, by 2020, almost half of our workforce will need to be trained to Level 4 or above. We also need to invest in science, technology, engineering and mathematics, and management and leadership skills.

Some of the key interventions that we have already taken include the provision of additional 1,200 STEM undergraduate places by 2015, and a 60 per cent increase in publicly supported PhDs, all in economically relevant areas. The department is also providing 100 per cent financial support to businesses that utilise the department’s leadership and management suite of programmes.

Through our Assured Skills programme, we are working in partnership with Invest NI to provide the very specific training that inward investors require through the development of bespoke programmes through our colleges and universities.

Central to this work is a focus on a number of sectors which are likely to achieve high levels of growth in the future. Working in collaboration with business, colleges, universities and other departments, skills action plans have been put in place for the ICT, food and drink processing and manufacturing, and advanced manufacturing and engineering services sectors.

While each plan is at a different stage, the longest established (the ICT Action Plan) has seen the development of an MSc programme, the delivery of several cohorts of the Software Testers Academy, a higher level apprenticeship pilot, a joint public-private sector approach to recruiting ICT apprentices and the ‘Bring IT On’ career attractiveness campaign. The plans are also encouraging take-up of existing provision such as the Youth Employment Scheme, essential skills, foundation degrees and ApprenticeshipsNI.

However, the key intervention is our current major review of apprenticeships and youth training. Apprenticeships offer a form of training where participants are in essence being trained while employed, and where employers in turn reap rewards from their investment in improving the skills and qualification levels of their employees.

I don’t believe that it is a co-incidence that those countries that most value vocational training, such as Austria, Germany and Switzerland, have the lowest levels of unemployment in Europe, including very low youth unemployment. My vision is to build on and enhance our existing provision, to make Northern Ireland the gold standard for apprenticeships.

If we are to achieve our economic vision, then our employers will be required to play an active role to ensure that our current and future workforce have the appropriate skills to rebalance and rebuild our economy. Business needs to be in the driving seat for our future skills provision and the voice of employers needs to be part of this process. Genuine stakeholder engagement is therefore key.

Northern Ireland has made significant progress over the last decade in raising the skills of the workforce. However, much more progress is required if Northern Ireland is to improve its productivity and employment rate, and ultimately its living standards. The ability to vary our corporation tax will provide a strong catalyst for this and will ultimately assist us as a region, to achieve our economic ambitions.

The Executive remains committed to achieving the capacity to lower the rate of corporation tax. While recognising that the UK Government has yet to make a final decision on the issue, I believe it is important that we prepare the way and put in place robust contingencies so that Northern Ireland can move swiftly in the event of a lower corporation tax being implemented.

However, it should be emphasised that a change in corporation tax alone will not transform the economy in isolation of investment in, and a coherent focus around, the key economic driver of skills. To this end, my department will continue to invest and develop a range of initiatives to develop a high and appropriately skilled workforce and is putting in place an action plan to accelerate the development of the skills we require, should we obtain the ability to lower corporation tax.

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