Britain is getting poorer. In the 30 years to 2008 real wages in the UK rose by 33% a decade (adjusted for inflation). Since then they have actually fallen. It now takes the average British worker five days to produce what the average French worker produces in just over four. As a result, the UK’s standard of living is falling, in absolute terms and by comparison with our neighbours.
The causes of our low productivity are many. They include low levels of investment in technology and equipment, poor infrastructure, and lack of long-term planning. Brexit has not helped. But a key element is the supply and quality of labour: we don’t have enough people working, and they don’t have the right skills.
A shortage of people
One problem is a shortage of people. Unemployment is at its lowest level since the 1970s, with only 1.2 unemployed people per vacancy, compared with the average of 2.9 since 2001. Since Covid the number of people too ill to work has risen, but our pressurised health system struggles to get them fit to return. Low birth rates mean that more people are retiring than joining the workforce from school.
Without a large inflow of immigrants, the situation would be even worse. It is fortunate, but ironic, that net immigration has continued to rise despite Brexit ending our ability to draw in workers from the rest of Europe.
A skills problem
So, how can we make the existing workforce more productive? A new research report attempts to map out the skills that we will need over the next decade and a half. Researchers examined, in great detail, how the skills required in jobs over the last decade have changed, and reviewed the research evidence on which industries and sectors are likely to expand or contract over the next 15 years. The result is a map of how the mix of jobs in the economy, and the skills required for particular jobs, will change.
Which occupations will grow?
Some of the predicted changes we need are familiar. We will need more highly qualified people to fill jobs in professional and related roles. There will be more people working in technology. But there will also be more jobs in caring and leisure occupations. All those people will need higher levels of skill. Although there will certainly be new specialised jobs, some in fields which do not yet exist, they will be a small part of the overall picture.
On the downside, technology will reduce the number of administrative and secretarial jobs. The prediction is that manufacturing jobs will decline, though the current political pressure to move manufacturing back into the UK from abroad may reduce that.
Six essential skills
The report concludes that there are six “essential skills”, which will be critical across most occupations. They are:
- Collaboration: ‘Developing constructive and cooperative working relationships with others, and maintaining them over time’
- Communication: ‘Providing information to supervisors, co-workers, and subordinates by telephone, in written form, e-mail, or in person’.
- Creative thinking: ‘Developing, designing, or creating new applications, ideas, relationships, systems, or products, including artistic contributions’.
- Information literacy: ‘Getting information; updating and using relevant knowledge; processing information; and analysing data or information’
- Organising, planning and prioritising: ‘Developing specific goals and plans to prioritise, organise, and accomplish your work’.
- Problem solving and decision making: ‘Analysing information and evaluating results to choose the best solution and solve problems’.
These six will be critical to productivity, and surveys of employers regularly report that they are already lacking in today’s workforce. We are already running to keep up with our international competitors, and the race is getting faster.
Measuring the wrong things
Our education and training systems are built around formal qualifications. The performance of schools and colleges is evaluated by their exam results, and many of those qualifications are used to measure economic performance. But most of them concentrate on things which are relatively easy to measure: formal knowledge and a threshold level of performance. They rarely look at the skills identified in this report.
The logic of this report is that our education and training systems should concentrate more on developing these essential skills, and less on formal knowledge. But it is not clear that our school system is moving in that direction. How much time do schools give to developing collaboration and creativity? How many marks do they get in an Ofsted inspection?
The collapse of training
This is not just a problem for the school system. Two thirds of the workforce of 2035 have already left school or college. But this government has cut total spending on adult training by 25%. And employers are not pulling their weight either. Historically, UK employers have invested less in training their workers than their European competitors, and levels of employer spending have fallen by nearly 30% since 2005.
To try to change this, government introduced an apprenticeship levy, which employers paid, but could reclaim for the costs of some kinds of training. But government rules on how the money can be spent have restricted its usefulness, and in practice it has often become simply another tax on employers, with the funds returning to the government unused.
Will devolution help?
The government’s devolution plans include handing over funding for workforce training to local elected Mayors. The hope is that decisions about workforce skills will be better made locally, where people understand the needs of local economies. Certainly, recent decades of managing workforce training centrally have not been a huge success. Perhaps moving responsibility closer to the local economy would increase training, and make it more relevant to the skills needs of the next decades. But there is substantial opposition to the proposals for devolution in Norfolk and Suffolk, and in an uncertain political climate, they may well not happen.
Whoever is in charge, we have to hope for a revolution in our approach. Britain has been on a downward track for a long time. Without a solution, we are doomed to become the poor relation of Europe.
