1

SKILLS UTILISATION

Francis Green

Prepared for the conference: Regional Skills Partnerships in a Global Economy, 22-23 June, 2005.

2

Outline

• Evidence of rising skills demand in the “knowledge economy”– Direct and indirect

• Evidence about the match between skills supply and demand

• A framework for considering policy about skills utilisation

3

Degrees Increasingly Held

9.7

12.3 12.6

17.7

0

2

4

6

8

10

12

14

16

18

1986 1992 1997 2001

Degree Held

4

Degrees Increasingly Required

9.7

13.214.1

17.3

0

2

4

6

8

10

12

14

16

18

1986 1992 1997 2001

Degrees Required

5

‘Short’ Learning Times Have Shrunk

27.1

22.3 21.420.2

0

5

10

15

20

25

30

1986 1992 1997 2001

Short (<1 month) Learning Time for Job

6

1997 2001

essential 31 40

very important 15 15

fairly important 12 14

not very important 12 10

not at all important 30 21

total 100 100

Changes in Computing Skills, 1997-2001

7

Changes in other generic skills 1997-2001

0

.05

.1

.15

change in skills

checkingclient

high-levelhorizontal

literacynumeracy

physicalplanning

problemstechnical

8

Skills are Valued in the Labour Market 1

Batchelor’s Degree Wage Premium (over 2 A-Levels)

Men: ~ 22%Women: ~ 35%

No trend 1996-2003

9

Examples: how using a skill is associated with higher pay

Example 1 : Someone with A-level of equivalent as their highest qualification

Those using computers only in a very simple way or not using them at work £8.24 hourly payThose using computers with at least a moderate level of sophistication £10.08 i.e. about 22 % more.

Example 2 : Degree holder

Jobs where making speeches/presentations very important or essential £17.12Other degree-holders’ jobs: £14.21.

Skills are Valued in the Labour Market 2

10

2

2.05

2.1

2.15

2.2

2.25

2.3

2.35

2.4

2.45

2.5

All Men W omen

1992

1997

2001

Em

ploy

ee T

ask

Dis

cret

ion

Inde

x

Task Discretion Index: 1992, 1997 & 2001

11

Skills Mismatches: Shortages and Under-Utilisation

Shortages: • around 4% have “skills-shortage vacancies”; • around 1 in 5 establishments have “skills gaps”, implying

roughly 1.5 million employees judged by their managers to have insufficient skills

• recent trend stable/edging downwards slightly

But some occupations suffer more than others: skilled trades, caring occupations, sales and customer service

occupations, elementary occupations, business professionals

12

Figure 4.2 Trends in the Balance of Supply and Dem and for Qualifications

-5000

-4000

-3000

-2000

-1000

0

1000

2000

3000

4000

1986 1992 1997 2001

Exc

ess

Su

pp

ly (

+)

or

De

ma

nd

(-)

, '0

00

s

Level 4

Level 3

Level 2

Level 1

No qualifications

13

Figure 3.2 Qualifications Dem and and Supply, 2001

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000Demand

SupplyJo

b D

eman

ds a

nd P

eopl

e S

uppl

y ('0

00s

)

Source: Table 3.6

14

Individual Mismatch

3031.2

33

37

0

5

10

15

20

25

30

35

40

1986 1992 1997 2001

Percentage 'Over-Qualified'

15

Sustainability of College Premium?

College wage premium among

25-29 Year-Olds

1996-1999

%

2000-2003

%

Men 21 15

Women 25 21

Source: Walker and Zhu (2005).

16

Skills polarisation

Fastest growing occupations:

• At the top: consistent with the “knowledge economy”

• At the bottom: – security and protective service workers in the business services

industries– window dressers, floral arrangers and telephone sales persons

in the hotel and catering industry– matrons, house parents, welfare, community and youth workers

in the public administration and sanitation industries

17

In short:

• skills demand has been growing on average• there are ongoing skills shortages reported by employers• and some generic skills have acquired a special

shortage value in the labour market• BUT:• there is also a growth of low-skilled jobs• at all levels, there is a decline in discretion, usually

associated with skill• there are increasing numbers of people apparently

under-using their qualifications• may be becoming more acute with the rising supply of

qualified workers

18

What can management do?

• take long-term viewpoint

• consider moves into high-value added sectors: these

require greater analytical skills, as well as a commitment

to investment in new technologies

• integrate skills planning with business strategy

19

What can government do to raise skills utilisation?

• Influence demand

• Influence supply

• Influence the supply-demand match

20

Supply leading demand

Can an abundant supply of skilled labour stimulate

increased utilisation of skilled labour?

• Pro: e.g. early adoption of computerisation in the US

• Con: long-run strategy is uncertain, and has short-run

costs (wages below expectations; dissatisfaction;

resource waste); potentially greater at regional level

21

Affecting demand as well as supply

• The state and the economy

• Advocacy

• Business advice services

• Industry standards/kite marks etc.

• State employment

22

Matching services

• encouraging linkages between enterprises and HE/FE

• strategic planning of life-long learning services to meet

local demands

• information, advice and guidance services for individuals

• work-life balance and other policies that promote

flexibility