A perfect storm to transform our investment approach in the UK Lifelong Learning, Crisis and Social Change

Lesley Giles, Deputy Director

UK Commission for Employment and Skills

18 & 19 October 2012

About us: Our Commissioners

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About us: The UK Commission for Employment and Skills

More employers investing in the

skills of their people

More employers taking ownership of

skills

More career opportunities for

young people

More collective action by employers through stronger sectors and

local networks

Provide outstanding labour market intelligence which helps businesses and people make the best choices for them

Maximise the impact of employment and skills policies and employer behaviour to support jobs and growth

Work with businesses to leverage greater investment in skills

Impact

Investment

Intelligence

Aim: Transform the UK’s approach to investing in the skills of people as an intrinsic part of securing jobs and growth

Five assets and 100 staff to deliver on outcomes3

Global performance is NOT world class

Source: OECD Employment Outlook 2011 and OECD Productivity Database 20104

There are pressures on investment

“Today, our national debt stands at £770 billion. Within just five years it is set to nearly double to £1.4 trillion. To put it in perspective, that is some £22,000 for every man, woman and child in our country.”Speech on the Economy, David Cameron (7th June 2010)

I don’t see a time when difficult spending choices are going to go away”David Cameron, Daily Telegraph interview 19th July 2012

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Upskilling rates are not making us world class

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We especially need to address the long tail of individuals with low skills

Low Skills Intermediate Skills High Skills

Current international skills position

21st 25th 13th

25th 26th 11th

Are businesses investing wisely in skills?

There are 2.3 million businesses of 1+ employers across the UK. Of which...

59% train(1.3 million)

41% do not train(0.9 million)

Of those who do train:

23%(0.5 ml)

29%(0.6 ml)

8%(0.2 ml)

Do not knowif they want to

do more

Would like to do more

training

Do sufficienttraining to

meet needs

26%(0.6 ml)

15%(0.3 ml)

No trainingneed

Perceived need but met

barriers

Of those who do not train:

Key Challenges:• Training investment is holding up despite the recession overall• But with only 19% of businesses adopting High Performance Working practices, is this ambitious

enough? 7

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Employer investment in training

£24.7 BillionIs spent on the direct

costs of training.

Across the UK

£49 BillionIs spent on training.

However:

£24.3 BillionIs the wages of those

being trained.

£13.5 BillionIs tradeable costs (i.e. Elements of

training that can be outsourced)

£11.2 BillionIs non-tradeable (i.e. Elements

of training that cannot be outsourced)

Of which

£3.9 Billionon payments to

external providers

£2.8 Billionon course fees

£1.1 BillionOther activity

Investment in qualifications

23%Of employee’s trained were

training towards a qualification

And this varied by business size

16%

37%

58%

67%

66%

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Big variations in individual learning, Skills rich vs skills poor well established

Rich: Employed, managerial & income £31K+, younger, qualifications A-levels or above, parent in education after 16.

Key factors: attainment at school and parents education

Learning creates a habit and leads to more learning. Over 8 out of 10 people with higher qualifications (e.g. degree level) undertake learning compared to less than 3 in 10 with no qualifications

Training connected with employment showing a gradual decline

Poor: Older, income less than £10k, qualifications below GCSE, no work or part-time.

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Are individuals investing wisely in skills?

Ages Learning participation

Income & (Expenditure)

Motivations Barriers

16 - 24

Young AdultBiggest challenge, limited choice

79%£575 wages

(£430)Job prospects

Cost

25 - 39MidlifeWork predictable, class divisions

73%£873 wages

(£559)

Work performance Job satisfactionHelp children

Time Cost

40 - 59

MaturityDefined by experiences. Rich & poor

71%£744 wages

(£485)

Learn something new

TimeCost

60 - 74Old ageRich retire, low income still work

48%£464 social

security(£342)

Learn something new

Too old

75+Truly elderly majority women

24%£331 social

security (£236)

Learn something new

Too old

Dec

reas

ing

Par

tici

pat

ion

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We must meet future needs, but where will the growth come from?

Projected UK employment change by sector (000s) between 2010-2020

(Source: Working Futures)

Change(‘000s)

-170

-103

-22

237

415

1,195

Sector

Manufacturing

Non-market Services

Primary Sector & Utilities

Construction

Trade accommodation & transport

Business & other services

Private services expected to be the main engine of job growth (2010-2020)

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What will the future jobs be?

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Most net job creation (2010-2020) expected in high level occupations, but job openings expected in all occupations due to replacement demands

Net Job Openings

(‘000s)Occupation

Managers

Professional

Associate Professional

Admin & Secretarial

Skilled trades

Caring, Leisure etc

Sales

Operatives

Elementary

1,614

2,726

1,742

1,106

930

1,256

779

535

1,117

Projected England Job Openings 2010-2020(Source: Working Futures)

Replacement DemandJob Creation

Where are the future jobs?

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While growth will occur almost everywhere, the north-south divide will continue to be exacerbated.

Projected change in total employment across the UK: 2010-2020

6-8%

4-6%

2-4%

0-2%

Skills play a vital role in performanceFirms in the UK that don’t invest in training, on average...

Are twice as likely to failAnd this varies by sector...

Manufacturing

Construction

Hotels and Restaurants

Retail and Wholesale

Transport and Comms

Likelihood of business failure

2x

2x

2x

4x

9x

Building a new approach to investing in skills

The Growth and Innovation Fund is open to all employer representative organisations (including Sector Skills Councils) and is an England only fund.

Employers invested: £22 million

Growth & InnovationFund invested:

£13 million

£35 MillionSupporting 16 projects that aim to

Develop innovative Working practices

Raise professional standards in sector

Increasing the demand for

Higher skills Provide leadership

& management solutions Support future growth

of the economy

Growth & Innovation Fund

Building a new approach to investing in skills

The Employer Investment Fund is open only to licensed Sector Skills Councils (SSCs) and is a UK wide fund.

Employers invested: £46 million

Employer InvestmentFund invested:

£66 million

£112 MillionSupporting 77 Employer led projects

that aim to

Raise ambition & change employer

behaviours

Drive innovation & develop new ways

of working

Secure momentum to support sustainable

increases in skills levels

Stimulate employer investment in skills and to improve the use of these

skills in the workplace

Support better use of skills

across sectors

Employer Investment Fund

Building a new approach to investing in skills

The Employer Ownership Pilot is open to employers and is an England only fund. Employers invested:

£98 million

Employer Ownership Fund invested:

£67 million£165 MillionWill test new delivery

and investment models

11,000 Apprenticeships

18,500 full time training opportunities

45,000 training opportunities (including work experience &

work placements

Employer Ownership Pilot

To find out more:

More about UK Commission investment:

http://www.ukces.org.uk/ourwork/investment

Employer Skills survey: http://www.ukces.org.uk/publications/employer-skills-survey-2011

UK Employer Surveys site:

http://employersurveys.ukces.org.uk

UK Commission research: http://www.ukces.org.uk/ourwork/research

Thank you