#Skills2030 - A RADICAL NEW STRATEGY FOR LIFETIME RESKILLING MUST BE BEDROCK OF UK ECONOMIC RECOVERY @CBItweets
Last month, the CBI welcomed the Prime Minister’s Lifetime Skills Guarantee to help solve the urgent skills challenge facing the UK jobs market. Yet research carried out prior to the pandemic shows an urgent need to go further and faster to reskill the country’s workforce.
The UK faces a stark choice:
- Invest more in lifetime learning and upskilling of millions of employees, or
- Stick to business as usual, and risk sustained higher rates of unemployment and skills shortages.
The CBI’s report Learning for life: funding world class adult education, based on analysis by McKinsey & Company, shows that nine in ten employees will need to reskill by 2030 at an additional cost of £13 billion a year.
New technologies and the changing nature of our economy are transforming the skills needed for many jobs, while other roles are being lost entirely.
As Covid-19 accelerates changes to the world of work, the UK should use this momentum to drive a national reskilling effort to futureproof livelihoods and power UK competitiveness.
The CBI’s analysis also shows that failure to invest will harm the livelihoods of the most disadvantaged. Participation in training by those in lower-skilled jobs which are most at risk of automation is 40% lower than that for higher-skilled workers, while half of those in the lowest socioeconomic group in the UK have received no training since leaving school.
Regions with historically sluggish employment growth are likely to face the most negative employment impacts from automation.
The UK’s mission to invest in training is therefore not just about the economy, but also about tackling wide inequalities, and a key part of the government’s goal to level up across the country.
Four key issues government and business must work together to tackle
- Employers remain the biggest investors in adult training, but investment in workplace training has flatlined at best in the last decade and needs to increase. Good employers recognise the importance of investing in people and embracing a learning culture: it improves staff retention, satisfaction, and overall productivity. But despite its growing importance, investment in workplace training has stagnated during the last decade, with annual training spend per employee has fallen by 5.6% from £1,620 in 2011 to £1,530 in 2017.
- SMEs face barriers which prevent many of them from increasing investment in training. These include a lack of scale, high fixed costs of training and a lack of capacity. 43% of micro and small businesses did not provide any training in 2018, compared to 4% of organisations with 250 or more employees.
- The training landscape is complex and does not support the large scale reskilling the UK requires. Provision is overwhelmingly targeted at young people and focused on longer courses and formal qualifications.
- Many individuals at risk of automation do not think that their roles will be impacted by technology, and people looking to retrain struggle to find quality information. 68% of workers in the 15 most at-risk automation occupation groups believe it is unlikely that their current job role will be automated in the next 10 years. But individuals looking to retrain face steep challenges in finding quality information on the right jobs and training to take up.
What does the report recommend?
Businesses see the upcoming Spending Review as a golden opportunity for the government to embed these changes and ensure that the coming decade sees a step-change in the UK’s approach to adult learning.
Based on the findings outlined above, the CBI has set out a package of measures, that we believe the government needs to adopt as a first step towards increasing investment in training by businesses, government, and individuals.
- Help small businesses overcome barriers to training investment, such as lack of capacity and resource, by introducing SME tax credits, to overcome longstanding barriers of capacity and resource in smaller businesses
- Boost overall business investment in skills by turning the Apprenticeship Levy into a Skills and Training Levy to unlock business investment in high-quality accredited training.
- Encourage people to take up new training opportunities by introducing Career Development Accounts to support unemployed people and individuals with the biggest retraining needs, and help remove financial barriers
- Extend the lifelong learning loan allowance to adults of all ages and use it to drive increased availability of bite-size, flexible and online learning, by accommodating shorter bitesize courses, not just longer formal qualifications
- Encourage more people to have a stake in lifelong learning by turning ‘Job Centres’ into ‘Jobs and Skills Hubs’which offer face-to-face support, to support workers looking to retrain.
The pandemic can be a catalyst for action. Many employees are not working at full capacity as firms face weak demand.
This time can be used for training, and many employers are already offering this opportunity. But more scale is needed and we recommend that business, unions, education providers and government work together to ensure spare time is productively used.
The difference for our economy and employees could be transformational.
Kirstie Donnelly, CEO at City & Guilds Group said:
"The impact of Coronavirus has created a hugely challenging environment for employers and workers alike. In some industry sectors it has fast tracked the labour market changes that were already being brought about by increasing automation of the workplace and, as a result, is forcing millions of people into unemployment without the skills they need to find a new career.
"With unemployment set to rise above 3.4 million by the end of year and potentially a no deal Brexit on the horizon, what we need now is a clear vision for lifelong learning that is focused on helping people to identify the transferable skills they have and develop the new skills they will need both now and throughout the rest of their working lives.
"To ensure we never find ourselves in this position again, firstly, we need a better funded adult education system that provides more accessible opportunities to upskill, especially for those out of work. Secondly, much more needs to be done to hardwire a culture of lifelong learning into working life and subsequently boost productivity in the UK, with people retraining throughout their career."
Ian Pretty, CEO, Collab Group, said:
“The system of adult education in the UK is in urgent need of reform and the CBI highlight some thought-provoking recommendations to address this.
"In the current economic climate, focussing on retraining and upskilling will be crucial. We agree with the CBI that a focus on supporting providers to develop “more flexible, bite-sized learning” will be important. Collab Group has advocated for the adoption of more flexible modular provision to support people to retrain. Such an approach will not be relevant in all cases where retraining is required. But we do urgently need to think differently about how incentives and funding streams can better enable short, sharp training interventions that recognise transferable skills and their relevance within different occupations and economic contexts. Government needs also to urgently look at how it funds company certified training courses in sectors with high labour demand to retool people and get them back into work.
"We are also very supportive of the recommendations to turn Job Centres into Jobs and Skills Hubs. These proposals align with our thinking about how the FE Sector can think differently about the support provided to job seekers in the current labour market. The focus needs to shift away from focussing on indiscriminate job progression towards a much more supportive and holistic model in which people are offered a range of services and support. Such support should include skills diagnostic and triage services, careers information and advice and signposting to relevant training opportunities to boost skills and employment prospects. Collab Group colleges are keen to work with stakeholders locally, as well as government and employers to develop these concepts further.
"We are less convinced that a move from the apprenticeship levy to a broader skills and training would be the right approach at this time. The overall point the report makes that employer investment in training since the levy was introduced has declined is well made. The issue around how employers are able to support the reskilling of their workforce needs a clear policy response. However, it is our view that a move to dilute the focus of the levy would have a negative impact on the apprenticeship brand and the provision of apprenticeship opportunities for young people at levels 2-3. The levy does need urgent reform, and many of the issues identified in the report are correct. However, we would need to ensure a policy response that increases the flexibility that business has to invest in their people while at the same time enhancing the opportunities that apprenticeships provide for early careers opportunities.”
Dame Carolyn Fairbairn, CBI Director-General, said:
“Ensuring people can adapt to the changing world of work will be one of the most important missions this country embarks on in the next decade. The economic impact of Covid-19 makes starting now only more urgent.
“Jobs were already changing with nine out of ten employees needing to reskill over the next decade. The pandemic has accelerated the need to act now.
“The right skills strategy can help every worker to progress their careers, drive up living standards and level-up the country. But a failure to act will leave businesses facing skills shortages and workers facing long-term unemployment. We are at a fork in the road that requires urgent and decisive action.
“The recently announced Lifetime Skills Guarantee is an important step in the right direction, but it is only a start. The government has long promised meaningful reform of the Apprenticeship Levy but has not delivered it. Meanwhile the number of apprenticeships continues to fall. It is time to end this failed experiment.
“Replacing the Apprenticeship Levy with a Flexible Skills and Training Levy and a training tax credit for SMEs would encourage every firm to invest more in the skills that are essential to the long-term success of their company and workforce.
“And let’s not waste time during this pandemic. The CBI wants to work with unions, education providers and government to ensure that employees working fewer hours have as much opportunity as possible to retrain and reskill.”
Tera Allas, McKinsey & Company Research and Economics Director, said:
“Technology-driven change is set to transform our economy and society. The emergence and spread of COVID-19 is accelerating many of these trends, and some industries have changed more in the past few months than they had in the past few years.
“For those in work today, 90% are expected to require significantly different skill sets by 2030, driven by the changing number of jobs, with occupations such as care workers likely to increase while others, such as machine operatives, likely to decrease. The skills transformation is also driven by changing skills requirements within jobs, such as salespeople needing to have better digital skills.
“Investing in the UK’s human capital by boosting the skills of our workforce offers a huge opportunity: boosting productivity, improving job satisfaction, and enhancing livelihoods for workers. Achieving this will need a significant shift in current approaches to adult education and to skills investment.
“None of the key groups that need to take action – business, government, the education sector, and workers – can do this alone. To capture the future skills opportunity, we need the partnership of the century.”
Lesley Giles, Commissioner at the Independent Commission on the College of the Future, and Director of Work Advance, said:
“Today’s new report from CBI shows the rapid change in the nature of work over the coming decade and the huge leap in the levels of lifelong learning that is needed. Our education, skills and employment systems have to adapt to meet this, and collectively with Government they must find ways to incentivise lifelong learning.
“Colleges are a critical part of this and embedded in communities across the UK. They must be better recognised and utilised in delivering on this UK-wide priority as a matter of urgency. The Independent Commission on the College of the Future will be setting out its recommendations for how to achieve this later this Autumn. ”
The skills our economy needs over the next decade
The CBI report sheds new light on how changes in the economy, fuelled by digitisation and automation, will dramatically change the skills sought by employers. These changes include:
- 21 million people will need basic digital skills
- 16 million will need critical thinking and information processing skills
- 15 million will need skills in leadership and management
- 14 million will need interpersonal and advanced communication skills; and
- 9 million will need to build on their STEM knowledge
The research was carried out prior to the coronavirus pandemic, with analysis done by McKinsey & Company in "McKinsey UK Skills Mismatch (2019)".
The figure of nine in ten workers was calculated based on modelling showing that by 2030, over 30 million people – equivalent to 90% of the current workforce - would need to be reskilled.
The data gathered before Covid-19 indicates that businesses, government and individuals already needed to spend an additional £130 billion over ten years (£13 billion a year) on adult education, a 25% increase on current expenditure.
If firms continue to invest in training at the same rate as they do now, this could increase their investment in training by £3.6 billion per year. However, this would still leave a £9.5 billion per year gap, a figure which is now likely to be larger following the pandemic.
Nine in ten people will need new skills by 2030 to support the future economy, requiring an additional £13 billion per year.
£13 billion a year is the equivalent of an additional £430 per employee annually.
Flexible Skills Levy - £0.48 billion
Career Development Accounts - No more than £3.9 billion
Retraining is the process of learning a new vocation or skillset.
Upskilling refers to the refresh or development of skills to keep up to date with technological and business developments.
Reskilling is the process of updating skills through retraining or upskilling.
Basic digital skills include using computers to carry out tasks such as operating applications and sending e-mail.
Interpersonal and advanced communication skills include empathy as well as complex communication or negotiation skills.
STEM knowledge includes advanced data analysis, mathematical, IT and programming skills, technology design, engineering and scientific research.