Skills emergency could starve growth

The demand for higher-level skills in British industry is set to grow in the years ahead, with those sectors most central to future growth, including manufacturing and construction, particularly hard-pressed. That’s according to this year’s CBI/Pearson Education and Skills survey published 13 July 2015.

The survey of 310 companies, which together employ over a million people, underlines the skills challenge that the UK faces. It reveals:

• 2 in 3 businesses (68%) expect their need for staff with higher level skills to grow in the years ahead, but more than half of those surveyed (55%) fear that they will not be able to access enough workers with the required skills
  
  
• Demand for highly skilled workers is particularly strong in sectors critical to the rebalancing of the economy – engineering, science and hi-tech (74%), construction (73%) and manufacturing (69%).
  

With an apprenticeship levy for larger employers set to be introduced following the budget, the CBI is concerned that while it may fund more apprenticeships to meet the government’s target of 3 million, it will not deliver the high-quality, business-relevant training needed, and do little to help small- or medium-sized businesses. Of apprenticeship starts in 2013/14, just 2% were higher apprenticeships, which lead to qualifications at a level equivalent to higher education. Business is clear that the government must accelerate reforms and ensure employers are in control when it comes to the design and delivery of apprenticeships, to boost quality.

Katja Hall, CBI Deputy Director-General, said:

“The government has set out its stall to create a high-skilled economy, but firms are facing a skills emergency now which threatens to starve economic growth. Worryingly, it’s those high-growth, high-value sectors with the most potential which are the ones under most pressure. That includes construction, manufacturing, science, engineering and technology.

“The new levy announced may guarantee funding for more apprenticeships, but it’s unlikely to equate to higher quality or deliver the skills that industry needs. Levies on training already exist in the construction sector where two-thirds of employers are already reporting skills shortages.

“Employers have a critical role in upskilling the workforce, but part of the deal must be for real business control of apprenticeships to meet their needs on the ground.

“The best way to plug the skills gaps and provide quality training is to speed up existing apprenticeships reforms already underway and encourage smaller firms to get involved.”

Apprenticeship opportunities growing but reforms must now accelerate

• Around two-thirds (66%) of respondents are involved in apprenticeship programmes, with provision spreading well beyond traditional sectors such as manufacturing (76%) to new sectors such as professional services (42%), accounting and legal services
  
  
• 62% of respondents either intending to expand their apprenticeship programme or to start one in the next 3 years - the best result since the survey began in 2008
  
  
• Recent government reforms have been welcomed by business (81%) but concerns about the reform programme include bureaucracy and red tape (29%) and delays in funding reform (25%)
  
  
• 38% of respondents say that matching qualifications better with business needs would get more companies involved in apprenticeships, as would putting more purchasing power in the hands of firms (34%).

Rod Bristow, President of Pearson’s UK business, said:

“Better skills are not only the lifeblood of the UK economy – as fundamental to British business as improving our infrastructure, technology and transport links – they are also critical to improving young people's life chances, of enabling them to be a success in life and work.

“The government is right to be ambitious about apprenticeships. We need more higher-level apprenticeships in high growth sectors like biotech, engineering, and technology, as well as traditional ones.

“But our further education sector, which provides the Higher National Diploma courses that deliver these technical skills, sits on the edge of a funding precipice and may suffer damage for years to come. Proper funding of further education would provide a huge boost to British businesses and productivity. Without improving the supply of skills, the UK will find it hard to remain competitive in the global economy.”

Firms report widespread difficulties in recruiting staff with the necessary science, technology, engineering and maths (STEM) skills, with half (52%) of firms experiencing (or expecting within three years) a shortfall of experienced staff. As a result STEM study carries a real premium with 2 in 5 employers (40%) preferring graduates to have STEM skills.

The survey also highlights the desire among businesses for schools to focus on developing rounded and grounded young people from primary age with the majority of firms arguing that aptitude and attitude rank ahead of academic qualifications:

• Nearly three-quarters (73%) of firms want to see primary schools focus on developing pupils’ literacy and numeracy, as well as communications skills (46%) and other skills that will unlock their learning potential
  
  
• In later years, the focus shifts to developing greater awareness of the world outside the school gates (50% of firms want this as a priority for the 14-18 age group)
  
  
• Close to half of businesses (45%) recognise foreign language skills as beneficial to them with European languages heading the list of those in demand – French 53%, German 49%, Spanish 36%
  
  
• Three-quarters of firms (77%) are not satisfied with the current performance of careers advice in schools and colleges across all parts of the UK.
  

While the performance of schools has been gently improving, businesses are still worried about a long tail of under achievement. Over a third of firms report some concerns with school leavers’ literacy/use of English (37%) and basic numeracy (37%), and nearly half with communication skills (49%). Close to a third (31%) of firms have had to organise remedial training in core skills for some school/college leavers.

The CBI has set out a comprehensive reform programme for schools in the UK through its First Steps campaign to help focus beyond academic ability alone. When employers recruit school and college leavers, this shines through. Attitudes/character (85%) ranks well ahead of qualifications (39%) or academic results (31%) as the most important factors when recruiting. 39% are currently concerned by the attitudes of school and college leavers to work, with 61% not satisfied with self-management and resilience. The CBI has called for a series of reforms to our school systems, including curriculum and Ofsted reform.

Katja Hall added:

“We betray our young people if we fail to equip them with the knowledge, skills and attitudes needed to progress in work and life. We must better support schools and teachers from day one to develop the confidence, resilience and creativity that will help the next generation of talent to succeed.

“Employers consider attitudes and aptitudes more important than any specific qualification or skill, other than practical literacy and numeracy. They also want to see young people gaining a greater understanding of the world outside the school gates, by inspiring pupils about career opportunities from a much earlier age and by putting work experience back on the agenda for all young people.”

On the role of business in the education system, the survey highlighted that many firms are already engaged with schools:

• Three-quarters (73%) of firms which responded have at least some links with schools or colleges, with over half (51%) increasing their engagement in the last year.
  
  
• The two most common forms of support from firms are offering work experience placements to pupils (74%) and delivering careers advice and talks (71%). 60% report that they are willing to play a bigger role in supporting careers provision.
  
  
• Businesses report that some of the biggest obstacles to greater involvement are a lack of interest among schools or pupils (25%) and fitting involvement with the school timetable (23%).
  

Rod Bristow added:

“It is overwhelmingly clear from the research that employers are looking for education, above all else, to be a better preparation for the workplace. Skills such as communication, team-working, grit and leadership must be nurtured throughout our education system in order to enable young people to enter the workplace with confidence and to realise their ambitions in a modern economy.”

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Notes to editors

The CBI/Pearson education and skills survey 2015 received responses from more than 300 organisations, collectively employing more than 1.2 million people across the UK.

Participants ranged in size from firms with fewer than 50 employees – to those with more than 5,000. Small and Medium-sized Enterprises (SMEs) accounted for more than a third of respondents (36%).

Across the UK, the CBI speaks on behalf of 190,000 businesses of all sizes and sectors which together employ nearly 7 million people, about one third of the private sector-employed workforce. With offices in the UK as well as representation in Brussels, Washington, Beijing and Delhi, the CBI communicates the British business voice around the world.

About Pearson

Pearson is the world's leading learning company, with 40,000 employees in more than 70 countries working to help people of all ages to make measurable progress in their lives through learning. Visit www.Pearson.com for more information.

Media contacts

CBI Press Office: 020 7395 8239, or out of hours pager on 07623 977854. Email: press.office@cbi.org.uk. Follow the CBI (@CBItweets) on Twitter.

Pearson press office: +44 (0)20 7010 279. Email: tom.steiner@pearson.com or Hannah.hawkins@pearson.com. Follow Pearson (@Pearson_UK) on Twitter.