Growing and Aligning Demand and Supply of Skills for Inclusive Growth

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A key challenge for the UK and its regions and cities is low productivity vis-à-vis competitors. Employers are not necessarily investing in capital: uncertainty is a key factor here. But employment levels are at historic highs at 75.3% in September 2017, with 32.14 million people in employment. Unemployment rates have fallen: a rate of 4.3%, the lowest since 1975, was reported for the UK in September 2017. So the focus of the debate has shifted from the quantity of jobs to the quality of jobs.

But there are local variations in employment profiles, opportunity structures and the magnitude and complexion of skills deficits. Ideally, high levels of demand for skills would be matched by a strong supply of higher level skills. However, some local areas are characterised by low skill traps: a limited demand for skilled labour leads to limited opportunities for progression and a reduced demand for, and viability of, training provision. More skilled people with underutilised skills move away, so leading to skill shortages and constraints to higher value business development. Jobs demanding low skills drag down productivity.

For inclusive growth there is a need for policy action on both the demand side and the supply side – the objective is more and better jobs. Local variations in circumstances suggest a need for a local dimension to skills policy – allowing the possibility of greater innovation and flexibility to better aligne the supply of skills with demand. This needs to cover the full range of skills – from employability skills to high level skills. The place-based element of Industrial Strategy should help here.

Universities have an important role to play in the skills system at national and sub-national levels. They supply graduates and postgraduates with cutting-edge skills. Working Futures projections point to a continuation of a medium-term trend for an increase in managerial, professional and associate professional & technical occupations with a growth of nearly 2 million jobs for higher-skilled occupations in the UK between 2014 and 2024.

As well as providing subject-specific skills universities also equip graduates with generic skills – including ‘learning how to learn’. This is important given the need for lifelong learning. Moreover, research on the future of skills shows the types of skills that will be at a premium in the future. These are higher-order cognitive skills, system skills and inter-personal skills. This highlights the importance of broad-based knowledge and social skills in addition to more specialised features that are needed for certain occupations.

But universities also need to – and increasingly are – working with other education and training providers in the FE and schools sector, focusing on a complementary and joined-up provision to meet employers’ and society’s needs.

Universities have an important convening role to play at the local level. As anchor institutions in local economies, they represent a key asset – in terms of being a major employer and offering access to knowledge, talent and facilities. They can help make regional economies attractive to talent –contributing to the provision of a range of employment opportunities for individuals and households. So universities are a key stakeholder in inclusive growth.

By Anne Green, Professor of Regional Economic Development at the University of Birmingham, City-REDI. This blog was first posted here, as part of the University of Birmingham’s response to the challenges set out in the Industrial Strategy

The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI or the University of Birmingham.

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