DEVELOPING SKILLS IN THE UK WORKFORCE

The Government today announced a new employer-led taskforce to support the improvement and expansion of Modern Apprenticeships, and an ambitious new target to increase the participation of young people in post-16 education and training, among several measures to improve UK skills. These measures, along with others aimed at supporting the training of low-skilled adults already in the workforce, will help to reduce the proportion of the UK workforce with low skills, currently more than 8 million people.

Chancellor Gordon Brown said:

“Skills are critical to an individual’s chances of success. To push a teenager into the world of work today without any qualifications is to put them at lifetime risk of poverty, failure and wasted potential. A skilled workforce is also important for the wider health of the economy and for UK employers - improving productivity and increasing prosperity. Adults in the workforce with low skills must be supported to develop their potential if we are to increase productivity and tackle social exclusion.”

New measures announced today to improve the skills of the UK workforce and help ensure that UK employers can recruit staff with the skills they need include:

setting a new target to increase post-16 participation in education and training. By 2010, 90 per cent of all 22 year olds will have participated in a full-time programme fitting them for entry into higher education or skilled employment;
a new National Modern Apprenticeship Taskforce, led by Sir Roy Gardner, to encourage more employers to get involved in Modern Apprenticeships and report to ministers and to the Learning and Skills Council on key policy issues;
providing £130 million to enable the Employer Training Pilots to be extended for a second year, and expanded to around a quarter of local Learning and Skills Council areas, to test the impact on the training of low-skilled adults of a wider range of policy packages; and
taking further steps to ensure that the UK immigration system helps meet the recruitment needs of UK employers, including by extending permanently the Highly Skilled Migrant Programme.

DETAILS

Post-16 participation in education

The decision to remain in education and learning after the age of 16 is the major determinant of skill and attainment levels as an adult. The Government wants to ensure that young people can enter high quality academic and vocational programmes, reducing the historically low rate of post-16 participation compared with other countries. In 2000, 86 per cent of 18 year olds in Germany were enrolled in full-time or part-time education or training, compared with only 56 per cent in the UK. The target includes young people studying level 3 academic or level 2 or 3 vocational programmes, both work- and college-based, and builds on the existing Public Service Agreement that by 2004, 28 per cent of 22 year olds will have participated in a Modern Apprenticeship.

Modern Apprenticeships (MAs)

MAs provide opportunities for young people to develop skills in a work environment, with the costs shared between the Government and employers, and are at the centre of the Government’s strategy to ensure that all young people can access high quality education and training. Recent measures have done much to improve MAs, and participation is rising - with over 135,000 young people enrolling on MA courses each year. Employer involvement in MAs is critical to ensure MAs continue to meet the needs of UK firms and offer young people high quality training in a work environment. A National Modern Apprenticeship Taskforce was launched today to champion MAs and encourage more employers to get involved. The Taskforce will also report to the Government, and to the Learning and Skills Council, and report on key policy issues. The Taskforce will be led by Sir Roy Gardner, CEO of Centrica, and will include individuals from across industry and the education and training sector.

Employer Training Pilots

Employer Training Pilots are now operating in six local Learning and Skills Council areas. Firms who offer their low-skilled staff paid time off to train are provided with subsidies to cover the costs involved (up to 150 per cent of wage costs for small firms), free training courses up to NVQ level 2, and information and guidance on training.

Early evidence suggests that the model being tested in the pilots is proving successful in engaging low-skilled individuals in training, and employers have responded positively to the pilots. At the end of October, only 2 months into the pilots, nearly 500 employers had signed up to participate, and almost 900 employees with low levels of qualifications and skills had committed to undertaking basic skills or NVQ level 2 training. Over 40 per cent of individuals signed up to the pilots so far work in firms employing fewer than 50 people.

The Government has made available £130 million to enable the Employer Training Pilots to be extended for a second year. This will enable the Government to further explore the impact of the pilots on the demand for training, and allow the expansion of the pilots to around a quarter of local LSC areas.

Migration

The Highly Skilled Migrant Programme will now be extended from January 2003, in view of its success since January 2002. To improve its effectiveness further, the criteria for awarding points in certain categories will be revised from 28 January 2003.

Further steps are also being taken to ensure that SMEs can benefit fully from the work permits system. The Government has created a new Small Business Unit in Work Permits UK to ensure that small firms can access appropriate information and more easily recruit skilled staff to meet their needs.

Last month the Home Secretary announced new sectoral migration schemes to help address skills shortages in specific sectors, such as hospitality and food processing. In light of experience with these previously announced sectoral schemes, the Government will consider the case for further policy development in this area, working with other sectors where employers are facing labour shortages.

NOTES FOR EDITORS

Skills and productivity

The skills report of the CBI-TUC productivity group and the second report on workforce development by the Strategy Unit in the Cabinet Office have identified the lack of basic skills and level 2 qualifications as the biggest skills problem the UK faces. The CBI and TUC cited estimates in their recent study which suggest that UK firms lose up to £10 billion per year due to basic skills shortages in the workforce.

There is an established relationship between improvements in skills and increased productivity (more details are set out in Developing workforce skills: piloting a new approach, published with Budget 2002). Higher levels of workforce skills enable workers to:

undertake an increased number of tasks;
perform them more efficiently;
adapt faster and more effectively to change; and
become a greater source of innovation.

Improving UK workforce skills

There are over 8 million people in the UK workforce who have skills below the level 2 standard (equivalent to 5 A*-C GCSEs). Over 50 per cent of these people are employed in firms with fewer than 50 employees. Over 30 per cent of those in employment in the UK have low skills. This compares to only 17 per cent of workers in Germany.

Those with higher levels of skill receive significantly more training than those at lower levels. According to the National Skills Taskforce, when surveyed, 19 per cent of employees qualified to level 4 (degree equivalent) had received training in the last four weeks compared to 8 per cent of those qualified below level 2. People employed in small firms also receive less training than those employed in large firms. This uneven distribution of training occurs in most countries but these findings are particularly worrying in the UK context because the UK’s skill gap with other countries is primarily at intermediate level - levels 2 and 3.

Migration and the UK workforce

The work permit system allows UK employers to recruit highly skilled staff from outside the EEA, if they can show that they have been unable to recruit a suitable person domestically. Around 140,000 work permits were granted in 2001-02.

To provide a further source of skills for the UK economy, a pilot Highly Skilled Migrant Programme was launched in January 2002, allowing highly skilled individuals to enter the UK to seek and take work. Applicants to the scheme may demonstrate their eligibility by educational qualifications, work experience, achievements in their field or past income. Since its introduction, the scheme has helped many highly skilled individuals to enter the UK to live and work, making a valuable contribution to the economy.

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