Today’s labour market figures showed that unemployment rates have risen once again.
Employment in manufacturing has fallen slightly since the end of the recession. However, our Business Trends survey has consistently shown that manufacturers are looking to recruit. Today’s statistics, too, show that manufacturing vacancies have increasedby 10.1% over the last year, even as the total number of vacancies in the economy has fallen.
So how can we explain this?
One of the key issues that manufacturers raised at EEF’s conference last week was skills shortages. Dick Olver, chairman of BAE systems summarised this neatly when he said:
“The UK nurtures great engineers. But we need more. A lot more.”
Skills shortages are hampering manufacturers’ ability to grow their businesses. This is an ongoing issue for the sector, and something that needs to be addressed.
Looking ahead to the budget next week, we are calling for a clearer, stronger strategy for growth, based around four key ambitions (the first of these I blogged about yesterday).
The second key ambition should be for the UK to have
A more productive more flexible workforce
What does this ambition mean?
Achievement in basic qualifications is somewhere the UK lags behind some of its major European and international competitors. One of the biggest issues manufacturers raise with us is a lack of basic numeracy and literacy.
This is an economy-wide issue: basic skills in English and Maths by the age of 16 are vital to an individual’s employability and future progression in any sector.
For these reasons, we believe the government should set the following target for 2015:
65% of people who take GCSEs achieve 5 A*-C grades including English and Maths
But the economy needs more than basic skills. Innovative world-beating companies need people with the skills to match. But advanced or Level 3 apprenticeships numbers have failed to satisfy the skills demand from business.
Therefore, our second target for a more productive and flexible workforce is:
An increase of 25% in the number of STEM apprenticeships at Level 3 (or above).
There is a skills gap now. Businesses across the economy need to fill vacancies straight away as hard-to-fill vacancies impact negatively on firm-level productivity. Similarly, businesses looking to locate in the UK need to know that a skilled workforce is available to them. Our third ambition, therefore, relates to this:
Keep the proportion of hard-to-fill vacancies below 23%.
Setting clear and measurable ambitions for the economy will be essential to ensure the government prioritises its limited fiscal and policy reform resources on the areas that matter most for the UK’s growth. A more productive more flexible workforce is be a key step towards a stronger, growing economy.