Even at a time where growth is modest at best, companies are reporting skills shortages with four in five manufacturers facing recruitment problems with candidates lacking technical skills and experience. With manufacturers reporting rising demand for a range of skills over the next three years, the question is where will they come from?
Companies have become more proactive, increasing their investment in training and apprenticeships as well as forming better links with schools and colleges. But none of this is straightforward and firms continue to struggle to attract and invest in the skills they need now and in the future. As a result over a half of manufacturers say finding employees with the right skills is their main business concern.
In our report released today, Skills for Growth: A More Productive and Flexible Labour Force we outline our ambition to create a more productive and labour market. We have set three benchmarks for skills which should drive government action.
1. That 65% of school-leavers will achieve give GCSEs A*-C grades including English and maths.
We must achieve this target if we are to expand the pipeline of talent flowing into the industry. The proposed English baccalaureate may help but government must do more to ensure that teaching young people receive is of the right quality and inspires them. This should include reviewing the case for capping the repayment of fees for teachers who take training courses in key subjects, introducing a compulsory development requirement for teachers to spend a set number of days in local business and by following the example of free schools and academies by allowing people from industry to contribute their experience on a part-time basis.
Young people must also get impartial careers advice from an early age. Face-to-face provision is fundamental and should be available to all young people, who should also all benefit from a period of work experience that gives them chance to see a real working environment at first hand.
2. There will be a 25% increase in STEM Apprenticeships at Level 3 and above.
The government also needs to raise its ambitions to expand advanced and higher apprenticeships and to prioritise any future increases in funding in this direction.
Employers also need a single apprenticeship standard for their industry that they can easily understand. Such a standard must be owned by employers, with input from learners and allow greater flexibility in how training is provided to meet this standard.
Accessing funding remains difficult for businesses, and if we are to drive apprenticeship investment further, we must in future route funding through employers through reductions in national insurance contributions. This will give them a greater sense of ownership and will encourage greater responsiveness and innovation from training providers.
3. The proportion of hard-to-fill vacancies will drop to 20% in 2013 and be maintained at this rate.
Moves towards a demand-led skills system have begun, but more needs to be done. We need to develop mechanisms that allow employers to come together to shape not only apprenticeship frameworks but also the quality of training provision and to set qualifications for their sector, which reflect their needs.
Local Enterprise Partnerships have a role to play in bringing local employers and providers to collaborate more effectively and as a signposting source to information. However, skills budgets should not be given to local bodies. We have been here before local Learning Skills Council and it didn't work.
Finally, we must widen the talent pool available to businesses, including recruiting labour from outside the EEA labour market. An effective measure would be to reinstate the Tier 1 post-study work route, allowing non-EEA graduates to seek employment for a period of two years after their course has ended.