Foundations for long-term growth: A more productive and flexible workforce

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Last week we blogged on one of our key foundations for growth – improving infrastructure. Today we look at our second pillar for growth – a more productive and flexible workforce.

A more productive and flexible workforce – why it matters to manufacturers

In 2012 we published our Skills for Growth report which found that even at the early stage of the recovery, when growth was modest at best, many companies reported acute skills shortages. It found that manufacturers were responding by paying greater attention to recruiting apprentices, and developing stronger links with schools and colleges. However, our research found that none of this was straightforward and employers felt they lacked the building blocks to attract and invest in the skills they need. Our research found:

  • Four in five manufacturers were experiencing  recruitment problems

  • Two-thirds said these problems were due to candidates lacking the right technical skills

  • Seven in ten employers were offering apprenticeships

  • Over half of respondents said their training spend had increased in the past two years and six in ten said their spend would increase in the next two years

  • Seven in ten companies offered work experience to young people.

Last year we published Improving the quality and quantity of graduate-level skills, which built on our Skills for Growth report. With the economy now picking up and manufacturers’ order books starting to fill, recruitment is on the rise. However the challenge once again was finding the skilled employees needed to fill these roles.

Moreover, manufacturers widening growth ambitions have put increased pressure on demand for higher-level skills. Whilst we found that recruitment of graduates plays a key role in meeting manufacturers’ demands for higher-level skills in the medium term, it is not without its challenges. And with almost one million employees needed in manufacturing between 2010 and 2020, our research found that companies are taking alternative actions to address their higher-level skills needs with a particular focus on investing in higher apprenticeships, supporting existing employees through university and recruiting from overseas. Once again, manufacturers are facing challenges in seeking the skills provision they need and battling through a complex and burdensome migration system. Some key highlights from our research include:

  • 66% of manufacturers plan to recruit an engineering graduate in the next three years

  • 63% think that increasing the number of placement and internship opportunities at universities will increase the number of learners studying STEM subjects

  • 8 in 10 companies say designing and delivering courses that meet industry needs should be a priority for higher education providers

  • Six in ten manufacturers think the increase in fees has driven young people to make informed decisions about their careers

  • More than half of manufacturers who have recruited a non-EEA graduate found the process time consuming.

What has been clear from our research is that skills shortages are acute and for manufacturers filling vacancies is a real and on-going challenge. Whilst they have continued to take action this has not been easy and therefore they want to see action from government.

What do manufacturers want from the next government?

As we stated in our 2015 Skills Manifesto, the next government must prioritise the following

1. Creating a sustained growth in the talent pipeline for manufacturing

From primary to tertiary, skills and education policy must equip young people with the skills and knowledge needed to enter into manufacturing.  Skills policy must also give manufacturers access to highly-skilled workers. This includes:

  • Radically overhauling careers provision

  • Emphasising the importance of key subjects and raising the standards of teaching them

  • Giving young people practical experience of the world of work

  • Developing a migration policy that gives manufacturers access to highly-skilled workers

  • Supporting workers back into manufacturing.


2. Investing in the national skills infrastructure where it levers the greatest economic benefit

Apprenticeship funding must lie in the hands of the employer and a longer-term approach must be taken to higher education funding. The next government must focus on:

  • Developing a simple, sustainable mechanism for giving employers control of apprenticeship funding.
  • Ensuring universities have the capacity and capital to recruit STEM students and deliver high quality STEM courses.
  • Continuing the employer ownership of skills agenda and making it more accessible to SME


3. Giving employers a greater role in driving forward the skills agenda

Future governments should not underestimate the role employers can play in the early years as well as their ability to become involved in the design and development of qualifications. Therefore the next government should be:

  • Supporting employers to engage with schools and increasing the number of education establishments with an industry focus

  • Rolling our apprenticeship Trailblazers giving employers control and governance of standards

  • Strengthening the relationship between business and universities to deliver relevant courses and high-quality graduates.

How will this improve investment, trade and productivity?

Our 2015 Manifesto – Securing A Manufacturing Renaissance, set out key targets for investment, trade and productivity to be achieved by 2020.

A more productive and flexible workforce will help us move towards narrowing the gap with top-performing economies for Level 3 and above skills. Whilst it is currently at 78% we want to see it increase to 82% by 2020. The measures we have set out will help us reach these goals.

But it’s not just productivity that will benefit. A more productive and flexible workforce means more manufacturing activity in the UK with half of manufacturers saying improving the availability of skilled employees will encourage more manufacturing in the UK. It also has positive impacts on trade with more manufacturers taking the UK’s products abroad, utilising the highly skilled employees with the technical knowledge needed to make this a success.


Head of Education & Skills Policy

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