Productivity and skills doesn’t always mean vocational and intermediate

You can’t go far wrong with writing a report about productivity.

Solving the productivity puzzle – the confusing reality that UK productivity has fallen far beind comparator nations – is seen as the key to driving growth and raising living standards.

One theory suggests that the problem is a lack of the required skills at the required levels. In a new report City and Guilds polled 1,000 UK employers and 2,000 working age UK adults to find out what is going on.

Employers clearly see skills as the basis of productivity gains, with 74 per cent seeing a need to build the skills within their workforce – 50 per cent saw a need to bring in skills from outside of their business or sector to make this work. And employees feel correspondingly underskilled – fewer than half (48 per cent) felt like their education has helped them to move into a career of their choice, with this being felt more keenly among older workers. Some 40 per cent did not feel they did not have the skills they would need now to enter the workforce – suggesting that just three fifths of workers had the skills they need to do the job they are currently doing.

But, as City and Guilds also notes, the UK has a problem with skills utilisation – citing research from the Productivity Institute that suggests more than a third of workers (36 per cent) report having the skills to cope with more demanding duties than those they are currently fulfilling. The Office for National Statistics has estimated that 31 per cent of graduates are “overeducated” for the roles they are in.

None of this is really news, in the sense that the last 30 years have seen a bewildering array of initiatives, structures, and plans put in press to address what is widely seen as a fundamental skills problem. The latest of these is the advent of Skills England – though we have little information about how this will actually work or what it will do it has become a repository of tertiary hopes. The general sense is that it needs to help the skills (or tertiary) sector become more responsive and better informed, at a national and regional level.

As luck would have it, we’ve only recently seen data from the Department for Education on occupations in demand. Here I’ve plotted a demand index (higher number means more jobs available) against the wage premium (an indicator of how salaries currently compare) – the colours show the SOC group of each individual code, the size of the dot shows the number currently in employment.

While this isn’t everything we need to think about skills needs, it does give us a sense of the level of skills required in each role (via a specific measure separate to the usual groups, which you can view on the mouseover drop down, or explore via the highlighter). Rather than longer term plans, this represents where employers are right now.

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What you’ll notice is the concentration of large purplish dots above the zero line on the demand index. What employers are currently looking for, it would appear, are appropriately skilled people to fill key graduate level (as defined by the Office for Students) roles. And quite a lot of these are not STEM roles. Beyond this, the nation is crying out for care workers, plus there’s a need for a smattering of skilled trades (chefs, metal workers, motor mechanics) and administrative roles (bookkeepers, clerks, office managers).

There’s a sense that “skills” are almost universally required at a technical and intermediate level – driving the development of things like higher technical qualifications – yet this data, at least, does not appear to show a huge demand for such skills.

City and Guilds’ recommendations would give Skills England a role in “recognising the importance of level 2 and level 3 skills”, and in shaping the balance of provision (between sub-degree and degree, and between STEM and non-stem) on offer. There is some sensible stuff on integration and joint working, but it does feel a lot like the kind of recommendations we got used to under the last government – where lower level, vocational, qualifications held the key to growth and productivity.

It would not appear that employers agree, at least currently. On the available evidence, the route to growth and international competitiveness almost certainly runs through higher education.