Skills policy in Wales - two issues and a long-term business

opportunity?

Ewart KeepCentre on Skills, Knowledge & Organisational Performance

Structure:

1. Regionalisation of skills planning

2. The prospects for co-investment

3. Learning in and through work and the workplace

Backdrop

Moves by Welsh Government to devolve some aspects of skills policy and planning from national level to ‘regional’ level.Three Regional Employment and Skills Plans (RESPs) 1. North Wales2. Swansea, Port Talbot and Central Wales (now splitting) 3. SE WalesPut together by groups made up of local government, business interests, local economic development organisations.

This development produces:• Process issues about how to create the plans • Issues about the plans themselves• Issues about how to operationalise the plans

Other backdrop

GDP per hour worked across G7:UK = 100USA = 131Germany = 128France = 127Italy = 109Canada = 101Japan = 85Source: National Office for Statistics, 2015 (figs for 2013)The figures for Wales would look far worse!

There are two potential lenses to RSPs:

1. The immediate future and all its problems, and how the various actors cope with these.

2. The longer term future and where Wales might want to be in 5-10 years time.

Dealing with 1 is vital, but without a sense of 2 you may never get to where you want to be! Without a vision, all you get is tactical adjustments – we have many of those in skills policy over the last 30 years!.

RSPs in comparative perspective

Experience in Scotland with Regional Outcome Agreements (ROAs) and sectoral Skills Investment Plans (SIPs) suggests:1. Over time they are useful ‘steering’

mechanisms for the skills system2. They can help leverage cultural change among

providers and employers3. They don’t produce dramatic, overnight

change

Matching or alignment- a warning

A lesson from Scotland is that initially people often think the aim of skills planning systems is to ‘match’ provision to employer demand. This sounds easy and desirable, but is problematic:• Lead times are long• Demand shifts• People are mobile, as are skills from sector to sector• No employer wants one applicant, however good, for their

job, they want a surfeit of skilled applicants from which they can choose. Employer forecasts can become ‘bidding/bargaining positions’.

The danger of too narrow a focus when planning

Dangers of focusing only on:1. New jobs, not the x9 times larger replacement

demand in the labour market2. New industries and firms rather than what you

have already (especially the foundational economy, which is where the bulk of the workforce may be employed)

3. Initial E&T rather than adult and continuing4. Education in schools, colleges and universities,

rather than learning and skill use in the workplace

Lots of other issues:

1. Quality and granularity of LMI2. The weakness of employers’ workforce planning

and skills forecasting3. Ensuring direct employer buy-in/commitment4. Organising employers collectively, not least to

help themselves around skills creation5. Linkages between the 3 RSPs, and England6. Balance between different routes

Balance between different routes

Current models rely on state/student funded HE to meet a great deal of associate professional skill demand through 3-year full honours degree courses.• Is this affordable?• Does it make sense?• Is it the best way to create these skills? In many

other economies they would be delivered via sub-degree college provision, or via high quality apprenticeships.

What will the Diamond Review suggest?????

The technician crisis – some issues

• The origins of the looming ‘technician crisis’ – a 25 year plus ‘training holiday’ by many major employers.

• The 3Rs (Rights, Roles and Responsibilities) of employers remain as unclear as ever.

• Where will the students (with L3 STEM qualifications) come from to fill these new sub-degree routes? At present almost every student with STEM level 3 enters HE.

The underlying problem of funding

• How do you fund a skills system in an age of austerity?

• The answer, in Wales at least, is a move towards voluntary co-investment.

• Will this work?

Evidence from England

What can experience in England tell us about the likely progress of co-investment policies

What follows is based on what happened with: • Level 3 Train to Gain (T2G)• HEFCE workplace training pilots• UKCES’s Employer Ownership pilots• Research on apprenticeship funding

Level 3 T2G

• Aim: anticipated employer co-contribution of at least 50%.

• Reality: employers folded their arms and said ‘no thanks’. The Learning and Skills Council had government rollout KPIs to meet, so ended up paying 100% in most cases.

HEFCE Workplace Training Pilots

• Aim: to provide initially subsidised CPD and degree and sub-degree level initial training within workplace settings. Expectation to move to 50/50 funding split by end of pilots.

• Reality: Only a few HEIs managed to get close to 50/50. In many cases by the time the Coalition Government wound the scheme up, costs were still running at £4 public to every £1 private.

Employer Ownership Pilots

Complex set of different funding streams (GiF, EOPs, Futures Programme, Employer Investment Fund)

• Aim: game changing increase in employer investment focused around collective action.

• Reality: EOPs evaluation suggests £1.3 private for every £1 public, but direct cash contributions are Lower (about 50p) from employers, the rest ‘in kind’. All the employers involved in this were willing volunteers. Is a ratio of £1.3/£1 enough to represent a game changer?

Apprenticeship

The original plan was a 33% upfront cash contribution from employers. BIS research showed very clearly that this was a bit of a dream:“Most employers had become accustomed to an Apprenticeship model where they paid nothing, or relatively little, to the training provider…When asked how much they would be willing to pay…most employers were unable to suggest a price as it was something they had never really considered before. Where they were able to provide a price, it tended to be much lower the current level of funding provided by Government” – (Hogarth et al, 2014:vii-viii)

Compulsion trumps voluntarism

• Faced with these realities, the UK/English government has opted to introduce a compulsory apprenticeship levy on large employers (UK-wide).

• None of the details about how it will work are clear. After an initial stunned silence, employers are getting upset (see CBI)

Underlying factors:

• UK has 2nd lowest demand for beyond people educated beyond compulsory schooling out of 22 OECD countries.

• UK has 2nd highest (30% of workforce) levels of over-qualification out of 22 OECD nations

• Overall levels of employer investment in training across UK falling (since before the recession), and levels of training days per employee have fell by as much as half between 1997 and 2012.

The prospects for Wales

1. Need for a concerted mature conversation between government and employers and their representatives.

2. Clarity around the 3Rs (employers’ rights, roles and responsibilities) is required.

3. Short-term outcome – fall in training volumes?4. Long-term – are levies an answer?

A business opportunity – improving workplace learning?

1. Productivity2. Innovation (broadly defined)3. Work-based learning (including apprenticeship)4. Work organisation5. Job design6. The management of employment relations 7. Demand for skill, and its effective utilisationAre all inextricably linked.

Workplace development alongside workforce development

We know that certain configurations of work, job design and people management practices support and embed:• Better on-the-job learning (expansive learning

environments)• Better skills utilisation• More workplace innovation

Attributes of a learning rich workplace

• Confidence and trust in managers and colleagues• Mutual learning and support• Giving and receiving feedback without blame• Learning from experience, positive or negative• Learning from colleagues, clients and visitors• Locating and using knowledge from outside sources• Attention to the emotional dimension of work• Discussing and reviewing learning opportunities• Reviewing work processes and opportunities for quality

improvement

The win/win waiting to be won?

• Helping firms to design more expansive work processes and jobs to embed learning and support employee innovation and good skills usage.

• Helping join up skills creation, skills utilisation and innovation.

A new model for integrated business support

The integration of:• Economic development• Business support• Innovation support• Export promotion• Productivity enhancement• Job quality enhancement• Employment relations enhancement• SkillsAs a seamless ‘offer’ – this is emerging (slowly) in Scotland.

Fundamental long-term choices:

• High road or low road competitive strategies

• Some sectors are getting locked into low road, low pay, low progression, low skill, casualised models of competing. High costs for workers, society, government and localities (the in-work housing benefit bill has doubled in last 4 years).

• The clock is ticking….Where do we go next????