Overview of Key Skills Intelligence and Future Challenges

Presentation to South Yorkshire Lifelong Learning Network

Alison Wilson

The Macro Economic Challenges Shaping the RES Skills Commitments

• Our economy is growing, but will grow less quickly than the national economy – 2.2% compared 2.5% growth (average next five years).

• Those sectors growing in employment terms are almost exclusively services – but they will grow less quickly than nationally (for instance our latest view of Business Services growth in the short term shows the sector growing 0.5% pa below that forecast nationally up 2010).

• The nature of the “Catch Up” we are playing on NVQ employment presents a compelling challenge for the region (as the graph shows).

Economic Challenges – structural employment shift relative to England

at Level 2 only

Working Age with NVQ4+

23.4

27.1

20.3

22.7

15

17

19

21

23

25

27

29

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07

England

Y&H

Working Age with NVQ2+

63.3 63.3

60.4

60.7

57

58

59

60

61

62

63

64

65

66

67

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07

England

Y&H

Economic Challenges Structural EmploymentWorking Age in Employment with NVQ4+

31.6

27.2 26.7

24.0

15.0

17.0

19.0

21.0

23.0

25.0

27.0

29.0

31.0

33.0

Jun 2000-May 2001

Jun 2001-May 2002

Jun 2002-May 2003

Jun 2003-May 2004

Jan 2005 -Dec 2005

Jan 2006 -Dec 2006

Working age people in employmentwith NVQ 4+ England

Working age people in employmentwith NVQ 4+ Y&H

Gap 3.2%

Gap 4.9%

Working Age in Employment with NVQ3+

49.7

46.447.3

44.4

41.0

42.0

43.0

44.0

45.0

46.0

47.0

48.0

49.0

50.0

51.0

Jun 2000-May2001

Jun 2001-May2002

Jun 2002-May2003

Jun 2003-May2004

Jun 2004-May2005

Working age people in employment withNVQ 3+ England

Working age people in employment withNVQ 3+ Y&H

Gap 2%

Gap 2.4%

The Headlines of the Macro Economic Challenges• Key (and indeed) vital sectors to our growth going forward are simply

not growing quickly enough.• Our growth dipped from it’s high point in 2004 and is likely to settle

(for the foreseeable) at a trend rate below that nationally (and compared to the South).

• Whilst our economy has grown – creating net new employment – there is data to suggest that the rate of level 2 employment is greater than that for level 4 (if this continues this will inevitably constrain or effectively define the nature of our GVA growth relative to other regions).

It would be a mistake to treat the current demands of employers and individuals for skills as coterminous with the needs of the economy…the demand from individuals and

employers is conditioned by the current structure of incentives they face and the information they have about education and training opportunities and their economic benefits. It cannot be assumed that these necessarily

reflect the wider needs of the economy for economic growth and stability.

(National Skills Task Force, 1998: 33)

Headlines cont…….

• Connecting the existing workforce to economic growth going forward:– The phenomena of economic migrants and sectoral

drivers.– The sectors likely to grow (and their skill needs) – such

a retailing – will increasingly draw in migrant labour.

Returns to Learning

• In striving to reach the Leitch target the productivity rewards will be significant, empirical evidence regarding the returns to higher level skills indicate significant earning potential gains from additional skills acquisition, 2 A levels can equate to earnings of 17% higher than someone with 5 good GCSEs. A further 27% can be accrued for someone with a degree.

The RES Skills and Employment Targets are Shaping the development of our Evidence Base

• The challenge and driver of the RES skills target – a commitment to raising level 2 and level 4 (with a higher rate of level 4 within this) is focusing our capacity to allow us to:– Improve our supply side skills modelling and impact techniques

(so that we can consider the impact of supply side interventions – such as sectoral – and test their contribution to RES).

– Improve how we “Join Up” our existing intelligence – allowing us to “mine” more effectively the data we have.

– Target marketing – using our primary (and substantial geo-demographic) data on training propensity on the supply side to target market (working with partners).

Regional Performance on the RES Skills Target

Key Sectors

• The development of a sector based approach presents an opportunity to take a more coherent approach to developing supply and demand evidence.

• We are currently developing a clear framework for the prioritisation of our key sectors.

• Sectoral approach will be based on idea of technologies which will enable economic growth, regional niche areas and factors of production relevant to a knowledge economy. Also sectors which are good for employability, (construction, health, retail).

Funded Training

• Our national survey work has consistently pointed to a gap between the importance of skills (to employers in Yorkshire) and the reality of our performance in paying for workplace based training (as the graph shows).

• We are currently undertaking “In Depth” follow-up research (working with those companies who have told us they do not need to fund training) to understand the reasons for Yorkshire’s poor comparative performance (ongoing).

The Regional Current Situation on Funded (by employer) Training

Developing some of the this work into context of the Leitch Targets

Demand Side Economic Forecasting of Skill Levels

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

000'

s

Gap to Leitch 40%

NVQ4+ Employment

|

Achieving the Leitch Targets: Huge challenge in achieving Leitch targets for Level 4 Gap to achieving level 4 target in region = 750,000 -800 000

additional people need to achieve level 4 by 2020. South Yorkshire figures by LEA can be made available shortly

The New IRS and it’s focus on Economic Growth

• Whilst the IRS provides a framework to integrate the economic, the sustainable and the spatial – it’s sole purpose is to drive a single regional GVA target.

• Skills plays a key role in evidencing progress towards this target Potentially this raises some interesting policy issues around how skills interventions are matched to the needs of Yorkshire and the Humber economy at the “Macro” compared to the “Micro” level.