We don't just need any skills, we need the right skills

This week, Ed Miliband stated that better training is key to increase productivity. If elected, he pledges to create 80,000 additional new apprenticeship places. The Conservatives promised apprenticeship places to three million people. The pledges are not just about quantity, but also quality. Apprenticeships have to last for a minimum of two years, ensuring that money currently used for in-house training is diverted to “proper apprenticeships”. In a country where the discussion is often centred on higher education, a national debate about alternatives to meet the skills shortage should be welcome. 

But in reality we are in a single European labour market and thus need to assess the bigger picture. Whilst capital, services and goods can move freely, there are still barriers to the movement of labour. The Bologna Declaration in 1999 aimed to harmonise higher education in Europe by providing a “more comparable, compatible and coherent systems”. Degrees which varied from country to country are now consistent across Europe: a UK employer is able to identify the qualification of an applicant from another EU country at a glance. Apprentices, however, miss out. To get your apprenticeship qualification translated into the UK equivalent is a bureaucratic and costly process, and the UK equivalent does not necessarily reflect the time and effort one has invested to gain the qualification.  This hinders the free movement of labour on which single markets, such as the EU, depend on.

Skills shortages are a familiar issue, but more likely to be apparent when the economy picks up and employers compete for a qualified labour force. Last year’s City Growth Commission report ‘Human Capitals: Driving UK metro Growth through workforce investment’ noted that

“Everywhere we have travelled […] has thrown up the skills issue as a major challenge early in our discussions”.

To date, the debate has mainly focused on skills required in the field of construction and engineering. Recently, the BBC reported that “one-in three large construction firms in London are said to have decided not to bid for projects because of a lack of skilled workers”.  However, apprenticeships could be offered in various roles ranging from medical assistant to paralegals and merchandisers. The range can be just as varied as the range of university degrees on offer.

As stated in our City Growth Commission report, half of graduates in the UK works in a job unrelated to their field of study – this is the highest rate among the OECD states. 43 percent believe they have skills which they are not applying in their current role while 16 percent are believed to be over-skilled for their role. This is more than just a statistic. There are people behind these numbers whose job satisfaction might be affected by them not being able to apply their skills. It’s all well and good to have thousands of young people who have read politics or literature, but who will benefit from it if the labour market requires engineers? In short: We do not just need any skills, we need the right skills at the right time in the right place.

This is not to say that young people should not gain a qualification in a field they might be interested in, but people should be made aware of the opportunities the labour market has to offer and be empowered to make their career choices accordingly. This is where schools and parents come in. Whilst schools tend to advertise their performance by informing us about how many of their graduates join higher education, they also need to inform young people about alternative opportunities which might increase their chances of finding a job that matches their skills and interest and meets the demands of the labour market. Apprentices at the prestigious AMRC told us that their school discouraged apprenticeship routes. Most importantly, information about opportunities need to be accompanied with an offer of relevant subjects. As outlined in our latest OPSN report, especially the provision of science subjects at GCSE level varies significantly between schools and limits pupils’ opportunities to match their education with their interests and strengths.

As main beneficiaries of a qualified workforce, businesses also bear a significant responsibility. We should be critical that the government has to offer incentives to create apprenticeship places. Apprenticeship programmes require resources, but apprentices also provide their time and skills (at a cheaper price than employees!). Moreover, an apprentice does not just learn the theory and practice of his profession, but he or she learns how the organisation runs. An apprentice finishing their qualification on a Friday can start his employee role on a Monday morning – no further training is needed at this stage.

Of course, it may happen that former apprentices join a competitor after they have gained their qualification. However, if employers combine their efforts to provide skills training for young people, the industry as a whole will benefit, driving economic growth. There might be free-riders who attract fully qualified employees without offering apprenticeships themselves. But such an approach saws off the branch we are sitting on and should be addressed by the government. For example, employers of a certain size that do not contribute to the training of young people could be made to pay a compulsory fee which can be used to fund apprenticeship places elsewhere. We should open up data on employers that are not prepared to provide skills training, they lack the moral high ground to complain about the lack of a sufficiently skilled labour force.

Developing the national apprenticeship system, complementing our higher education system and embedded into a European framework, is a key component of addressing skills shortages and the skills mismatch in the UK and Europe. Add language skills to the training and you have a highly skilled mobile labour force that can meet not only the demands of the labour market, but also increase people’s chances to find a job – across the EU – that matches their qualification and interests.

It could be a win-win for people and business.