1 SKILLS UTILISATION Francis Green Prepared for the conference: Regional Skills Partnerships in a Global Economy, June, 2005.

2 Outline Evidence of rising skills demand in the “knowledge economy” –Direct and indirect Evidence about the match between skills supply and demand A framework for considering policy about skills utilisation

3 Degrees Increasingly Held

4 Degrees Increasingly Required

5 ‘Short’ Learning Times Have Shrunk

essential3140 very important15 fairly important1214 not very important1210 not at all important3021 total100 Changes in Computing Skills,

7 Changes in other generic skills

8 Skills are Valued in the Labour Market 1 Batchelor’s Degree Wage Premium (over 2 A-Levels) Men: ~ 22% Women: ~ 35% No trend

9 Examples: how using a skill is associated with higher pay Example 1 : Someone with A-level of equivalent as their highest qualification Those using computers only in a very simple way or not using them at work £8.24 hourly pay Those using computers with at least a moderate level of sophistication £10.08 i.e. about 22 % more. Example 2 : Degree holder Jobs where making speeches/presentations very important or essential£17.12 Other degree-holders’ jobs: £ Skills are Valued in the Labour Market 2

10 Task Discretion Index: 1992, 1997 & 2001

11 Skills Mismatches: Shortages and Under- Utilisation Shortages: around 4% have “skills-shortage vacancies”; around 1 in 5 establishments have “skills gaps”, implying roughly 1.5 million employees judged by their managers to have insufficient skills recent trend stable/edging downwards slightly But some occupations suffer more than others: skilled trades, caring occupations, sales and customer service occupations, elementary occupations, business professionals

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14 Individual Mismatch

15 Sustainability of College Premium? College wage premium among Year-Olds % % Men2115 Women2521 Source: Walker and Zhu (2005).

16 Skills polarisation Fastest growing occupations: At the top: consistent with the “knowledge economy” At the bottom: –security and protective service workers in the business services industries –window dressers, floral arrangers and telephone sales persons in the hotel and catering industry –matrons, house parents, welfare, community and youth workers in the public administration and sanitation industries

17 In short: skills demand has been growing on average there are ongoing skills shortages reported by employers and some generic skills have acquired a special shortage value in the labour market BUT: there is also a growth of low-skilled jobs at all levels, there is a decline in discretion, usually associated with skill there are increasing numbers of people apparently under-using their qualifications may be becoming more acute with the rising supply of qualified workers

18 What can management do? take long-term viewpoint consider moves into high-value added sectors: these require greater analytical skills, as well as a commitment to investment in new technologies integrate skills planning with business strategy

19 What can government do to raise skills utilisation? Influence demand Influence supply Influence the supply-demand match

20 Supply leading demand Can an abundant supply of skilled labour stimulate increased utilisation of skilled labour? Pro: e.g. early adoption of computerisation in the US Con: long-run strategy is uncertain, and has short-run costs (wages below expectations; dissatisfaction; resource waste); potentially greater at regional level

21 Affecting demand as well as supply The state and the economy Advocacy Business advice services Industry standards/kite marks etc. State employment

22 Matching services encouraging linkages between enterprises and HE/FE strategic planning of life-long learning services to meet local demands information, advice and guidance services for individuals work-life balance and other policies that promote flexibility