The Importance of the Skills Agenda in Rebalancing the Economy

The current global recession and the likelihood of a second major downturn have highlighted in many developed and emerging economies the need to fundamentally re-evaluate the way they manage their economies. Such comprehensive analyses will require a total rethink of how a country’s economy is balanced not only between the private and public sectors but also between wealth generating industries of manufacturing production and service industries particularly those devoted to finance. The issues associated with this essential and urgent re-evaluation will impact on many interconnected elements. The solutions must be radical and based on long term strategies and freed as far as possible from political interference and short-termism. Empty political rhetoric and dogma will impede the necessary reforms and no doubt maintain the current vested interests.

Pivotal to all the reviews and subsequent economic reforms will be the importance of vocational education, training and careers information, advice and guidance (CIAG) at all stages of the education system i.e. the creation of a comprehensive skills agenda. Without major reforms of education and training any attempt to rebalance the economy will fail. Some of the key issues that must be addressed to create an effective skills agenda include:

  • Develop more valid, relevant and up to date Labour Market Intelligence systems (LMI)
  • Create effective, impartial and ongoing CIAG in schools, colleges, private providers and universities
  • The recognition once and for all of the importance of technical, commercial and vocational education and training and to create parity of esteem with the so-called academic subjects
  • To recognise and develop long term strategies to deal with the destructive impact of structural youth unemployment
  • Establish comprehensive programmes of Continuous Professional Development (CPD) for people in work with a major focus on transferable and higher skills
  • Develop valid and relevant programmes of technical, commercial and vocational education and training with appropriate providers containing meaningful work based elements including sandwich programmes
  • Develop stronger links with employers at all stages of the educational and training process
  • Develop flexible apprenticeship frameworks that truly match the requirements of the labour market and more effectively address the supply and demand equation
  • Insist on the promotion of a more positive and informed image of science and technology in the mass media.

In summary a new paradigm for the skills agenda is required not just for education and training but for the whole economy and the industries of which it is composed. Clearly different countries will require different solutions. As an example Britain has to urgently rebalance and rebuild its economy and devise effective education and training provision to tackle the unacceptable level of youth unemployment.

Its economy is totally skewed to the financial sector and consumerism and will require a fundamental rethink on a wide range of issues including its economy and education and training systems. Britain’s economy is currently based on very weak and unreliable foundations i.e. financial services and consumerism. The financial system is about short term speculation (basically a culture of gambling) to maximise profits and generate massive bonuses for the few instead of long term investment in research and development and encouraging productive and manufacturing activities. The consumerist free led market is failing Britain and it is essential that the country moves quickly from the current obsessed consumerist society to one that is a dynamic manufacturing and productive nation. This is the time to leave behind the lazy politics of highly dubious reliance on a ‘credit cow’ attitude to financial services and base thinking on a clearer, more long-term vision of new industries to be prioritised for the future. Part of this is to turn the model of the fast buck pantomime of ‘Dragons Den’ into national support and industrial development prioritising focus on new productive industries related to the country’s infrastructure and real problems e.g. new housing and public transport technologies, energy production, transformation of waste recycling, water efficiency techniques, use of ICT to prolong the independence of an ageing population.

Young people deserve a more inspiring vision from their elders of the economy for their futures and they should be part of its reshaping. For too many generations they have borne the punishing effects on their prospects from their elders’ abysmal judgements on the economy and jobs. Unfortunately the hostile and confrontational approach presented by such programmes as ‘The Apprentice’ is a massively misleading approach to promote, understand, motivate and encourage people to participate in such important training activities. In addition the mass media have done little to provide role models that promote manufacturing and practical professions in a positive light.

In these times yet again, youth unemployment presents a particular challenge to this country. During the mid 1900s many school leavers found low skilled and poorly paid jobs and moved relatively easily from one job to another and in spite of this exploitative and unacceptable culture youth unemployment was relatively low. Later in the 1970/80s youth unemployment increased significantly and numerous short term programmes operated by the Manpower Services Commission (MSC) were established but with very little long term impact. Since then the level of unemployment has in many ways become an accepted fact with certain regions of Britain having high levels of unemployment or underemployment. Successive generations of people have never worked or had opportunities to participate in further study. Another sad fact is that the low skills mentality continued and has been unsatisfactorily addressed by successive governments. Skills shortages and gaps have persisted for a number of decades but with little effort to resolve the low skills equilibrium coupled with persistent low levels of productivity and efficiency. It will take at least a generation to bring about sustained improvements in education and training. We can have numerous national committees and commissions looking at skills and educational reforms but if the fundamental problems are not identified and actioned however painful that may be to politicians nothing will happen – no pain no gain!

Perhaps the current situation, if managed carefully, coupled with an all party political consensus could bring about a long term solution. Political parties need to be weaned away from their commitment to support the financial world and to radically change the basic hostility and indifference towards manufacturing. This coupled with sustained investment into technical, commercial and vocational education and training, will present major challenges to the political parties. I fear in spite of what the politicians say about a radical reform of the financial sectors little will change. Sadly the current and future governments will continue to be beholdened and besotted with the banking and financial services which have shown themselves to be basically banksters, gamesters, fraudsters, manipulators, looters and financial terrorists in pin stripes.

Harsh words and judgements, perhaps, but since the 1990s the real global economy has been subverted by a fictitious and ghost-like economy. Widespread derivative trading, mis-selling, libor rigging and massive manipulation of global markets by this fictitious and largely unaccountable culture has exposed the vulnerability of capitalism as it is operated at present. A long as the country (and the US) are wedded to the political – military/multi-national corporations  complex we are doomed!

Shortened version first published on the City and Guilds Centre for Skills Development Website Autumn 2011

Click on knowledge_portal then click on e-zine

In 1994 4.7 million people were employed in Britain in manufacturing whilst in 2009 the figure was 2.6 million.

Extra footnote
A number of informed commentators and financial experts state that the maximum level of dependence for any country on financial services including banking should not exceed 4%. Above this level the economy becomes unstable. Britain has currently a 10% dependency level e.g. in terms of number employed and its contribution to GDP and this largely explains its current massive financial difficulties. In order to achieve a more acceptable value the government will need to take some drastic and unpopular decisions which it is highly unlikely to do. The long standing love affair between successive governments and the City of London has created a cultural of cronyism and legalised bribery that is too embedded into the British establishment to be changed. So far, (autumn 2012), 160,000 people in the financial services and banking have been made redundant but this still represents a too small a contribution to what is required to rebalance the economy.

Some definitions:

General skills: the transferable skills which can be used across occupational groups. These include key skills.

Vocational skills: the specific ‘technical’ skills needed to work within an occupation or occupational group.

Job specific skills: include local functional skills (e.g. operating specific pieces of equipment) or employer wide skills (e.g. in-house quality standards or specific working methods).

Employability relates to the breadth and depth of an individual’s generic and vocational skills, but not their job specific skills.

Skills shortages exist where there is a real lack of adequately skilled individuals available in the accessible labour market.

Skills gaps exist where employers feel that their existing workforce have lower skill levels than necessary to meet their business needs and objectives; or where new entrants to the labour market are apparently trained and qualified for occupations but still lack a variety of employment/business skills.

Recruitment difficulties exist in addition to skills shortages and gaps and include: poor recruitment practices, negative image/perception of the industry, low remuneration and/or poor terms and conditions of employment and weak IAG systems e.g. in schools/colleges and universities.

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