Britain's Got Talent: Unlocking the demand for skills

a paper by John Springford and Ian Mulheirn for the Social Market Foundation

Introductory paragraphs to the Executive Summary

Britain’s workforce desperately needs new skills. The country faces a sustained period of high unemployment, with workers’ skills decaying at a rapid rate. Even in the boom years, many people struggled to find a job, and many were employed in poorly paid, low-skilled occupations. But government skills spending does not translate directly into a more highly skilled workforce. The money must be invested well. This means investing in training that leads to jobs and pay rises, by giving people skills that are in demand. At the core of its long-term growth strategy, the government needs a plan to boost the nation’s stock of human capital in a cost-effective way, especially as it has less money to invest than before.

Unemployment is high. In the first quarter of 2012, 8.5% of the working-age population were unemployed.¹ The continuing debt crisis in the euro zone may damage the UK economy further in 2012 and 2013, with several indicators pointing to renewed recession in the UK’s largest trading partner. This may push up unemployment still further. As the economy stagnates, the proportion of people who are long-term unemployed increases. The proportion of unemployed people who haven’t found work for a year or more rose from 25% to 32% between 2009 and 2011. The proportion out of work for two years or more rose from 10% to 16%.²

The government faces further difficult macro-economic policy decisions to get Britain growing and thus to reduce the unemployment rate. But a complementary policy for growth must be efficient investment in adult skills to make the labour force more productive. This would help to create a supply of labour that more closely matched the demands of employers. It would help the long-term unemployed, many of whom have struggled to find sustained work since the recessions of the 1980s and 1990s, by guarding the skills they have from atrophy and giving them new ones. And it would make labour markets more efficient in the long term, helping people cope with an increasingly dynamic economy with a fast pace of sectoral boom and decline.
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¹ Office for national statistics, Unemployment data, April 2012. http://www.ons.gov.uk/ons/taxonomy/index.html?nscl=Unemployment+rates
² ibid

Full text (PDF 102pp)

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