Focus on skills is needed to enable economic growth
As the UK government grapples with the best way to achieve growth, a shift in mindset focused on skills, particularly job skills, will be worth the investment. Indeed, practical skills are the backbone of growth, productivity and social value – all vital to a thriving economy.
Right now the UK has another economic time bomb to add to the government’s growth ambitions. This is huge wage inflation directly caused by specific skill shortages. For the infrastructure sector, the high-demand skills driving up costs are mostly level 2 or 3 skills such as excavator drivers, concrete colors and welders.
We also notice that the specialized skills sought, including high voltage electrical engineering, software engineering and project managers, are rare. Analysis by the Construction Industry Training Board (CITB) found that to meet the demand for infrastructure projects, housing construction and ongoing repair and maintenance, the workforce of the sector is expected to reach around 2.78 million by 2026 and current projections indicate that the shortage will be around 266,000.
There are three main reasons for the skills shortage. Historically, we have placed greater value on academic subjects and have not done enough to encourage technical and vocational skills such as engineering and trades. Second, Brexit has restricted the supply of essential workers entering the UK. Finally, it is clear that our new, greener and rapidly changing digital world requires whole new skills.
The good news is that things are slowly improving, even in the context of Brexit there are some really positive results. So what exactly are these improvements and what do governments, businesses and individuals need to do to accelerate the pace of change and create growth?
In recent years, companies have been encouraged to create alternative paths to employment for young people who decide their choice of studies after 16 years. T-levels were developed in collaboration with companies as a technical alternative to A-levels. These technically oriented qualifications ensure that the content meets the needs of industry and prepares young people for work, further training or study. T levels are offered to 16-19 year olds after completing their GCSEs.
Employers also provide pathways to work with apprenticeships, on-the-job training and the government’s Kickstart program. All these concrete initiatives are bearing fruit and are challenging old mentalities. In the first three quarters of the 2021/22 academic year, 288,800 post-16 year olds started learning, up 14.1% from the previous year. And, in more positive news, the number of engineering apprentices over the same period reached 23,300, up 42.2% from 5 years ago.
An apprenticeship leading to a degree is another route to more skilled employment. These apprenticeships allow students to earn a full undergraduate or master’s degree while they work, typically spending 20% of their time in college and the rest working and learning on the job. Degree apprenticeships last from three to six years in England and Wales, depending on the level of the course. According to government figures, in 2017 there were just over 1,000 degree apprenticeships, in 2021 that number rose to 6,000 across England and a quarter were in engineering and manufacturing with 27% women and almost 18% were of non-white background.
In Scotland, degree-granting apprenticeships are known as ‘Graduate Apprenticeships’. Since their launch in 2017, more than 3,5000 people have completed graduate apprenticeships, involving 500 employers. Importantly, by 2020, the number of women studying STEM-related graduate apprenticeships had increased by 3% to 21.2%.
There is more good news about social value, as employers have to go to their own communities to find workers. Most often, they found them in disadvantaged communities where many young people have been overlooked by Europeans wanting to work. The most socially valuable thing a company can do is bring work, work experience, and new skills to disadvantaged and overlooked local communities on its doorstep.
Employers must go to their own communities to find workers
Testimonials from major companies involved in delivering the HS2 mega-project – Balfour Beatty, Costain, Skanska and Vinci – suggest that their recruitment processes have become more open to a much wider range of candidates.
NSAR’s analysis of the social value results of rail and infrastructure projects found that HS2’s “target of 10% new hires from disadvantaged backgrounds” initially seemed exaggerated, but the good news is that it has been achieved. Additionally, we believe 20% is achievable for projects such as improving the Transpennine Railway.
The third reason for the skills shortage is actually the lack of good skills. Achieving net zero by 2050 requires a different skill set involving digital solutions and tools. Employers who will find it easier to attract young talent to green jobs understand that young people want to work in interesting companies, where environmental and societal values are taken seriously.
The green agenda will create new demand, we have already seen this in the offshore wind sector where enlightened policies have created a highly skilled and highly productive sector incredibly quickly. For offshore wind, the government has introduced legally binding ‘contracts for difference’ as a mechanism to support low-carbon power generation projects and attract new sources of investment while minimizing costs for the taxpayer.
A study by Oxera for the Rail Delivery Group last year found that the development of a net zero railway could create up to 6,000 long-term jobs in the sector nationwide between 2024 and 2050 while supporting the growth of emerging high value-added manufacturing sectors. The electrification of railways in the UK and around the world will be a key part of the net zero future, this means that electrification skills will be in demand. If the UK is to be a leader and to compete internationally, it will be essential for the future to seek out and invest in these growth sectors and skills.
Engineers are well placed to support the transition to net zero, they can use their knowledge of systems thinking to tackle the complex challenges of decarbonization, as well as to strengthen the resilience of infrastructure and buildings in the face of climate change. A green economy will undoubtedly increase the demand for engineers, and also develop and improve their skills.
The government is rightly focusing its attention on the economy and specifically developing its plan for growth, but it must do so by focusing on developing those sectors and the in-demand skills that will create respectable jobs which, in turn, will improve living standards and level the UK. .
* Neil Robertson is Managing Director of NSAR
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