Nobody benefits from skills mismatches
If people are to be at the heart of our Industrial Strategy and in tackling the skills challenges our country faces, they need to be an equal partner in creating and shaping our future economy.
The increased pace of change in skills demands and the creation of new tasks and jobs are significant challenges for our current and future workforce. The role of employers, government, policy makers and trade unions are vital in providing the solutions to those skills challenges. Skills mismatches are impacting millions of working people across the UK.
Last year, the Industrial Strategy Council published our ‘UK Skills Mismatch 2030’ report which found that workers are even more likely to be over-skilled or under-skilled by 2030 than today. This is of significant concern considering 80% of that workforce are already in work today, which means this cannot be addressed through policies which affect the flow of people into the workforce.
A skills mismatch relates to the difference between the supply of an individual’s job skills and the demand required by the job market. It is a key barrier for workers. Skills mismatch is inherently difficult to define. On one measure, under-skilling currently reflects 12% of the workforce (4 million workers) and over-skilling 37% of the workforce (12 million workers). Furthermore, our own estimates show that, by 2030 an additional 7 million workers (20% of the current labour market) could be noticeably under-skilled for their job.
We know that those workers whose skills are mismatched with employers’ needs have lower average earnings. And are ultimately less satisfied with their jobs due to operating below their productive capacity. They are also more likely to become unemployed and have lower standards of living.
With increasing demand, skills development and supply will clearly be a struggle for workers to keep up with over the next decade. A technology revolution and the associated transition of our economy demands a workforce with basic and advanced digital skills, critical thinking and communication skills, leadership and management skills, and some entirely new skills. However, without recognising the importance of the role of the workforce in increasing productivity and shaping the solutions to our skills challenges, our accomplishments will only go so far.
People must be given the tools to be agents throughout our changing economy to fully unlock their potential. With workers’ participation in training remaining flat at the best of times, it is crucial we do not talk about workers as passive consumers of education and training if we are to support them with the skills challenges over the next few years.
Not only do skills mismatches limit opportunities for people, they also limit productivity and potential for businesses and organisations. Productivity growth in the UK is at its lowest level since the start of the industrial revolution. The Industrial Strategy Council has further found that regional differences in UK productivity are at their highest level for over a century and those differences will be difficult to reduce.
Nobody benefits from skills mismatches – workers, employers, government and business alike. The solutions to reduce skills mismatches in the UK will require numerous approaches, with a long-term vision to provide support to the workforce at a local and national level.
This will require a recognition of the benefits lifelong learning can bring, and an aim to develop a culture that embraces learning for individuals. This will need to be constant and ongoing and will require a drastic increase in the teaching and provision of training. Businesses will have to recommit to providing training opportunities as part of their social responsibility to upskill individuals and they must lead the way in this field to support solutions to our skill problems over the next decade.
Through unions, government, policy makers and businesses working together we can support more workers to learn and support employers to deliver training and reskilling. It is important this is seen in the interests of boosting the UK’s productivity and competitiveness, but also the satisfaction, progression and pay for individual workers.