Closing the skills gap in London and beyond

London is suffering from a skills gap that is getting ever wider, according to reports citing the evidence presented to an All Party Parliamentary Small Business Group, which is seeking to “further the aims of small businesses and provide feedback on small business issues to Parliament”.

In evidence given by Councillor Peter John, London Councils’ executive member for children, skills and employment, the Group were told that the current skills system is broken and needs a radical overhaul. He honed in on three particular areas that he said were fuelling the gap and which meant that Londoners were losing out on jobs whilst firms were finding it hard to find skilled workers: a lack of local influence, a flawed system of incentives for skills providers and poor Labour Market Information (LMI):

“The skills system, as it stands, is not fit for purpose,” he said. “There is a disconnect between the skills London is producing and the skills businesses, especially small businesses, need. Too much funding is being wasted on courses that employers do not need or want such as hair and beauty, car mechanics or health and safety… We need to address this urgently if we are to avoid producing a generation of Londoners unprepared for the labour market.”

So the skills gap is clearly a massive problem – not just in London but throughout the country – but the question is how can it be tackled?

As Mr John said, poor LMI is a big factor in all this. The problem, at its most basic, can be summed up as lack of knowledge: lack of knowledge of what is going on in the local labour market; lack of knowledge of the skills needs of local industries; and lack of knowledge of what steps can be taken to harmonise the training being given to learners with the needs of employers.

There are two major parts to this lack of knowledge, both of which must be addressed in order to begin closing the skills gap. On one side, the problem of lack of knowledge is very much a college problem. The simple truth is that many colleges simply do not have the detailed knowledge of their local labour market to enable them to make informed decisions about what that local economy needs from them. As Mr John rightly points out, this can lead to people being trained for occupations for which there is little or no demand.

The problem is not just on the college side of things, however. We not only need to see good local information given to colleges to allow them to make informed decisions regarding their curriculum provision, we also need to see good information given to learners to direct them to training which will lead to a sustainable career. Unfortunately, this really isn’t happening very much at the moment, and all too often many young people end up doing courses that don’t really lead them anywhere.

It all sounds rather doom-and-gloom, but happily change is beginning to happen. Whereas colleges and learners have been somewhat shooting in the dark until now, and this lack of information has caused a mismatch between the workforce emerging from colleges and the needs of employers, the standard of LMI out there has improved massively in recent years. Coupled with modern technology which can process and present the data in a format that is readily accessible to colleges and learners, good LMI has never been so easy to come by.

But what can good LMI do? For colleges, it can give access to key local information on jobs and skills trends across industries and occupations, so enabling those colleges to make informed, clear and objective decisions as to what kind of skills local employers really need. For learners, it can inform them of what occupations actually exist out there, how much they pay, what skills they need to acquire to get into them, what other occupations exist with similar transferrable skills, and what training they need to get into these jobs.

You will no doubt be familiar with the expression “nature abhors a vacuum”? Well this is really a little bit like that. The skills gap has been steadily increasing in importance over recent years so that we are fast approaching a critical juncture, yet there has, until now, been no adequate solution to address this problem. However, at the same time as we are reaching this critical juncture, easier access to raw data, coupled with the technology to turn it into intelligence that is both meaningful and easy to use, means that this vacuum is now beginning to be filled to the benefit of both colleges and learners. The solution has arrived right on time!

Peter John rightly lamented the poor LMI out there and in one sense he is right. The skills system does suffer from poor LMI. Yet all that is beginning to change and we are starting to see a move to a situation in which good LMI is increasingly being used to rise to the challenge of closing the skills gap.

Andy Durman is VP for UK operations at Economic Modelling Specialists International, the labour market information firm