Filling the intermediate level skills gap in the UK

Professor Terence Hogarth considers how the UK can drive its productivity and growth by boosting the supply of intermediate skills, which would enable increasing numbers of technical and professional vacancies to be filled.

Intermediate-level skills have long been regarded as a driver of productivity and national competitive advantage, providing the skills that are seen to be a key constituent part of a high skill, high value economy.

However, successive government policies on skills development over recent years have struggled to develop strategies to tackle the shortage of employees with the intermediate level skills that are needed to fill a potentially expanding number of technical and professional jobs. Demand is currently outstripping supply and an insufficient number of applicants with the skills, experience, or qualifications that employers require has resulted in a raft of hard-to-fill vacancies.

Countries that have displayed relatively high levels of productivity, such as Germany and the Netherlands, have tended to rely more heavily on the productive contribution of people working in technician roles compared with the UK. People filling these roles typically possess the knowledge and skills to problem solve and drive change in the workplace.

The answer to the UK’s productivity problems?

If the answer to the UK’s productivity problems lies in creating an increasingly large body of technicians and associate professionals, then a means needs to be found of increasing the supply of people with the skills required to fill these roles. Employers need to be incentivised to invest in intermediate level skills, and workers need to be empowered to invest in their own skills development.

Over the past 30 or so years policy makers in the UK have been innovative in trialling a number of initiatives to stimulate the demand for skills and find the means for the supply side to suitably respond. Some of these provide a basis for thinking about how to both increase the demand for skills and simultaneously match supply to it. Looking to the future and the actions that might stimulate both the demand for, and supply of, intermediate level skills, there is scope for assessing how previous attempts to stimulate demand and improve supply might be built upon.

New evidence paper for ReWAGE

My new evidence paper for ReWAGE, How to address skills shortages at the intermediate skills level, which has been commissioned and funded by the Gatsby Foundation, examines the evidence on intermediate level skills shortages and makes recommendations to address it.

Firstly, we need to consider how to incentivise employers to invest in the skills of intermediate level skills. Increasing the cost to the employer of providing intermediate level skills is unlikely to stimulate demand so there needs to be some way of minimising the risk employers face when investing in training.

It would be worth considering setting the employer costs of training apprentices to completion to a realistic level to increase volumes and reduce the net cost of apprenticeship training to employers to make them less risk averse when it comes to investing in this form of training.

Providing guidance for employers about the skills their workforces need to acquire to meet future changes in the demand for skills, would also help, as would encouraging employers to engage in training of a type which confers benefits on businesses and individual workers – tax credits may provide one means of achieving this aim.

But it is not all about employers. Individuals need to be empowered to invest in their skills (both those making the transition from education to work and adult workers) so that they can make decisions about the skills they need. Individual Learning Accounts have the potential to fill this role but will need to be supported by careers guidance.

Individuals need to be attracted to vocational programmes

Individuals also need to be attracted to vocational programmes which lead to the acquisition of intermediate level skills. T-levels and high-quality apprenticeships have an important role to play here and there is a need to ensure that sufficient places will be available to those who wish to pursue training at an intermediate level.

Intermediate level skills demand cannot simply be left to the market to determine. This will result in supply meeting short-term goals at the national or local labour market levels and, in so doing, run the risk of doing little to ensure supply is better matched to demand over the longer-term and may well contribute to skills obsolescence.

The irony, perhaps, is that many of the building blocks are already in place or have been tested in the past (such as Individual Learning Accounts), it is just that their application to date has not necessarily resulted in the desired policy goals being met.

The current danger is that a prolonged period of the economy being in the doldrums means that key investments in skills will not be made which will slow the pace of any recovery because skill shortages will constrain the productive capacity of businesses.

By Terence Hogarth – ReWAGE expert and Professor of Practice in the Institute for Employment Research at the University of Warwick

To find out more, you can read my full evidence paper or the related policy brief on the ReWAGE website.

ReWAGE is an independent advisory group that analyses the latest work and employment research to advise the government on addressing the current challenges facing the UK’s productivity.