Industrial Strategy needs to be on the Job!

Let’s start with the obvious: business and government agree that having a well-functioning labour market is absolutely crucial for sustainable economic growth. It is the foundation of everything. If workers are not just employed but also earning fair wages and continuously developing skills, we unlock the true potential of our workforce. This is what drives productivity, fuels consumer demand, and sets the stage for long-term prosperity.

The Modern Industrial Strategy

But here is the real challenge: achieving this vision in the face of sluggish economic growth, tight budgets, and ongoing labour and skills shortages, all while recovering from a turbulent decade and a half. It is no easy feat – and a big plan is required.

That is where the consultations about the new modern industrial strategy come in. It is exactly what we need to close the gap and build the inclusive, high-productivity labour market that will power the UK’s economy in the second half of the decade.

The modern industrial strategy must work.

The stakes are high because many businesses cannot have another year in trading like last year.

It is energising that professional and business services are one of the eight growth-driving sectors in the plan. Equally, it is understandable how frustrating it would be to not be one of the eight. So, the overarching plan must be bigger than a simplistic attempt to “pick winners”: it should be clear that people and skills are central to its success.

Workforce Planning and Implementation

The government has committed to 80% employment – a laudable goal that can only be achieved by working with organisations on the thing that occupies our thoughts most of the time: how do we get the right people in the right jobs at the right time? We should probably add “and in the right place” to boot.

The commitment that the Industrial Strategy Advisory Council will work in partnership with Skills England, the Migration Advisory Committee, the Department for Work and Pensions, mayors, and wider government is vital to achieve a coherent approach. But it is going to take more engagement, really broadly, than having reps from Skills England informing the Industrial Strategy Advisory Committee.

What we really need is a unified Workforce Plan, which convenes government departments, civil society and employers to provide stability. Good strategy comes from good data and analysis, and we could do worse than get better informed by commissioning a long-overdue Workplace Employment Relations Study (WERS).

There is a clear need for a more nimble and agile qualification accreditation system, along with shorter, more flexible courses. Urgency is required in implementing the Lifelong Learning Entitlement and the Growth and Skills Levy, to ensure that career entrants and career changers are better supported, alongside those looking to upskill or shift gears in their current roles. But these are tactics that come from a clear strategy aiming to support a labour market that drives long-term economic growth, equipping workers with the skills and resilience to thrive in an ever-changing economy.

An effective industrial strategy must not only support but also challenge UK PLC on people and productivity policies. Without bringing employers on board, new initiatives risk failing to achieve their full potential.

The AI Challenge and Future Skills

The industrial strategy needs to be on the money.

The government has said artificial intelligence will be unleashed across the UK to deliver a decade of national renewal. Yet, it is common over the past 12 months for the REC/KPMG Report on Jobs to report many IT/computing roles in short supply – the January edition had 20 such roles, in a period where there is a wider pool of candidates than we have seen for 18 months.

AI is a huge opportunity and will reshape the broader economy, from manufacturing to professional services. But it will require us to focus on two key areas: upskilling our current workforce and ensuring the right talent pipeline for the future. It is a familiar refrain but something we have yet to really crack: we must have strong, enduring partnerships between education, businesses, and government to ensure people are equipped with the skills they need to thrive in an AI-powered economy. So many of us are standing ready to play our part in these conversations and make meaningful change.

By Kate Shoesmith, Recruitment and Employment Confederation Deputy Chief Executive.