The Importance of Higher Skills
4 March 2008 Bill Thomas
In order to compete in the global marketplace, the UK needs to boost productivity. Bill Thomas of EDS explains how skills training is the key.
Improved productivity is essential if the UK is to maintain its position in the world economy. The pressures of globalisation are here to stay and the UK must act urgently to ensure that it can compete effectively. At the moment, the UK’s productivity falls well below that of many other major economies, with a ranking half-way down the Organisation for Economic Co-operation and Development's (OECD’s) productivity league table.
Not-for-profit, government-licensed organisation e-skills UK recently published research indicating that fully exploited technology is the single most important step the UK can take to improve productivity across its economy.
This is not just about investing more - it’s also about making the most of investments. Currently, the UK not only invests less in IT than the US, a major competitor, but has proportionately lower productivity gains to show for that investment.
The potential rewards of getting it right are considerable: the research suggests that maximising technology could generate an additional £35bn for the UK over the next five to seven years. But this will be achieved only if the UK takes urgent action to improve its skills base and increase the adoption of technology – particularly among smaller firms.
Increasing skills is the key to the UK’s future. The rest of the world is upskilling at a significant rate. India and China between them produce five million graduates each year, a significant proportion of which have studied science and engineering-related subjects.
Research for the recent Leitch Review into the UK’s skills needs to 2020 suggests that, in order to remain globally competitive, the labour market will need more than 4.5 million additional people with graduate-level skills: an extra 450,000 graduates every year.
But simply increasing the overall number of graduates is not enough, the UK must ensure they have the skills and competence employers need. The UK needs increasing numbers of highly numerate, literate and capable people who can deliver real added value to business – who can understand and respond to changing customer needs, develop new products and services, drive innovation and improve efficiency.
Improving the take-up of higher education is vital, but to compete successfully in the global economy the UK must also focus on the development of the existing workforce. By 2020, the number of 18-year-olds will have declined by over 100,000 and around 70% of the UK’s workforce will have left education.
Research by e-skills UK shows that more than 140,000 new entrants a year are needed to fill increasingly high level IT and telecoms professional job roles. Only about 19% of these new entrants will come direct from education, while more than half will be experienced workers transferring in from non-IT and telecoms occupations.
This has far reaching implications for mid-career professional development and workforce re-skilling and upskilling.
Furthermore, 77% of the UK’s workforce, 21 million people, use IT in their every day jobs. Over the coming years, these people will require skills at increasingly advanced levels as technology becomes ever more embedded across all business processes.
The key to creating the highly skilled economy the UK needs is effective partnership between employers, government, education and training providers. Employers need to play a key role, from helping to design and deliver new types of educational and professional development programmes to reforming the qualifications landscape and achieving accreditation for their own training.
But responsibility also rests with the individual to upgrade their skills and keep them current.
Many traditional entry-level IT roles are disappearing from the UK due to offshoring and technological advances. At the same time, increasing numbers of IT professional roles in the UK are becoming focused on highly skilled, customer-focused areas such as project management, business analysis and solutions design.
UK organisations need skilled, adaptable, productive and committed employees. Achieving this requires a shared sense of purpose between individuals, employers, education and government. We have before us a chance to make a real difference to the UK’s long term productivity, social prosperity and quality of life. We must take it.