Insights into sector skills needs

Newsletter articles

1 Sep 2012

Employment Studies Issue 16 

Jim Hillage, Director of Research

With nominally five people chasing every job it is not surprising that skill shortages across the economy are at record lows. However, at sectoral level there are still major concerns that a lack of the right sort of skills in critical areas could hold back economic recovery and damage future UK competitiveness. As consumer demand evolves and technological change creates new markets and ways of working, the skills required to deliver effective performance also change. Employers will increasingly have to find new ways of ensuring that prospective and existing employees possess the required skills.

IES has been working with the Institute for Employment Research (IER) at the University of Warwick to produce a series of reports for the UK Commission for Employment and Skills (UKCES), examining the main performance challenges faced by employers in eight key sectors, and the skills solutions available to address them. The IES reports cover the digital and creative, energy, health and social care and tourism sectors and below we look at the key findings. In addition, IER has produced reports on advanced manufacturing, construction, retail and professional and business services.

Creating a digital economy

The digital and creative sector is one the key strands of the Government’s growth strategy. The UK has one of the most influential and successful creative sub-sectors in the world and the digital industry is one of the most productive and fastest growing parts of the economy. However, to continue to be successful the sector as a whole faces a number of the crucial challenges, including:

• Recruiting sufficient high-level skills to support predicted growth, particularly in the digital side of the sector.
• Ensuring that the education and training young people receive in their initial education is of sufficient quality to keep pace with technological and business developments, especially in the creative sector.
• Getting employers to invest more in workplace training to offer employees the opportunity to refresh their technical skills in a fast-changing environment.
• Finding ways for the large number of small employers and freelancers in the sector to work together to provide access to workplace training more efficiently.

Employers, skills agencies and education and learning providers are already engaged in tackling these challenges and the report highlighted a number of ways in which employers and others could do more. Employers could widen their recruitment pools, for example, to bring in more women, particularly into the digital side of the sector. They could also work more closely with education and training providers, provide better in-house training and development, and provide more work experience placements and internships. Smaller firms could be encouraged to collaborate through voluntary training levies and group training associations. Other solutions include: developing more high-level vocational routes into the sector (for example, through advanced/higher apprenticeships); developing more accredited courses to guarantee their quality; and increasing the range of information, advice and guidance available to young people.

Fuelling the energy sector

The UK energy sector is relatively small in employment terms but is one of the most productive parts of the economy. Its importance will only increase in the future as the economy strives to meet the challenge of the low carbon agenda and to achieve greater energy security. Technology will be central to meeting these challenges but will create substantial skills needs. Employers can help ensure a sufficient supply of skills by:

• Making the sector more attractive to science, technology, engineering and mathematics graduates by getting involved in initiatives to promote the sector, and encouraging existing employees to act as ambassadors and extol the virtues of working in the sector.
• Developing alternative pathways into the sector below full degree level, through further promoting apprenticeships and Foundation Degrees.
• Further increasing investment in workforce development, principally among smaller employers who can find it difficult to source and organise training effectively, for example through a voluntary training levy or Skills Passports. This could provide a recognised accreditation of the competency of employees to work in a highly-skilled sector.

Managing improved customer service in the tourism sector

Tourism is another key sector that is expected to grow significantly over the next ten years, with employment and productivity also expected to rise. It faces a series of specific skill challenges which the sector will increasingly need to address, including:

• Securing a sufficient supply of skills to the sector to meet expected high levels of expansion and replacement demand, by offering work tasters, work experience placements and expanding the number and quality of apprenticeships. The sector relies heavily on transient labour and employers will need to look to alternative labour pools to meet their recruitment needs, such as women returners and early retirees.
• Continually improving the skill base of existing staff to minimise skill gaps andmake up for skill shortages, including investing in management skills and customer service skills. Management skills are crucial for the sector to make the most of the market opportunities available and in particular to engage and motivate staff to ensure high levels of performance and minimise labour turnover.
• Improving employee engagement and motivation and minimising labour turnover, so that employers and employees can reap the benefits of training and improved customer service.

Doing more with less in health and social care

The health and social care sector is of great significance to the UK’s economic and social wellbeing. It is a major employer in its own right and also a major contributor to UK productivity through its role in keeping the wider workforce healthy and productive.

Demand for health and social care has risen steadily and has been stimulated in part by some key demographic changes, such as a growing and ageing population and changes in lifestyle choices that affect health. Technological innovation has also transformed practice and is continuing to shape skills demand in the sector. Public expenditure on health and social care has steadily increased over the last decade, both as a percentage of GDP and relative to other parts of the public sector in response to these pressures. Responding to such rising demands with increasingly constrained resources presents the sector with a number of key challenges.

The first challenge is to do more with less (or at best the same) resources. Potential solutions include:

• Changing working practices and reconfiguring roles to maximise efficiency.
• Encouraging innovation and using the opportunities offered by new technology to develop new ways of working.
• Raising employee engagement to maximise productivity and retention and minimise absence.

Another challenge is to reduce the reliance on immigrant labour in some parts of the sector by developing new routes into the sector that maximise recruitment and retention. Raising employee engagement, for example by greater team working and improved management and leadership capability, should also help meet this challenge.

The third key challenge is to raise the capability of management and leadership skills to be able to respond to the various demands faced and to improve the quality of care offered, through increased in-house training and more continuous professional development.

A further challenge is to resolve acute skills shortage vacancies and gaps in key occupations, particularly professional and caring roles, by developing new routes into the sector such as apprenticeships and diplomas.

For more information on this work, please contact Jim Hillage at IES.