Meeting the skills gap within the new economy Productivity and skills

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1 Meeting the skills gap within the new economy Productivity and skills Paul Casey UK Commission for Employment and Skills

2 Presentation overview What this presentation covers UK productivity UK skills & training snapshot Employer leadership of skills Discussion

3 The world of work is changing: What happens in the workplace matters to productivity and growth People Capital The workplace strategy management flexibility technology innovation engagement skills etc Products and services

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5 Recession and impact on productivity Data from ONS Labour Productivity and ONS International Comparisons of Productivity.

6 Global economic recession impact on UK US UK Japan Italy Germany France Canada The UK is one of three G7 countries to report negative growth in labour productivity since 2007, along with Italy and Germany. But in the years before, the 12 UK had the fastest 14 % cumulative growth in labour productivity growth so we have seen the sharpest slowdown Source: ONS International Comparisons of Productivity, 2013

7 Sharp productivity growth slowdown in all sectors Primary (agri, mining) & Utility Average growth in output per hour worked, % p.a Manufacturing Construction Wholesale, retail, accom & food Transportation & Storage Information & communication Financial & insurance Real est & bus svcs Public admin, education & health Arts & ents, oth svcs Output per hour growth pa Output per hour growth pa Output per hour, or labour productivity, is the simplest measure of productivity. It simply divides the amount of value added within the industry (output) by the number of hours worked by employees to produce it. Source: UKCES analysis of ONS Multi-Factor Productivity (experimental) 2013

8 World class businesses but not enough of them Small and medium-sized enterprise management practices. This chart shows the country distributions of management practice scores on a 1-5 scale; red dots are medians and dotted lines are cross-country quartiles. The UK has a good share in the top quartile, but a long tail reaching well into the bottom quartile. Source: World Management Survey,

9 High skilled jobs continue to grow High skill roles and tertiary education

10 Presentation overview UK skills & training snapshot Employer leadership of skills Discussion

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18 Underutilisation of skills 2,000,000 THREE IN TEN EMPLOYERS HAVE AN EMPLOYEE WHO IS UNDERUTILISED, A TOTAL OF UNDERUTILISATION UNDERUTILISATION OCCURS WHERE AN EMPLOYEE HAS SKILLS AND QUALIFICATIONS ABOVE THOSE REQUIRED FOR THEIR ROLE 12% OF ALL UNDERUTILISED STAFF WORK IN HOTELS AND RESTAURANTS WORKERS What this means THERE IS HUGE UNTAPPED POTENTIAL IN THE WORKFORCE

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22 Presentation overview Employer leadership of skills Discussion on your challenges

23 Business Leadership Some of the country s most senior business leaders, convened by Sir Charlie Mayfield, Chairman of the John Lewis Partnership, have written to the government making the case for taking forward a business-led action group for productivity. The work will be practical and grounded, driving direct action to enhance productivity in different sectors and workplaces across the UK. The group has offered to report to the Chancellor and the Secretary of State for Business by the end of the year. (para 2.13)

24 Valuing your Talent

25 UK Futures Programme An R&D approach to skills We run Productivity Challenges that are highly targeted at particular skills issues IMPACT Our ambition is to transform the United Kingdom s approach to investing in the skills of people as an intrinsic part of securing growth develop and pilot employer-led projects that try innovative solutions to these issues learn what works, what doesn t and why have a higher risk appetite allowing lessons to be learned and feed this learning into policy development and wider business practice

26 Productivity Challenges PC 4: Skills for innovation in manufacturing Exploring new ways of developing the skills and business practices needed to maximise the value of innovation to the UK economy. It focuses on the non-technological/stem skills required to manage and commercialise innovation.

27 Presentation overview Discussion

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