Degree Apprenticeships. A guide to identifying opportunities for developing your offer
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1 Degree Apprenticeships A guide to identifying opportunities for developing your offer
2 Foreword The huge role that higher education plays in providing the skills needed by industry is widely acknowledged. For instance, the Government s recent White Paper Industrial Strategy: Building a Britain fit for the future had this to say: Higher education plays a significant role in bringing benefits for the UK economy, particularly in the provision of higher-level skills that are needed by employers both nationally and within local areas. However, it is also generally acknowledged that many of the problems that have plagued the UK economy in recent years, such as low productivity and poor growth, are at least partly down to the fact that very often the skills learned in both universities and colleges are not well aligned with what employers actually need. This has led to increasing calls for education providers to get much better at ensuring their provision is supplying the skills that industry is calling for. Degree Apprenticeships are one very important way of addressing this misalignment. Unlike traditional degrees, which do not necessarily need to be directly aligned to the labour market, Degree Apprenticeships must align for the simple reason that there are employers involved. The key to an institution s ability to identify which new programmes to introduce therefore rests, to a large degree, on its ability to understand economic and labour market context. This might sound easier said than done. However, by the careful use of localised Labour Market Insight (LMI), it is possible for an institution to identify where the best opportunities are for Degree Apprenticeships. This is a three-step process: Identifying occupations with Degree Apprenticeship potential Understanding industry demand Determining the best opportunities for Degree Apprenticeships The purpose of this report is to take you through each of these stages, including both the methodology behind what we do, and some examples of data in practice. We conclude on pages with some practical applications, including how we have worked with Birmingham City University and Sheffield Hallam University to help them plan a more effective Degree Apprenticeship programme. Degree Apprenticeships represent a great opportunity for universities and colleges to really get to grips with addressing higher level skills gaps. In addition, they are likely to become increasingly attractive to young people looking to earn a degree, but without incurring the costs of tuition fees. We hope that this short report will be useful to your institution as you set about developing your offer. 2 Degree Apprenticeships
3 Identifying occupations with Degree Apprenticeship potential The vast majority of occupations in the labour market do not have the potential to translate into Degree Apprenticeships, either because they are not degree level, or because they are not appropriate for apprenticeships, or sometimes both. The first step in identifying opportunities for developing Degree Apprenticeships is therefore to determine which occupations are actually suitable. We have developed a modelling strategy to identify the cross-over between graduate jobs and apprenticeship jobs which offer the greatest potential for Degree Apprenticeships. The approach uses modelled indicators of graduate skill and apprenticeship skill requirements, and then a cluster analysis to identify graduate and apprentice occupational groups. We then identify those occupations in the boundary between these two clusters. MODELLING SKILLS REQUIREMENTS The approach follows a similar methodology to that used by Green and Henseke (2014) in classifying graduate jobs using the UK Skills and Employment Surveys from 1997, 2001, 2006 and Classifying according to perceived requirement for degree qualifications, they fit a linear probability model with several features of their experience and perceptions of their current job to predict that requirement. What we have done is to model an apprenticeship skill requirement variable (ASR), which is then fitted alongside an adapted version of Green and Henseke s graduate skill requirement (GSR). The reason is simple: Skills requirements correlate and we need to distinguish between them. Following Green and Henseke, the GSR depends on a Work i vector including managing, low repetition and high variety, high reported training needed, and Skills i records a mix of generic skills as well as computer skills. GSR k is then used in similar fashion to ASR k. So, in this case, we fit a model where for each worker i has a reported apprentice skill requirement ASR 1, which is determined by their perceived need for the skills they have plus the belief that they needed to learn additional skills on the job: ASR i = β 0 + β 1 ASR k + β 2 Work i + β 3 Skill i + ε i Where ASR k is the mean reported skill requirement in the surrounding occupational workforce (defined by the Standard Occupation Classification (SOC) minor group); Work i is the worker s reported experience of task variety, decision-making and training within the last 6 months in their current role; Skills i is a vector reporting whether the worker has a high use of physical, communication and interaction skills, and i is an error term. The models are fitted and then disentangled at the SOC unit group average level using two clustering processes, one on each measure, following a k-medoid clustering process, with a further cluster across both vectors to check agreement. Through several iterations, we end up with three clusters Apprentice, Graduate, and Neither, and we are then able to identify the occupations on the border between the Apprentice and Graduate as being the most relevant occupations for Degree Apprenticeships. Encouraging inward A guide investment to identifying in your opportunities region with labour for developing market information your offer 3
4 FROM METHODOLOGY TO PRACTICE Having established a methodology that enables us to find out which occupations have the highest levels of Degree Apprenticeship potential, what we can then do is to plug it in to our granular LMI to identify demand for these occupations. For instance, the graphic below shows the Top 15 fastest growth occupations with Degree Apprenticeship potential across the country. Please note that we can also do this exercise at more granular geographic levels, down to LEP or even Local Authority level, in order to give you a better sense of demand for occupations with Degree Apprenticeship potential in your region. BRITAIN S TOP 15 FASTEST GROWING OCCUPATIONS WITH DEGREE APPRENTICESHIP POTENTIAL Key Science, engineering and production n.e.c. Laboratory s 1,652 Paramedics s 856 t 3% s 691 Health and safety officers s 1,221 t 3% Sales accounts and business development managers s 12,838 t 3% Vocational and industrial trainers and instructors Advertising accounts managers and creative directors s 1,618 t 5% s 3,407 s Projected change in job numbers from t Projected percentage job change from Health associate professionals n.e.c. Production managers and directors in construction s 5,993 t 5% Quantity surveyors s 1,823 t 5% Pharmaceutical s 1,287 t 4% s 542 Engineering s 641 t 1% Conference and exhibition managers and organisers s 1,544 Public services associate professionals s 1,451 Medical and dental s Degree Apprenticeships
5 Understanding industry demand Degree Apprenticeships are applied, work-based programmes which need to be aligned with, and relevant to, employer skills needs if they are to be successful. Education institutions can find their curriculum out of alignment with the labour market for a number of different reasons: Employer training and recruitment practices change, creating a different division of labour with education Businesses come and go, and certain courses become more or less pertinent to industry structure Rapid advances in technology and business create curriculum needs that require new capabilities for providers to meet The past decade have seen all of these factors come into play, with substantial shifts in training and recruitment, industry structure and new technology. These trends aren t going away, and successful education institutions will be those able to keep the pace with the accelerating change in the demand for skills. Given that Degree Apprenticeships must be aligned with employer demand, for any institution looking to start a programme, expand existing provision, or even convert existing degrees to Degree Apprenticeships, an essential question to ask is, what are the actual needs of industry? This question is in fact closely connected to one of the four criteria mentioned as a condition for the allocation of funding in the Degree Apprenticeships Development Fund (DADF), which stated that it was looking to see evidence of: activities that better match the supply of provision to employer needs by establishing future skills needs of employers. Using LMI is by far and away the most effective method of establishing the current and future skills needs of employers, as it can give answers to the following questions: Which are the biggest industries? Which are the fastest growing? How many occupations with Degree Apprenticeship potential are there in each industry? By answering these sorts of questions, higher education institutions can begin to get a feel for which industries they could look to target for potential Degree Apprenticeships. On the following page we take a look at how we have simplified this process. A guide to identifying opportunities for developing your offer 5
6 INTRODUCING INDUSTRY CLUSTERS In terms of actually identifying industries, standard practice is to use the Government s Standard Industrial Classification (SIC) system, which categorises a total of 563 (4-digit SIC) industries. However, the sheer number of sectors presents a very practical problem for anyone interrogating the data, since it isn t necessarily very easy to identify trends with such volumes of data. The SIC system itself attempts to solve this problem, by adding the 4-digit classes up to form groups (3-digit SIC), then divisions (2-digit SIC), then sections (1-digit SIC). However, because these groups, divisions and sections are connected by similarity of activity (i.e. lumping manufacturers together), rather than by any economic linkages between them, they don t actually tell us very much about what is driving a local economy. We have been looking into how we can make the process of identifying regional industry drivers much simpler, and we believe we have identified a highly effective solution. Back in 2016, research at Harvard Business School s Institute for Strategy and Competitiveness identified a benchmark for defining industry clusters based on a number of criteria that link them together economically. These include: Industries which tend to co-locate in the same areas Industries that share a similar workforce Industries which tend to have supply chain connections We have applied a similar methodology to industries in the UK. Beginning with the digit SIC industries, we have identified those that are most economically linked according to the criteria established by the Harvard study, and this has resulted in a set of 49 coherent industry clusters. In addition, we have then divided these clusters into two: Local Industry Clusters These are made up of industries which tend to serve local needs, and which don t have much in the way of national or international exports. They make up 14 out of the 49 clusters, with examples including retail, health, schools and restaurants. Tradable Industry Clusters These are made up of industries that tend to export both nationally and internationally. They make up 35 out of the 49 clusters, and include activities such as manufacturing and business and professional services. What is particularly exciting about this method of identifying industries, is that it fits perfectly with the Government s description of economic industry clusters throughout the country, which they highlighted in their Industrial Strategy: The most knowledge intensive jobs, industries and research are increasingly concentrated in particular economic clusters. This clustering effect gives rise to additional benefits to other associated sectors through higher employment and inward investment... Identifying industries in terms of economic clusters therefore kills two birds with one stone: not only does it make the process of establishing growth sectors and employer needs much simpler, but it also fits well with the industrial strategy to grow local economies that is about to be implemented by the Government. 6 Degree Apprenticeships
7 FROM METHODOLOGY TO PRACTICE As we demonstrated on page 4 in relation to identifying occupations with Degree Apprenticeship potential, once again this is not just an academic exercise, but is highly practical. Using the industry clusters, together with the methodology we have used to identify potential occupations, we can now put these two concepts together and plug them into our data to identify the Degree Apprenticeship potential within any industry cluster. To demonstrate this, we have chosen an anonymous region in the country, and then identified the Top 10 industry clusters within that region in terms of projected growth between But what is really exciting is that we have also identified the proportion of jobs within each of these clusters that have Degree Apprenticeship potential. It is worth noting that this exercise can be done for any region of the country, and for all 49 industry clusters. TOP 10 PROJECTED GROWTH CLUSTERS IN EXAMPLE REGION, INCLUDING PERCENTAGE OF JOBS WITH DEGREE APPRENTICESHIP POTENTIAL Maritime Number of jobs in Share of jobs in the cluster with Degree Apprenticeship potential 7.34% Utility % Furniture and wood products % Professional services 7, % Household goods and services 15,121 Civil engineering 6, % 14.25% Share of jobs in the cluster with Degree Apprenticeship potential 22% Upstream chemical % 18% Upstream metal % 14% 10% Personal services 15, % 6% Digital 7, % 2% 0% 5% 10% 15% 20% 25% 30% Projected Growth from A guide to identifying opportunities for developing your offer 7
8 Determining the best opportunities for Degree Apprenticeships So far, we have demonstrated how LMI can answer the questions that were raised in the Foreword, namely how to identify occupations with Degree Apprenticeship potential, and how to identify industry demand. But this still doesn t answer the question of where the best opportunities for developing Degree Apprenticeships are. To do this, what we would need to do is to delve into the industry clusters themselves and to pick out the occupations that we have identified as having the potential for Degree Apprenticeship development. Ordinarily, this would be an almost impossible job, because the raw industry data that comes to us from various public data sources doesn t actually tell us what the underlying occupations within those industries are. However, because of the way that Emsi data is put together, we are able to do this. We have developed and honed a methodology whereby we take various Government sources for industry and occupation data, combine them to provide multi-layered cross-checking, and end up with a complete dataset that is far greater than the sum of its parts. What this also means is that we are not only able to identify industry and occupation trends and projections for any part of the country, but because of the way that the data is combined, we can look at any industry and identify which occupations it employs, and conversely, we can look at any occupation and identify all the industries which employ it. For the purposes of identifying the best opportunities for Degree Apprenticeships, what this means is that using our LMI, we can open up any industry or any one of the industry clusters we have created, and identify not only which occupations it employs, but also those occupations that offer the most potential for a Degree Apprenticeship. Just to take one instance, we could look at the industry cluster Upstream Chemical, which as we saw when we looked at our example region on page 7 had 21.3% of occupations with Degree Apprenticeship potential. By way of explanation, this cluster is comprised of the following six industries: Manufacture of industrial gases; Manufacture of other inorganic basic chemicals; Manufacture of other organic basic chemicals; Manufacture of fertilisers and nitrogen compounds; Manufacture of synthetic rubber in primary forms; Wholesale of solid, liquid and gaseous fuels and related products. So what are the actual jobs within the cluster that might provide potential for Degree Apprenticeships? At the top of page 9, we have included a graphic which shows this. As you can see, we have included both actual job numbers and projected growth for each occupation, in order to give an indication of demand for them within the cluster over the next few years. Although the data in the graphic is for Britain as a whole, we are able to produce similar data for any of the 49 industry clusters for any region of the country. Furthermore, we are also able to break down each of the clusters themselves into the underlying industries, and repeat the exercise of identifying occupations with Degree Apprenticeship potential, again for any part of the country. 8 Degree Apprenticeships
9 OCCUPATIONS WITH DEGREE APPRENTICESHIP POTENTIAL IN THE UPSTREAM CHEMICAL INDUSTRY CLUSTER THROUGHOUT BRITAIN Health and safety officers n 569 s -2.46% Vocational and industrial trainers and instructors n 34 s 0% Laboratory n 708 s -3.25% Science, engineering and production n.e.c. n 216 s 6.48% Electrical and electronics n 126 s -4.76% Sales accounts and business development managers n 2,408 s 1.33% Engineering n 191 s 7.85% Production managers and directors in construction n 72 s 2.78% Planning, process and production Production managers and directors in mining and energy n 65 s 9.23% Key n 331 s 0% n Number of jobs in 2016 s Projected percentage job change from Of course, data is only ever as good as the use we get from it, and so although what we have presented throughout this report may look interesting, the real value in it comes from what you can do with it. Here are just three brief ideas of how the data might be used to support your Degree Apprenticeship strategy, and then on pages we show how two universities have actually used our data in practice: Use the data to identify potential opportunities for Degree Apprenticeships in your region Use the data to identify other parts of the country with potential for your Degree Apprenticeships Use the insight to identify potential employers and to help in your engagement with them A guide to identifying opportunities for developing your offer 9
10 Sheffield Hallam University Degree Apprenticeship Sector Reports In terms of numbers, Sheffield Hallam University (SHU) is the third largest higher education institution in the country with around 35,000 students and over 4,400 staff. SHU identified the need to diversify in the light of a number of external factors such as a demographic decline in the population, likely increased competition as a result of the Higher Education and Research Bill, and general movement towards a more employer-driven skills system. One of the ways they are doing this is through the development of a degree apprenticeship programme. In order to establish where the potential for degree apprenticeships might exist in their region, SHU commissioned Emsi to produce a series of reports looking at job demand in four different sectors: construction; advanced manufacturing; digital; and management. Each of these reports began with a brief overview of the sector, comparing job numbers and growth with the rest of Britain, before delving deeper to look at: Sector specialisms within Yorkshire and Humber Apprenticeship engagement by employers across the sector The skills that are currently driving the sector, together with projected demand to 2022 The occupations with the highest percentage of employees with a degree or higher Current and future demand for these top occupations These short, data-rich reports revealed a number of things that are now helping to inform the university as to what new degree apprenticeships it should develop. For instance, although engineering roles in general are set to decline in the region, the data reveals that this is not the case with higher level skills, and there are likely to be around 935 job openings for mechanical engineers in the region by Another area highlighted by the data is the rapid growth of computer programming, with an expected 3,955 openings for programmers and software development professionals by According to the university's Degree Apprenticeship Development Manager, Mark Rayner, these reports are proving enormously helpful in terms of understanding where they should look to prioritise their efforts around developing new programmes: The data in these reports has revealed to us a number of opportunities for growing our degree apprenticeships over the next few years. We believed that there might be potential in each sector, but we now not only have hard evidence to support this belief, but can also see more clearly the occupational areas within each sector where opportunities lie. 10 Degree Apprenticeships
11 Duncan Brown Birmingham City University Degree apprenticeship market analysis Emsi has also been working with Birmingham City University (BCU) to help them better understand the potential for degree apprenticeships in their area. But whereas the approach taken by Sheffield Hallam was to start with sectors and investigate the opportunities that exist within them, BCU took more of a "blank page" approach, commissioning Emsi to look at the labour market in the West Midlands as a whole, and to identify potential opportunities for new degree apprenticeships. The resulting report was a full degree apprenticeship market analysis of the West Midlands region, which contained the following: An overview of industries in the region, identifying the key sectors driving growth A workforce analysis, looking at demographic, unemployment and qualification levels in the region An identification of the occupations with the greatest potential for degree apprenticeships Having identified certain occupations with degree apprenticeship potential, the report then took an in-depth look at four of these in turn. This included a demand profile, looking at the historic growth and projected trends for the occupation in comparison to the job market in the region as a whole; a supply profile, looking at the demographic and qualification make-up of the occupation in the region; an industry profile, identifying which sectors employ the role; and a recruitment profile, looking at where in the region the occupations are being employed, what actual job titles employers are looking for, and the hard and soft skills that are involved in the role. In other words, the degree apprenticeship market analysis not only provided BCU with a window on their regional labour market, but also an evidence-based assessment of the main opportunities for developing degree apprenticeship programmes in the university region, and a comprehensive breakdown of some of the best prospects. As Resham Gill, the university's Partnerships and Collaboration (Higher Apprenticeships) Manager commented: Degree Apprenticeship Market Analysis Birmingham City University 21 July 2017 This report has really helped us to identify a number of areas where we can look to develop our offer. Having solid numbers, rather than educated guesses, means that we can now build a robust case for developing degree apprenticeships in a number of areas, and it also gives us the confidence that what we are proposing is very much needed in our region. A guide to identifying opportunities for developing your offer 11
12 ABOUT Emsi Our goal is to help local, regional and national economies function more effectively through helping people make better decisions relating to the world of work. We provide the best quality, most useful and appropriately detailed data and insight for our customers ready for the point that they make key decisions. This data is delivered through easy to use tools and services to the education, economic development and employment sectors. For more information about how we can help you identify opportunities for Degree Apprenticeships, contact Andy Durman : andyd@economicmodelling.co.uk Phone: Suite 22, Basingstoke Innovation Centre, Norden House, Basing View, Basingstoke, RG21 4HG You can also find out more by going to our dedicated Degree Apprenticeships webpage at:
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