ESF Priority Axis 2: Skills Skills and life-long learning & Education and Training Systems

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1 ESF Priority Axis 2: Skills Skills and life-long learning & Education and Training Systems Rationale The need for employers to continuously invest in their workforce, and for individuals to update their skills through lifelong learning, is more evident now than ever before. Skills needs within the workplace change at a rapid pace and people no longer have jobs for life, with many people changing career as well as individual employers during their working life. Investing in the skills of the workforce and ensuring individuals stay informed of employer skills requirements to have the best possible chance of accessing and progressing in employment is therefore a high priority. The rationale for change can be grouped under three headings. Growing demand for skills Over the next ten years demand for skills is forecast to rise significantly, particularly at Level 3 and above, driven by economic growth, the delivery of major projects and replacement demand. Despite strong skills performance (36% of the population is qualified to at least Level 4), Cheshire and Warrington cannot be complacent. People with low skills levels report the highest levels of inactivity (around half are qualified below Level 2) demonstrating the impetus to invest in skills to support economic engagement. Acquisition of skills is not just about the level but also the relevance to the labour market with Cheshire and Warrington having a number of key sectors. Although Cheshire and Warrington already reports high skills levels, going forward skills priorities need to be more closely aligned to economic priorities to allow the economy to strengthen its contribution and generate the greatest opportunities and benefits for businesses and residents. This includes the need to develop sector specific skills (for example to support the area s bio science sector and engineering sector, including the need for skills in automotive, nuclear, wider energy, low carbon and professional support engineering sub-sectors) as well as skills required across a range of economic sectors (e.g. strong communication, ICT and managerial skills) and that will play an important role in catering for replacement demand. Strengthening these linkages and remaining alert to evolving business needs will play a role in helping to reduce the current productivity gap and ensuring that the workforce delivers to its potential. An employer- led skills agenda Employers need to drive skills provision to ensure that it is demand-led and therefore supports the delivery of economic growth. This represents a shift in context and one where employers are anticipated to require support in the short term to understand the benefits of increased investment and drive responsive skills provision. Helping employers navigate and influence the skills system is vital, as well as ensuring local education and training providers are equipped to respond to and support this change. This is likely to require initiatives (both within and outside European investment programmes) to create new mechanisms to engage with and support employers, and new facilities and training provision that directly respond to employer needs, including the requirements of forecast growth sectors, including areas of smart specialisation (such as natural sciences and the automotive sector), growing demands of the low carbon economy and the needs of the rural economy. Examples include proposals for University Technical Colleges specialising in advanced engineering in Cheshire East and engineering and nuclear technology in Warrington along with proposals for Studio Schools specialising in ICT and creative digital skills. Such actions will ensure that both young people and adults gain a greater understanding of local employment opportunities and the skills and qualifications needed to access them. Vocational training is expected to increase, including apprenticeship changes as a result of the Richard s Review recommendations and in response to Higher Education loans. 66

2 Addressing Current and Future Skills Gaps There are already recognised skills gaps in the Cheshire and Warrington economy. The 2011 Cheshire and Warrington Business Needs Survey found that 66% of respondents reported skills gaps. The most common gaps in existing employees were sales and marketing skills (34%), IT skills (28%), customer care skills (25%) and specialist or other job specific skills (25%). Such gaps are anticipated to grow as the structure of the economy continues to evolve. Local (CHWEM) forecasts suggest that the greatest growth will be reported in the professional, financial and business services sector, driving demand for Level 3 and graduate level skills. Technical skills gaps are regularly reported in the engineering sector, reflecting the presence of a strong sector both within the LEP area (e.g. Bentley Motors and AMEC Group) and in adjoining areas (e.g. Airbus in North Wales) that form part of the local travel to work area. Cheshire and Warrington s ageing population is also forecast to contribute to high levels of replacement demand. Replacement of older workers is forecast to dwarf skills demand presented by economic growth. CHWEM forecasts suggest that 230,000 positions will be created through replacement demand between 2011 and 2025, accounting for 90% of the total increase, although these estimates are thought to be high. Replacement demand is forecast to be highest within managerial, professional and associate professional/technical, representing a further requirement for upskilling. Each of these three rationale headings emphasises the need for investment in higher level skills in Cheshire and Warrington, if our economy is to perform to its potential and our residents are to be equipped with the skills required by growing businesses, particularly those in our identified growth areas/areas of specialisation. Whilst published data is limited, we have secured strong anecdotal evidence through our discussions with partners to make the case for support in this area. This includes: A need to equip the whole workforce with the skills required by employers to address replacement demand, driven by an ageing workforce (as identified through the Cheshire and Warrington Employment and Skills Strategy); Evidence that SMEs (and particularly the smallest SMEs) are less likely to take on apprentices than larger companies 30; While levels of apprenticeship starts in Cheshire and Warrington is slightly higher than the area s share of population, the proportion of starts in our key sectors 31 is marginally lower than the national average (11% to 13%), suggesting a need for further engagement of high skilled employers; Challenges to graduates accessing employment and in cases where they do find work, often at a lower level than would be anticipated, given their skills set The UKCES National Employer Skills Survey 2009 found a strong correlation between business size and take up of apprenticeships. Businesses with 500 or more employees were most likely to offer apprenticeships (30%) compared to just 5% of businesses with 2-4 employees and 10% of businesses employing between 5 and 24 people. 31 Based on the apprenticeship sector classifications of Engineering and Manufacturing Technologies, and Science and Mathematics. 32 Nationally, the Higher Education Careers Services Unit What do Graduates Do? Survey found that 8.5% of graduates were unemployed six months following graduation while the latest ONS statistics (from 2011) show that 47% of recent graduates are working in non-graduate roles (up from 37% in 2001). Over a fifth (22%) were in lower middle or lower skilled jobs requiring a competency level equivalent to that achieved through compulsory education at most. 67

3 Securing the policy flexibility to respond to these requirements, including through variable funding rates, changes to the eligibility of activities (where they can be justified and agreed with funding partners in advance) and increasing the ability to stimulate employer demand and support supply side responses (focusing on our key sectors and particularly the needs of SMEs operating within these), is therefore a high priority for our area. Objectives The primary objectives of support under this Priority Axis are to: Ensure education and training systems reflect employer requirements; Engage new start businesses and SMEs in the education and skills agenda; and Equip the workforce with the skills and competences required by local employers, both at present and in the future, including in response to growing demand for higher level skills. Eligible activities by Investment Priority area These investment priorities were part of the original strategy and as such have been retained. In fact, the funding and targets for the ESIF programme follow National Guidelines and are not allocated against these Investment Priorities although in the case of ESF the Investment Priorities tend to mirror the Priority Axes. Activities to be supported under ESF Priority Axis 2 through Investment Priority 13: Addressing Higher Levels Skills, Skills Shortages and Enterprise include: Support to start and grow a business, including increasing awareness of enterprise and social enterprise opportunities and providing support needed to launch and manage an organisation; Investment to address identified skills gaps, including for higher level skills and transferable skills such as leadership and management, particularly where they reflect the requirements of growth sectors, including areas of smart specialisation (as outlined elsewhere in this document), sectors forecast to require substantial levels of replacement demand and emerging sectors such as the skills required to grow the low carbon economy and support greater resource efficiency; Support for residents to develop higher level skills, including through vocational learning routes (including sector specific Higher Apprenticeships) and active employer engagement in such initiatives with ESF support to facilitate this where necessary; Support for internship and placement programmes to encourage the engagement of graduates and post graduates by local employers working in growth and emerging sectors (including smart specialisations) and those experiencing technical skills shortages; Working with education providers and businesses to ensure employer led provision. This will include ensuring that businesses are alert to the benefits of investing in training and can articulate their training needs and that providers can recognise and respond to changing business needs over time, including through the development of innovative intermediate and higher level vocational training; Actions to support a culture of workforce development and lifelong learning amongst both employers and learners, including taking steps to engage employers, increasing activity to upgrade skills and investment in work-based learning to develop both jobspecific and transferable skills; 68

4 Tailored solutions for target groups, for example the low skilled, people affected by redundancy and the unemployed, to provide a supportive learning environment, including through community based learning; and Support for graduates employed in growth and emerging sectors without a work related qualification. Target beneficiaries This Priority Axis will support the following target groups: Members of the current and future workforce, including graduates SMEs with a need to engage more effectively in the skills agenda; People considering entrepreneurship and social enterprise; Marginalised individuals and groups. Finance An ESF allocation of million has been identified against this Priority Axis. Match funds are anticipated to come from the Skills Funding Agency opt-in and the Adult Skills Budget through the Local Growth Fund. The Funding allocations in this table have been updated in April 2016 and follow the Priority Axes numbering and sub-categories agreed as the final approach for Cheshire & Warrington. In some cases these differ slightly from the sub-categories set out in this strategy which was originally developed in The text of the strategy has broadly remained unchanged to ensure that its logic chain and integrity remain intact. The m allocations will vary according to exchange rates. The programme was working to a 0.78= 1 when this document was updated. ESF PA2: Investing in Education, Skills and Lifelong Learning Finance m ESF Match Total Targets Activities supported under ESF Priority Axis 2 are required to contribute to the following indicators. This has been updated in 2016 and no longer sets out targets by the Investment Priority areas shown above. 69

5 ESF PA2: Investing in Education, Skills and Lifelong Learning Targets Investment Priority 2.1 Investment Priority 2.2 Total R3 R6 R7 R9 gaining basic skills gaining level 2 or below or a unit of a level 2 or below qualification (excluding basic skills) gaining level 3 or above or a unit of a level 3 or above qualification 2,481 5,638 1,804 Small and Medium Enterprises successfully completing projects (which increase employer engagement; and/or the number of people progressing into or within skills provision) 2,481 5,638 1,