Consultation Draft Skills Needs Assessment for:

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1 Paper C Appendix 1 Consultation Draft Consultation Draft Skills Needs Assessment for: Leicester and Leicestershire (LLEP Area) MIRA Labour Market 1 MIRA Technology Park Enterprise Zone Research conducted by: HOST Policy Research Project Funded by: Skills Funding Agency 1 Defined as Local Authority Districts of: Charnwood, Hinckley and Bosworth, North West Leicestershire, North Warwickshire, Nuneaton and Bedworth

2 Contents Paper C Appendix 1 Consultation Draft Executive Summary... 1 Page Introduction...1 Introduction to the Skills Needs Assessment Overview Document...26 Introduction Chapter 1: Key Statistical Overview Location Key population and labour characteristics...28 Chapter 2: Overview of Labour Demand...31 Introduction Sector employment - key characteristics Sector employment key trends to Detailed industry employment trend to LLEP identified key sectors Coventry and Warwickshire LEP identified key sectors Occupational employment - key characteristics Profile of vacancies (Jobcentre Plus and ONS Vacancy Survey Employment projections Employment projections across main employment sectors Key occupations - employment projections Qualifications - employment projections Sector and occupational projections - total demand (including replacement demand)...58 Chapter 3: Overview of Labour Supply Introduction Population characteristics Population projections Trend in qualification levels within the population Current (2011/2012) GCSE and equivalent achievements by pupils At the end of Key Stage Current (2010/2011) further education and workplace training profile Apprenticeship achievement - key findings 2010/2011 Local Authority, Learner home postcode data Education and training achievements - key findings 2010/2011 Local Authority, Learner home postcode data Workplace achievement - key findings 2010/2011 Local Authority, Learner home postcode data Further education and skills - key findings 2010/2011 Local Authority, Learner home postcode data Current (2009/2010) higher education profile Overseas students... 97

3 Paper C Appendix 1 Consultation Draft Contents Page Chapter 4: Overview of Labour and Skills Mismatches...98 Introduction The relative size and importance of the different dimensions of current mismatch Skills shortage vacancies Key evidence from the winter 2011/2012 Leicester and Leicestershire Business Survey Unfilled Jobcentre Plus vacancies Jobcentre Plus claimant unemployment year olds not in education, employment or training (NEET) Mismatches in STEM supply and demand National sector evidence - UKCES Sector Skills Insight Reports MIRA Technology Park Enterprise Zone - Skills Needs Assessment Evidence Non-skills barriers to employment and training... Chapter 5: Conclusions: Emerging Skills Priorities Introduction Priority skills - broad skills levels and affected sectors/ occupations Potential priority areas for action Annexes: Annex A: Qualification equivalencies Annex B: Revised sector lead body descriptions

4 Executive Summary Paper C Appendix 1 Consultation Draft Introduction The Leicester and Leicestershire Enterprise Partnership (LLEP) published its Economic Growth Plan for Leicester and Leicestershire in July This plan set out bold ambitions for the local economy and acknowledged the importance of an appropriately skilled workforce in driving our economy forward. The Economic Growth Plan highlighted the need for a Skills Demand Plan and also for a more specific plan to meet the skills needs associated with the development of the MIRA Technology Park Enterprise Zone. Before developing a skills plan, the LLEP considered it essential to conduct a skills needs assessment to provide a robust and underpinning evidence base. The skills needs assessment was intended to identify the skills priorities for our area by collating data from a wide range of sources and through extensive consultation with employers, stakeholders and providers of education and training. The LLEP commissioned an independent specialist consultancy HOST Policy Research (HOST) to conduct the skills needs assessment. The analysis was requested at three different geographies: Leicester and Leicestershire (LLEP area). MIRA labour market area, defined as: Hinckley and Bosworth (in LLEP area). North West Leicestershire (in LLEP area). Charnwood (in LLEP area). North Warwickshire (in Coventry and Warwickshire LEP area). Nuneaton and Bedworth (in Coventry and Warwickshire LEP area). For the MIRA Technology Park Enterprise Zone (MTP EZ). This Executive Summary provides an overview of the findings from each chapter and presents the recommendations resulting from the analysis. The project was funded by the Skills Funding Agency and was managed by a dedicated Project Team with representation from the LLEP, North Warwickshire and Hinckley College, Caterpillar, MIRA, Flex Recruitment, Skills Funding Agency, Hinckley and Bosworth Borough Council and Leicestershire County Council. The project team was accountable to the LLEP Employment and Skills Strategy Board. The skills needs assessment seeks to identify the key sectors, occupations, population groups and skills that should be prioritised to effectively meet the changing needs of the local economy and labour market. 1

5 Paper C Appendix 1 Consultation Draft Executive Summary - Skills Needs Assessment Overview Chapter 2: Overview of Labour Demand Current Employment Structure The LLEP area is characterised by: Higher concentrations of manufacturing employment within the LLEP area. Higher concentrations of Logistics sector employment within the Leicestershire County, and MIRA labour market areas. A higher reliance on the public sector for employment within Leicester City. There are higher concentrations of employment in the higher skilled occupations (Managers, Professionals and Associate Professionals) within Leicestershire County compared to Leicester City. Key Trends in Net Employment Change (2008 to 2011) Key changes in net employment levels across sectors within the LLEP areas are: Current (2011) employment levels (433,000) remain 25,000 lower than they were in 2008, representing a 5 per cent fall in total employment in the economy. Some volatility in manufacturing employment levels across the period, latest data shows a small decline on 2010 employment levels - also reductions in manufacturing employment are more concentrated in Leicester City. Although evidence of some renewed growth in construction employment, current employment levels remain 25 per cent below 2008 levels, rising to 38 per cent within Leicester City. There is a mixed picture for retail employment, with a 22 per cent fall in employment within Leicestershire County, but a 5 per cent rise in Leicester City over the same period. Transport and Storage has seen employment growth of 12 per cent across the LLEP area 2008 to 2011 this is a priority sector the LLEP. 2

6 Paper C Appendix 1 Consultation Draft Executive Summary - Skills Needs Assessment Overview Chapter 2: Overview of Labour Demand Employment Projections ( Working Futures to 2020 ) Key projections in net employment levels and predicted job openings (including replacement demand) for the LLEP area are: 213,000 job openings between 2010 and 2020, of which: 187,000 replacement demand (to replace workers mainly through retirements, but also career/job moves or who leave the workforce 26,000 expansion demand (new jobs and structural change). Figure E1 shows the projected job openings by sector (top nine). Figure E2 shows the projected job openings by broad occupational groups. Overall, net employment levels are only expected to return to those seen in 2008 by The higher skilled occupations of Managers, Directors and Senior Officials, professionals, and associate professionals are all projected to rise as a proportion of total employment, as well as a small rise in low skilled elementary roles (contrary to previous projections). Administrative and secretarial, skilled trades, and process, plant and machine operatives are projected to decline. Figure E1: Overview of labour demand by sector Predicted job openings Sector (2010 to 2020) Wholesale and Retail 35,000 Health and Social Care 21,000 Support Services 20,000 Education 19,000 Manufacturing - including Engineering and Food and Drink 18,000 Professional Services 18,000 Construction 17,000 Transport and Storage 12,000 Accommodation and Food 10,000 3

7 Paper C Appendix 1 Consultation Draft Executive Summary - Skills Needs Assessment Overview Figure E2: Overview of labour demand by occupation Predicted job openings Occupation (2010 to 2020) Professional Occupations (especially Science and 44,000 Technology) Managers and Professional Administrators 30,000 Associate Professional and Technical 27,000 Care, Leisure, Personal Services (nearly all growth in care) 26,000 Administrative and Secretarial 19,000 Elementary Occupations 19,000 Skilled Trade Occupations (especially skilled Electrical and 18,000 Metal) Sales and Customer Services 17,000 Process, Plant and Machine Operatives 12,000 4

8 Paper C Appendix 1 Consultation Draft Executive Summary - Skills Needs Assessment Overview Chapter 3: Overview of Labour Supply Population Characteristics Latest Census (2011) shows very different age and ethnicity profiles between Leicestershire County and Leicester City, which is characterised by high levels of Black and Minority Ethnic Groups, overseas born, and a younger age profile in Leicester City - Median age is 31 in Leicester City, and 42 in Leicestershire. There is expected to be a rise of approximately 23,000 in the Working Age Population to 2020 across the LLEP area. However, with an ageing population, the Working Age population will form a smaller share of the total population. There has been a rising trend in the number and level of qualifications held in the working age population in the LLEP area. There is a lower percentage of individuals qualified to L3 or higher in Leicester City at 45 per cent when compared to 54 per cent in Leicestershire County and 52 per cent within England. Qualification Attainment Differences in GCSE achievement (5 A-C including Maths and English) at the end of Key Stage 4 (ie Year 11) highlights lower attainment amongst some key groups, eg males, especially white), pupils with Special Educational Needs (SEN), white and Black pupils, and those eligible for free school meals. Overall GCSE attainment, especially within Leicester City, is relatively low compared to the England average and other neighbouring areas, further analysis also suggests poor progression rates post-16 especially amongst poor performing groups, such as white males, at Key Stage 4. Key qualification achievement sectors in apprenticeships are: children and young people, Hair and Beauty, Hospitality, Leisure Travel and Tourism, Business Administration and Governance, Retail and Construction (Skills Funding Agency Data see, Section 3.5 in the report for data explanation). Key qualification achievement sectors in classroom-based learning routes are: Employability, Business Administration and Governance, Hair and Beauty, Healthcare, Creative and Cultural, and Construction (Skills Funding Agency Data see, Section 3.5 in the report for data explanation). Key qualification achievement sectors in work-based learning are: Adult Social Care/Healthcare, Construction, Freight, Logistics and Wholesale, Customer Service and Contact Centre, Fashion and Textiles, and Science, Engineering and Manufacturing Technologies (Skills Funding Agency Data see, Section 3.5 in the report for data explanation). 5

9 Paper C Appendix 1 Consultation Draft Within the higher education sector the East Midlands is dominated by the traditional student, ie aged 19-21, studying full-time for undergraduate degrees - it has the lowest proportion of part-time students of all regions. Chapter 3: Overview of Labour Supply Qualification Attainment (continued) The East Midlands is also the greatest exporter of graduates amongst the English regions, ie fewer graduates stay and work in the region after graduation. Of the Universities within the LLEP area, Loughborough has the highest number of Full Person Equivalent (FPE) students studying engineering and technology courses at around one third of all FPEs. 6

10 Paper C Appendix 1 Consultation Draft Executive Summary - Skills Needs Assessment Overview Chapter 4: Overview of Labour and Skills Mismatches Evidence of Skills Mismatch The LLEP area appears to in line with the England percentages from the UK Employer Skills Survey (ESS 2011) key indicators of skills mismatch, except for skills gaps within the workforce, which is slightly higher than the England percentage. Incidences of reported skills gaps across occupations is highest in sales and customer service occupations within the LLEP area according to ESS 2011 data, and lowest amongst Managers. However, evidence from the latest Leicester and Leicestershire Business Survey suggests there has been a slight increase in businesses reporting recruitment difficulties, especially for associate professional and technical and low skilled occupations. Manufacturing businesses were struggling to recruit skilled trade occupations and plant and machine minders. The Business Survey also showed that the most mentioned hard to recruit occupations were Care Assistants, Catering or Kitchen Assistants and Sales Representatives/Assistants. Almost a quarter of businesses thought skills shortages were having an impact on their business and half of businesses felt there were skills gaps in their workforce, especially in the area of interpersonal and communication skills. The LLEP area appears to have a higher number of unfilled Jobcentre Plus vacancies at 128 per 10,000 of the population aged when compared to the East Midlands (113 per 10,000) and England (92 per 10,000) - August 2012 data. There would appear to be particular difficulty in filling process, plant and machine operative Jobcentre Plus notified vacancies in Leicestershire County. There are also difficulties in filling vacancies in the care sector. This is likely to become a more acute problem with an ageing population (as noted earlier). There is higher Jobseeker Allowance (JSA) claimant unemployment in Leicester City compared to the County and nationally, there is also a higher percentage classed as long-term unemployed in Leicester City. People working in sales and customer services and elementary occupations are significantly over-represented in JSA claimants when compared to the percentage of people employed in these occupations. Leicester City has a significantly higher percentage of young people 7

11 Paper C Appendix 1 Consultation Draft who are classed as NEET (Not in Employment, Education or Training) when compared to the East Midlands or Leicestershire County area. Recent evidence from the OECD (2012) once again demonstrates there is a link between qualification levels and the level of risk of being unemployed or NEET. 8

12 Paper C Appendix 1 Consultation Draft Executive Summary - Skills Needs Assessment Overview Chapter 4: Overview of Labour and Skills Mismatches Evidence of Skills Mismatch (continued) Analysis of the supply and demand for Science, Engineering, Technology and Maths (STEM) skills has found that there is broadly a sufficient supply within the UK to meet employers needs with graduate STEM skills needs, but that 40 per cent of STEM graduates go into non-stem graduate jobs on leaving university, reducing to 28 per cent after 3.5 years after graduation However, analysis of wage data suggests that STEM graduates working in STEM jobs have a wage premium compared to those not working in STEM jobs. Specific sector evidence of skills mismatches provided by UK Commission for Employment and Skills (UKCES) is presented in Section

13 Executive Summary - Skills Needs Assessment Overview Consultation Draft Summary of key findings from the UK Commission for Employment and Skills (UKCES) Sector Skills Insight Reports (Published July/August 2012) Sector Skills Insight Reports - Summary of Key Findings Advanced Manufacturing Sector Skills demand Skills supply Skills mismatches The skills the sector needs typically embody a high level of numeracy and therefore are in high demand in other sectors of the economy. Skills supply issues therefore need to be seen in the context of the sector s capacity to attract - and retain - people who have the skills it requires. Simply increasing skill supply will not necessarily satisfy the sector s skill demands. The evidence overall shows that the number of people engaged in higher level occupations and who are relatively well qualified has been growing in the sector which reflects the increasingly complex nature of products and production processes. This is likely to continue over the long-term which will result in the sector becoming increasingly highly skilled. In particular, the sector has and will continue to have a strong demand for people with STEM skills. It is important to note that though the number of people in skilled trades occupations is projected to fall over the medium-term, replacement demands for this occupation are likely to remain positive and high due to the number of people in these jobs who will exit from the sector over the coming years. Accordingly, the sector will have a continued demand for people trained to Level 3 (typically via Apprenticeships). Survey evidence indicates that where manufacturing employers have vacancies they are more likely to report that applicants do not possess the skills, experiences or qualifications they require than in the economy generally. As noted earlier, this relates in part to the strong demand in the economy generally for the types of skill the sector requires. More strategically, key skills deficiencies relate to professional and senior managers and their ability to adequately research the drivers of change to enable them to develop effective product market strategies. 10

14 Executive Summary - Skills Needs Assessment Overview Consultation Draft Summary of key findings from the UKCES Sector Skills Insight Reports (Published July/August 2012) - (continued) Sector Skills Insight Reports - Summary of Key Findings Energy Skills demand Skills supply Skills mismatches Skills supply to the sector is relatively healthy, with an overall growth in students studying relevant subjects at university level, growing number of apprentices in the energy and utilities sector, and above average levels of workplace training. However, there are some signs that parts of the sector and particular groups of staff experience skill deficiencies. Specific areas of concern include: Many STEM graduates find jobs outside STEM sectors, and energy and utility sectors may not be seen as particularly attractive graduate destinations The UK relies heavily on international migration to supply skills relevant to the sector. The Migration Advisory Committee s shortage list identifies a number of shortage occupations, including engineering professional occupations, Engineering Technicians, and skilled trades such as Welders and Line Repairers. Employment across the sector is expected to expand by at least 4 per cent between 2010 and 2020, with the strongest growth in occupations requiring higher level qualifications. In addition, there is likely to be a significant demand for new recruits to replace an ageing workforce, creating a strong demand for technical and engineering skills in the electricity, gas and water industries. Key skills that are likely to be required across the sector include: Adaptability and transferability skills (to enable workers to learn and apply new technologies and processes) Environmental and sustainability awareness; Systems and risk analysis skills Entrepreneurial skills Innovation skills (to identify opportunities and create new strategies) Communication and negotiation skills Marketing skills (to promote products and services) Consulting skills (to advise consumers about green solutions and to spread the use of green technologies) Networking, IT and language skills (to perform in global markets). Although the incidence of skill shortages across the sector is below average, a significant proportion of employers identify problems recruiting process operatives. Skill gaps are below average, but where they do occur they affect process operatives, professional and associate professional occupations and managers. Wage growth across the sector is higher than average, particular in the mining sub sector, which could be an indicator of skills mismatch. 11

15 Executive Summary - Skills Needs Assessment Overview Consultation Draft Summary of key findings from the UKCES Sector Skills Insight Reports (Published July/August 2012) - (continued) Sector Skills Insight Reports - Summary of Key Findings Construction Skills demand Skills supply Skills mismatches There is a well developed skill supply system operated through the levy system and Construction Skills amongst others, and a relatively high level of engagement by employers with the training infrastructure (private providers and further education colleges). There is evidence of an increasing number of Apprenticeship starts at Levels 2 and 3, though this has tailed off over recent years due to a downturn in construction activity. It is apparent that construction employers are relatively sensitive to cost in relation to their training activities. Where employers do not provide training leading to vocational qualifications they tend to provide reasons relating to cost more than employers in the labour market as a whole. There is also evidence that many employers report that the skills of their workforce are under-utilised though less so than in the economy generally, which points to an extant source of skills supply within many organisations. The key drivers of change in construction have a variety of implications for skills demand in the sector. Meeting low/zero carbon requirements, adopting new technologies and satisfying various regulations requires particular specific skills and alters the importance of particular occupations. Skills to fill replacement demand as older workers leave the sector are particularly important in construction given the nature of work and the age structure of the workforce. In order to meet these challenges, the skill profile of the sector has been changing with an increased share of people working in higher level occupations (Managers, Professionals, and Associate Professionals). This is matched by an increasing share of people qualified at a high level (Level 4 and above). Within occupations too there is the changing content of the skills required given the changes in Construction processes and the use of new materials, and the need to meet a wide range of market demands (such as the low carbon agenda). The evidence shows that the sector has relatively high levels of skill shortages which have a detrimental impact upon organisational performance. In part, the sharp cyclical shifts in demand for construction, poses problems in relation to planning employment and skill demand. The relatively large share of microemployers and the number of selfemployed people in the sector means that some people can fall outside of existing skills supply-mechanisms unless they are encompassed within industry supply chains which require people to be trained and qualified. Given the high levels of replacement demand, and the associated expected growth in output over the medium-term, the sector, can, potentially, provide a large number of entry level training positions over the medium term which one would expect to go, predominantly, to young people. This would help young people enter the labour market and help address youth unemployment issues. 12

16 Executive Summary - Skills Needs Assessment Overview Consultation Draft Summary of key findings from the UKCES Sector Skills Insight Reports (Published July/August 2012) - (continued) Sector Skills Insight Reports - Summary of Key Findings Retail Skills demand Skills supply Skills mismatches There is a well-developed external skills supply infrastructure at Levels 2 and 3. Available evidence shows that the number of Apprenticeships being undertaken in retail has increased substantially over recent years. The National Retail Skills Academy provides a source of information and guidance to those looking to enter the sector, or for those who are already employed in the sector. Overall, however, employers in the sector engage less with the external skills infrastructure, eg use of further education colleges, engagement with higher education, etc. than is the case generally across all employers. Employer investments in training are generally lower than found in the economy generally. The level of replacement demand, notwithstanding technology substituting for labour, will be substantial over the period to 2020, such that the sector needs to give consideration to how it will meet its labour needs. Whilst much labour demand will be concentrated in relatively modestly skilled, low paid customer service jobs, the sector will also have a demand for an increasing number of managers and professionals who will need to ensure that the sector can meet its product market challenges. The sector will need to implement appropriate employment practices which will allow it to recruit and retain the labour it needs, by providing career paths and career development to its employees. The sector can more or less meet its current demand for skills. But looking to the future, there are a wide range of challenges which the sector must adapt to which will create a range of skill demands. Skill demands relate in part to improving the skills of those managers who will be charged with introducing many of the changes. The evidence suggests that at present the sector has a relatively modest demand for higher level skills (eg those at Levels 4 and 5). But it will increasingly need to acquire these skills in order to meet future challenges linked to new technology and more discerning customers. There is an expected increase of 29 per cent of professional and associate professional and technical occupations by 2020, which compares to an expected increase of 15 per cent across all sectors. 13

17 Executive Summary - Skills Needs Assessment Overview Consultation Draft Summary of key findings from the UKCES Sector Skills Insight Reports (Published July/August 2012) - (continued) Sector Skills Insight Reports - Summary of Key Findings Professional and Business Services Skills demand Skills supply Skills mismatches The UK professional and business services sector is supported by a substantial training infrastructure, including highly regarded professional institutes, which can be drawn upon to meet the various skills and human resource challenges that are presented. Evidence suggests that individuals are just as likely to be in receipt of training in the professional and business services sector as in the economy generally. The evidence also indicates that employers, especially in the financial sub-sector, are more likely to report the provision of training to their employees. Traditionally parts of the sector have been migrant-intensive. While migrants have supplied, and continue to supply specialist skills, and can provide links to global markets, given increasing regulation of immigration the sector needs to widen recruitment channels, so as to look beyond traditional sources. Employment in the sector is dominated by managers, professionals, and associate professionals who comprised approximately 55 per cent of employment in the sector in Hence the skill demand is oriented towards highly skilled and qualified people who have typically been educated to first degree level or above. Over the period to 2020 the number of managers, professionals, and associate professionals will continue to grow with the result that by 2020 these highly skilled occupational groups will comprise 60 per cent of the workforce. The sector also has a strong demand for other occupational groups, in particular clerical and administrative, and sales and customer service workers. Overall, there are likely to be strong replacement demands for all the higher level occupations and administrative and clerical occupations in the period to 2020, which may place a number of pressures on the skills supply. So whilst much skill demand is for people who have attained, at a minimum, a first degree, there are many people employed in the sector qualified to Level 3. Although the sector has a higher share of skill shortage vacancies than is evident across the whole economy, it has relatively fewer skills gaps. Where skills gaps do exist employers in the sector are more likely than those in other parts of the economy to take steps to remedy them. Whilst the sector engages in a relatively high amount of training relative to the rest of the economy, the evidence indicates that in the financial sector, the take-up of vocational qualifications is relatively low (though not by much) compared with the economy as a whole. Employers appear to be reluctant to use national vocational qualifications because they do not see a good fit between these and the sector s skill needs. Potentially, Apprenticeships in the areas of finance and business administration, where the numbers of apprentices has grown strongly over recent years, provides an alternative pathway into a sector which has traditionally been reliant upon graduates from higher education. 14

18 Executive Summary - Skills Needs Assessment Overview Consultation Draft Summary of key findings from the UKCES Sector Skills Insight Reports (Published July/August 2012) - (continued) Sector Skills Insight Reports - Summary of Key Findings Digital and Creative Skills demand Skills supply Skills mismatches Applications to computing and IT courses are in decline and the quantity of graduates may not be sufficient to meet the growing demand for professional and technical skills. Employers are concerned about the quality of HE education and whether graduates finish their studies with the right sort of skills that employers want, particularly in fast-moving sectors such as visual effects. Much of the training carried out in the sector is done informally. The proportion of the workforce receiving formal training is also below average and falling. Digital and creative sector employers tend to be less involved with government skill development initiatives and with the education system. The sector is characterised by continuous technological change and development. This gives rise to specific skill needs in the sector over time. Technology, and business, drivers in the digital sub-sector will mean that the sector will have high demands for managerial, professional and technical skills over the medium term. Replacement demands are projected to be even greater than the expansion demands for managerial, professional and associate professionals. A key challenge for the sector will be to ensure that its skills supply chain, through initial, secondary and tertiary education, through the vocational educational and training system and through ongoing workplace development generates both the quantity and the quality of skills to meet these growing demands. The evidence that indicates that skill demand exceeds supply in the digital sub-sector, particularly for highly qualified and experienced professional and technical staff, includes high average wages, persistent reports of skill shortages (some severe) and the use of migrant labour. Employers can play a significant role in meeting these changes through: Widening their recruitment pool and, for instance, encouraging more women to develop the skills to work in the digital subsector. Helping to develop more highlevel entry routes into the sector for example through apprenticeships. Helping improve the quality of information, advice and guidance available for people interested in or already working in the sector. Collaborating with other employers to develop training solutions more effectively. 15

19 Executive Summary - Skills Needs Assessment Overview Consultation Draft Summary of key findings from the UKCES Sector Skills Insight Reports (Published July/August 2012) - (continued) Sector Skills Insight Reports - Summary of Key Findings Tourism Skills demand Skills supply Skills mismatches The number of apprentices in the sector has been rising rapidly in recent years, as has the number of students studying tourism-related degrees. However the numbers are still small relative to the potential demand. On workplace training, the sector has one of the highest training expenditures per employee, although much of this expenditure is on initial training of recruits due to the high labour turnover within the sector. Tourism employers are also less likely than those in other sectors to engage with external training providers, particularly higher education providers. Reliance on transient workers can reduce the effectiveness of skills development activities, such as employee engagement. In addition to filling the new jobs, because the sector has a relatively high rate of labour turnover, tourism employers are expected to have to replace over a million employees between 2010 and Generally skill levels are expected to increase, although there will still be a large number of opportunities for people with low level (ie Levels 1 and 2) qualifications. Underemployment refers to workers who are overqualified or over-skilled (they do not require their qualifications or experience to do their job). Nearly one quarter (24%) of employees in the sector are over-qualified, compared to 16% across the whole economy. Businesses will need to create a consumer-focused culture, driven from the top down by leaders and supervisors. There will also be specific skill needs for technology professionals and technical staff. There is evidence that the demand for labour across the sector is outstripping supply. Currently skill shortages and gaps are predominantly concentrated among elementary occupations, and mainly around customer service skills. While addressing these shortages and gaps directly will improve the situation for the sector, sustainable improvements will come from developing management skills, particularly the people management skills of First Line Managers and Supervisors. Executive Summary - Skills Needs Assessment Overview 16

20 Summary of key findings from the UKCES Sector Skills Insight Reports (Published July/August 2012) - (continued) Sector Skills Insight Reports - Summary of Key Findings Education Skills demand Skills supply Skills mismatches Employment will continue to grow over the There is a well developed supply Skill mismatches are less in medium-term albeit at a slower pace than in the side which provides initial evidence in the sector than in past. But when replacement demands are preparation to those the economy generally. This considered, in relation to the age structure of considering entering the relates to both external skill the workforce, there is likely to be a strong teaching profession and deficiencies (ie recruitment demand for labour and skills over the mediumterm. supporting their ongoing problems) and internal ones (ie The occupational structure of the sector is continuing professional skill gaps). This relates at least in dominated by professional staff who make up development needs. The part to the strong training around half of the entire workforce. This share Education sector invests heavily in supply infrastructure and the is likely to increase over the medium-term. As well its workforce, compared to the relatively heavy investments as having a strong demand for professional staff, economy as a whole. There is a which are made in the training increasingly there is a demand for people with well- developed professional of new and existing teachers, skills in STEM subjects. People are attracted to development and training structure trainers, and lecturers. Despite teaching as a vocation, but the sector will place to assist with the initial and the relatively low incidence of skill strong pressures upon its supply of skills if it is to continuing training of the sector s mismatches there are likely to be meet its projected replacement demands and, in workforce, but for the sector to particular areas of shortage, addition, continue to meet the demand for existing continue to grow, more specific such as those people are who employees to acquire new skills. Given the professional development are skilled in teaching STEM importance of the sector to the UK economy this is opportunities will be required in key subjects. a challenge which cannot be avoided and cannot be areas. It is also apparent that the failed. Growth through skills is dependent upon sector has made use of initiatives people possessing the minimum entry requirements such as Apprenticeships to provide when graduating from university. There are training via vocational entry routes enormous skill replenishment needs once people are into the sector. in the sector in relation to curriculum changes and advances in knowledge. This can only be achieved through training and continuous professional development. 17

21 Executive Summary - Skills Needs Assessment Overview Consultation Draft Summary of key findings from the UKCES Sector Skills Insight Reports (Published July/August 2012) - (continued) Sector Skills Insight Reports - Summary of Key Findings Transport and Storage Sector (SIC ) Skills demand Skills supply Skills mismatches The qualification profile reveals that the sector is one of the most poorly qualified of all, with 37 per cent of the sector workforce not qualified to a Level 2, and only 16 per cent having a Level 4 or higher qualification (compared to 23 per cent and 37 per cent across the whole economy). Furthermore 3 in 5 Managers do not have a Level 4 or higher qualification. A number of factors affect the skills levels of the workforce. Firstly a large number of the roles are at a Level 2 grade, but key qualifications, such as vocational licences, considered to be Level 2, are not included in formal accreditation frameworks. Furthermore, the ageing profile of employees, especially those that have worked in the sector all their working lives, means they see little tangible benefit from gaining higher qualifications. EU and UK directives and regulations affect many areas of Employment roles are concentrated in the lower occupational groups of Machine Operatives and Elementary Workers (60%), with Managers accounting for a further 11 per cent. 69 per cent of the workforce work in just 15 job roles, whilst 4 of the top 6 roles are driving occupations. The vast majority of establishments in the sector employ fewer than ten people and smaller firms, particularly in road haulage, use informal recruitment methods, such as word-of-mouth. This may have implications for the recruitment of non-typical workers, while the negative perceptions of the sector and a lack of awareness of opportunities available mean that young people do not consider the sector as a career of choice. This is further reflected in the data that shows the sector is one of the least likely to take on an individual in their first job on leaving school, college or university. The working patterns of the sector are dominated by full-time workers, who are employees of businesses. Working hours though, tend to be non-standard - evenings, early mornings and weekends. The sector offers opportunities for employment for those with Level 1, basic and employability skills, such as warehouse operatives and cleaners, right through to Level 4 and higher qualifications. But Employers reveal that most vacancies are at machine operative level. Drivers fall within this category and historically there has been a shortage of good Large Goods Vehicle (LGV) drivers. However, the economic slowdown and an influx of European workers, has mitigated this situation to some degree, but concerns remain for future recruitment. Although significant number of individuals are seeking a role in the sector, a lack of applicants with the required skills mean that nearly a fifth of vacancies are classified as hard-to-fill. The skills most frequently reported as being considered to be lacking are job specific; in addition, a lack of customer handling skills is more prevalent compared to the all economy average. The skills identified as lacking in applicants are similar to those found to be lacking in the current workforce. 55,000 sector workers have skills gaps, with machine operatives and elementary workers most likely 18

22 Executive Summary - Skills Needs Assessment Overview Consultation Draft Summary of key findings from the UKCES Sector Skills Insight Reports (Published July/August 2012) - (continued) Sector Skills Insight Reports - Summary of Key Findings Transport and Storage Sector (SIC ) (continued) Skills demand Skills supply Skills mismatches the transport sector, with compliance training being a significant motivation for training spend. The Driver Certificate of Professional Competence (CPC) is one of the latest directives to have a massive impact on the training and development of professional LGV and Passenger Carrying Vehicle (PCV) drivers, and the supply of training. Over 400,000 professional drivers will need to complete 35 hours of periodic training every 5 years. the sector is relatively low skilled. Total jobs in the sector are projected to grow by 95,000 between 2010 and 2020, with replacement demand of 553,000. This means that 647,000 job openings are expected in the period, across all occupational groups. This raises issues for skills needs. To fully maximise economic performance there is an immediate need to ensure that we supply the right skills which effectively meet the changing needs and requirements of the sector labour market. to be highlighted as lacking full proficiency. The impact on businesses includes increased operating costs and the loss of business or orders to competitors. The majority of employers undertake activities to overcome these skills gaps, such as increasing training or expanding the trainee programme. However, the failure of some employers to provide appropriate training is reported to contribute to over a quarter of skills gaps. The skills needs considered to be most threatening to sector performance are job-related technical skills and customer service abilities. These skills are a consequence of a number of drivers influencing the sector. Source: UKCES, Transport and Storage Sector Skills Assessment, October

23 Executive Summary - Skills Needs Assessment Overview Chapter 5: Conclusions: Emerging Skills Priorities Demand: High and increasing High level skills are increasingly important Why? Volume: Large - three occupations account for 40 per cent of LLEP employment (managers, professionals, and associate professional and technical) - this is predicted to rise Importance: High and predicted to become more important due to drivers such as globalisation (keeping a competitive edge against emerging economies), on-going technical developments and consumer demand Supply: Despite good progress compared to other OECD nations our supply of highly skilled people is likely to place us 10th in the OECD by Stimulating demand: Despite growth, and some skills shortages, there is evidence to suggest the UK highly skilled employment growth needs further stimulation (high value product/service strategies). Also evidence of underemployment in the workforce raising issues of supply side relevancy, job-matching and employer optimisation of workforce skills Local considerations: Volume: Leicester City has a lower demand for these 3 occupations currently at around 30 per cent of all employment, it also has a lower percentage of the working age qualified to NVQ Level 4 or above Supply: The LLEP area and East Midlands region is weak on graduate retention Graduate retention is adversely affecting the supply of graduates from local/regional universities to meet increasing high level skills needs in the local economy. Also undergraduate profile remains predominantly one of young, full-time learners, both locally and regionally Mismatch: The business survey data shows increasing recruitment difficulties in associate professional and technical roles. Sector evidence suggests that increasing the supply of high level STEM skills alone is not a full solution to skills mismatches. This is because STEM graduates are in demand throughout the economy and take up opportunities in many sectors, their opportunities are by no means restricted to engineering and technology based sectors. It is therefore vitally important that STEM occupations are seen as attractive, prestigious and in demand - there is perhaps a need to over supply the STEM skills to ensure that future needs can be met. Stimulating demand: Leicester City in particular and the MIRA labour market area have an economic legacy of employment concentrations in lower skilled employment, affecting the demand for, and supply of, local highly skilled workers. The development of the MIRA technology park and enterprise zone provides a catalyst opportunity to change local supply and demand for high level (especially STEM) skills but other East and West Midlands EZ areas (especially i54 in Staffordshire) may provide significant competition, especially on the required high level STEM skills 2 National Strategic Audit, Volume 2, UKCES

24 Executive Summary - Skills Needs Assessment Overview Chapter 5: Conclusions: Emerging Skills Priorities (continued) High level skills are increasingly important (continued) Key occupations and sectors affected: Why? High level management skills capable of future strategy development and entrepreneurialism (exploiting new technology, new markets): All sectors but especially, large employing areas such as Retail, and emerging sectors, eg Advanced Manufacturing niche areas, and new technology sectors A range of managerial skills, often specific to sectors, eg Data Security Management and Protection of Intellectual Property: All sectors, but within varying requirements Professional Roles - IT: Business Services, Computing/Digital, Games/Software Professional Roles - Science and Technology: Health, Life Sciences, Manufacturing (especially advanced, low carbon) Professional Roles - Teaching and Research: Mainly education sector Professional Roles - Health/Social Work Professional: Health and Social Care Professional Roles - Engineering: Engineering, Manufacturing (especially advanced), Construction Intermediate level skills - remain important Why? Demand: Although net demand is not expected to increase substantially, there are some key issues to address at the intermediate level. This is especially marked in STEM occupations and the construction sector, where there is a significant need to replace those leaving the sector. There will be some new demand from emerging high technology sectors Importance: There is an aging workforce with intermediate skills that are vitally important to the economy - especially in engineering, manufacturing and the construction sectors. New intermediate skills will be needed for the emerging sectors and to support future economic competitiveness Supply: Nationally, the UK is struggling to meet goals on intermediate skills supply (Government s skills strategy). Growing emphasis on strengthening intermediate vocational career pathways to ensure skills are met at this level and also to aid progression to higher level skills acquisition. Migrant labour has been a feature in meeting some supply shortages, particularly in Construction 21

25 Executive Summary - Skills Needs Assessment Overview Chapter 5: Conclusions: Emerging Skills Priorities (continued) Intermediate level skills - remain important Why? Stimulating demand: In some traditional sectors (Construction) and intermediate occupations (skilled trades) they are set to decline in overall numbers but this is more than offset by large volumes of predicted replacement demand due to aging workers in this group, thus making this a pressing skills area if significant skills shortages are not to occur, hampering economic recovery and competitiveness especially in important sectors and emerging new sectors Local considerations: Leicester City has a lower (cf Leicestershire County and England) percentage of its working age population qualified to NVQ Level 3 or above Latest business survey supports national and sector evidence that there are some sectors particularly affected by skills shortages (with a requirement for skilled trades/stem roles, eg Engineering and Electrical sector (45 per cent stated impacted by skills shortages recruitment issues) Key occupations and sectors affected: Technician roles with higher levels of STEM skills: Broad range of sectors but especially Manufacturing (advanced), Process Industries (Oil, Water, etc), Automotive, Engineering, Creative, and Agriculture Health/Social Work, eg Nurses: Health and Social Care Miscellaneous roles, eg Graphic Design (Advertising), Public Sector Associate Roles, Investment Advisors (Financial), Sports Coaches (Leisure), etc Skilled trades: Construction, Manufacturing, Engineering, and Utilities, Life Sciences (eg Pharmaceutical sector, but this is not a significant employer in the LLEP area) 22

26 Executive Summary - Skills Needs Assessment Overview Chapter 5: Conclusions: Emerging Skills Priorities (continued) Low skills jobs - declining but expected to remain significant Why? Demand: There has been and is expected to be an overall decline in the share of lower skilled jobs in the economy. However, low skills jobs are very important for some sectors of the economy, eg Retail, Tourism, and Care Importance: Many low skill jobs are important in meeting public and market needs. They demand important skills such as customer service, quality product/service delivery, ability to tailor services to people/families/customers. These skills often need up-skilling within the workforce. These jobs can act as important first steps for people seeking to move out of unemployment/wanting a job, and back into the labour market. These roles are important for people seeking to work part-time around other commitments (care, learning), and are also a key source of employment for many migrant workers Supply: Many of these types of jobs have high labour turnover, requiring employers to repeatedly recruit and train. Despite lower skills level requirements there are significant levels of skills gaps within the existing workforce, affecting business costs, productivity and employer ability to move into higher value market strategies Stimulating demand: Future demand for lower skilled roles will in part depend on how businesses adjust their modes of working, and move into higher value/quality markets Local considerations: Leicester City has a higher (compared to Leicestershire County and nationally) percentage of its employment concentrated in lower skilled occupations There seems to be a specific difficulty in filling process, plant and machine operative roles in Leicestershire County, as evidenced by Jobcentre Plus live unfilled job vacancies, also further evidenced by the latest Leicester and Leicestershire business survey, eg in the manufacturing sector - biggest recruitment difficulty was for skilled trades and plant and machine minders The business survey and Jobcentre Plus data highlight problems in filling vacancies within the care sector - which is likely to become more acute with an ageing population without intervention to attract more people into this sector. There continue to be problems with job seekers demonstrating that they are job ready and can meet the requirements of local employers with vacant positions. Problems with mismatch between job seekers and vacancies persist Key occupations and sectors affected: Care/personal service: Health/Social Care, Retail, Hospitality, Tourism 23