UK Industry: nation’s skills crisis

The UK and Scottish Governments of all political creeds have not developed a sustainable and proactive industrial strategy over the last twenty years (and more). The current crisis engulfing our nation’s steel industry has illuminated a number of these structural and strategic weaknesses in our economy.

If we take a look more closely at the nation’s skills and apprenticeships programmes then you begin to understand some of the reasons for this inchoate approach.

The inadequacies of the system are alarming when you consider that more than 30 per cent of people who start apprenticeships fail to complete them, and the numbers have worsened every year for the past three years. The success rate for all apprenticeships completing their apprenticeship was 68.9 per cent in 2013/14. It has declined steadily since 2010/11 when it was 76.4 per cent. If the success rate stays as it is over the UK Parliament, the 3m target by 2020 will equate to less than 2.1m successfully completed apprenticeships. The sharpest fall in success rates was among apprentices aged 19 and over, which fell 4.4 percentage points in the latest year alone to 68.2 per cent — precisely the demographic that should be targeted.

The gender segregation is also striking as across the UK women account for 94 per cent of childcare apprentices but just under 4 per cent of engineering apprentices while male apprentices outnumber their female colleagues by 56 to one in construction and 74 to one in plumbing. These imbalances have barely budged in over a decade as women represented 4.6 per cent of engineering apprentices in 2002 and just 3.8 per cent in 2014.

The gap between the salaries of average full time male and female workers is also still around 10% which is directly a result of the aforementioned occupational segregation embedded by our apprenticeships system. In a recent survey by the Young Women’s Trust a survey found that women were paid £4.82 an hour on average and £5.85 for men — a scandalous gap accelerated by the Chancellors –so called Living Wage for over 25s.

In recent survey by British Gas conducted on perceptions of value worth of apprenticeships 44 per cent of people aged said they would never even consider an apprenticeship. This was complemented by a survey conducted by Prudential which concluded that in a survey of 16 to 18-year-olds who have decided against an apprenticeship it found that more than a third (36 per cent) selected other options due to the perceived level of qualification available.

Are the findings any surprise with low pay levels and an education system which is not tailored towards promoting apprenticeships in critical areas of our economy?

As I have written before proactive measures are required if building 60,000 new homes over the course of the next parliament in Scotland which would support almost 50,000 jobs a year is to be delivered. Construction employment in Scotland is also expected to fall over 2016 to 2020 despite the sector needing more than 21,000 new workers over the coming five years as people retire. In addition an October report by the Royal Institution of Chartered Surveyors said about 30% of respondents to its monthly construction market survey reported an increase in workloads but almost two-thirds said difficulty in sourcing labour was an obstacle to growth. The Institution of Engineering and Technology also reported demand for engineers is at an all-time high concluding that Scotland will need an additional 147,300 engineers from 2012–2022.

So when you get behind the headline figures what you find in a snapshot is that we have a skills-gap in strategic areas of our economy, gender segregation reinforcing structural weaknesses and pay inequality. A third of all apprenticeships across the UK are not being completed while a significant proportion of young people state that would not even consider an apprenticeship. It is a skills crisis created by an inchoate and non-existent industrial policy.

These figures correspond with a recent report by Oxford University Research in 2015 which confirmed a de-skilling trend over the 1996–2008 period highlighting for every 10 middle-skilled jobs that disappeared in the UK about 4.5 of the replacement jobs were high-skilled and 5.5 were low-skilled. In Ireland, the balance was about eight high-skilled to two low-skilled, while in France and Germany it was about seven to three. Last year the TUC also reported between 2008–13 the acceleration jobs in the two lowest paying industries — food and beverage services and services to building and landscaping activities — grew by around a quarter.

When we look at Scotland’s Modern Apprenticeship Employer survey of 2,500 companies you can see in the table below how the system reinforces the institutional bias towards low paying sectors of the economy.

Therefore we must ask whether the proliferation of low quality, low skill and low paid jobs is the type of economy we want for our country? Critically we must look behind the headline figures as politicians at Westminster and Holyrood scramble to claim how successful their respective modern apprenticeship systems are when the reality suggests they are contributing to the existent problems and weaknesses in our economy. One can only conclude there is no coherent skills strategy.

Note: Modern Apprenticeship report all employers (2,505); Hospitality (232), Retail (193), Business & Administration (226), Construction (190), Hairdressing and Barbering (216), Automotive (190), Social Services and Healthcare (165), Management (106), Freight Logistics (87), Social Services (Youth) (194), Engineering (145), Electrical Installation (99), Plumbing (52), Food and Drink Operations (82), Customer Services (60), Other primary / secondary (135), Other service industries (133)