New report reveals without more tailored training the UK’s productivity is threatened

New research carried out for the Sector Skills Development Agency (SSDA) reveals that more account needs to be taken of the needs of individual sectors when developing education and skills policy if money is not to be wasted on ineffective initiatives.

The report written by Professor Ewart Keep, Warwick Business School, for the SSDA entitled Market Failure in Skills examines vocational education and training (VET) policy to reveal that almost any outcome not meeting policy makers’ expectations is labelled ’market failure’. In turn such possible misdiagnosis is leading to potentially ineffective and expensive public initiatives.

Policy makers often argue that it is market failure that has led UK employers to under-invest in skills, and this has been the basis for government intervention over the past two decades. Government responses have included the expansion of post-compulsory education and state funded entitlements to minimum levels of certified training for adult workers.

The analysis reveals there is a dearth of research on what is causing skill deficits in some sectors. Market failure is only one cause of skill supply and usage problems. In practice employers limit training and investment for various reasons, including job design that minimises skill needs. Also, Britain may have a relatively low skills because that is what employers want. Some jobs involve low-specification products and services, which offer low skilled roles. In a ’low skills equilibrium’. It is not just about increasing skills, but also about increasing skill usage.

The report also asserts that blanket training schemes, which educate employees from all sectors to a specific level, are a dangerous approach and do not necessarily meet employer needs. This is backed by previous research that reveals that nearly 40% of employers say they are having difficulty filling positions due to the lack of people with the right skills.

Report author, Professor Ewart Keep, said: The Sectors Skills Councils are helping to ensure that courses and skills are tailored to parts of the economy. But policy has not yet caught up. Sector skills growth needs to be given emphasis, as vocational does not automatically mean employable. Some skills are in demand and some are not. The broad-based approach to skills needs to be replaced with a wider range of sector-based interventions

Market Failure in Skills is the first of the ’Catalyst’ series of policy papers commissioned by the SSDA. Professor Mike Campbell, Director of Strategy and Research at the Sector Skills Development Agency, said: The aim of the Catalyst series is to promote debate on crucial skills and productivity issues so as to inform the way that skills are developed and valued. Market Failure in Skills is the SSDA first report to examine the importance of moving to a more employer-led, demand driven approach to skills. Skills are only good if they are the right ones - and that can only be ensured by employers being intimately involved in their demand, development and delivery.

For more information contact: Jenny Murray, Communications Management,
Tel: 01727 733889, Email: jenny@communicationsmanagement.co.uk or Alex Curling, Head of PR and Communications, Sector Skills Development Agency, Tel: 01709 765435, Email: alex.curling@ssda.org.uk

The ’Catalyst’ reports are a series of accessible policy papers designed for businesses, vocational educators, HR specialists and policy-makers written by top economic and labour market experts. They are designed to initiate change by examining the most pressing issues facing the future of the UK’s economy. Future Catalyst papers are set to analyse issues such as the barriers to adopting high performance working practices, raising the demand for skills, international recruitment and how SME’s can meet their skill needs.

The Sector Skills Development Agency (SSDA) is responsible for funding, supporting and monitoring the network of Sector Skills Councils (SSCs).

Please click the link below to view the full report
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