UK skills policy has, for decades, been focused primarily on increasing the supply of skills. The assumption being that a greater supply of higher level skills would in turn drive improvements in productivity. Yet, the UK now boasts one of the world’s most qualified workforces, but productivity remains low and stagnating. There is a growing consensus that enhanced leadership and people management skills, alongside better use of existing workforce capabilities, are urgently needed if we are to tackle this challenge.
The OECD has argued that policies to tackle skills mismatch, which include improved job design, human resource management, businesses product market strategies, should be focused at the local level: 'it is often at the local level where the interface of these factors can be best addressed. Policies which aim to improve skills use in the workplace can address the multifaceted challenges many local economies are facing and contribute to national productivity and inclusive growth objectives' (OECD (2017) Better use of skills in the workplace: why it matters for productivity and local jobs, OECD, ILO.).
The importance of the local dimension is particularly relevant in the case of SMEs, who are much more likely to serve local markets and are required to draw from a local supply of skills, while it is also the case that smaller firms find it particularly difficult to put into place practices that make best use of their employees skills because of poor management or a lack of a specialised HR function.
Our recently published research Productivity and place: the role of LEPs in raising the demand for and use of skills at work and accompanying guide has investigated the extent to which Local Enterprise Partnerships have recognised and prioritised this challenge. To explore these issues we conducted a review of LEP strategic plans and other key documents to shed light on the LEP priorities and activities in this space, and interviewed senior LEP staff across 15 LEPs.
The key takeaway finding from the research was that although skills were identified as a key priority for LEP areas, there is limited evidence of attempts to develop skills demand, and there is often a view that improving skills supply on its own would address local economic challenges. However, there were some exceptions and the research identified emerging areas of practice:
- Two mayoral combined authorities were in the process of developing employment standards in an effort to encourage firms to offer stable, fairly paid work that provided training and in-work progression. Although, this activity was indirectly connected to the LEPs activity via the mayor.
- LEP Growth Hubs, and business support programmes, offer a potential mechanism to influence demand. A lot of activity was focused on supporting SMEs to improve their leadership and managements skills, and many of the LEPs spoke positively of their role to play here. However, only one Growth Hub had the resources to employ specialist workforce advisers, which have been demonstrated as effective mechanisms to raise skills demand/use.
The report recommends a coherent and co-ordinated approach is needed, both locally and nationally, to address skills demand and skills use:
- Development of a national skills policy that explicitly addresses the issue of skills utilisation and that positions addressing it as a key remit of Local Enterprise Partnerships (or equivalent), and that puts in place sustainable and flexible funding to enable them to fulfil this remit.
- Emphasis on local skills ecosystems that integrate current infrastructure (for example LEPs, Growth Hubs, anchor institutions, business networks) to address improved supply and demand.
- Introduction of mechanisms that develop capacity for local skills analysis; the rollout of Skills Advisory Panels should support this aim.
- Development of skills supply initiatives that go beyond a narrow focus on work entry for those leaving education or furthest from the labour market, and which help to facilitate in-work progression.
- Creation of effective mechanisms to influence skills demand, working with employers on job design that creates stable, fairly paid work that offers training and in-work progression and promotes inclusive growth. Current initiatives such as combined authority employment standards should be evaluated for effectiveness here.
- Introduction/development of business support programmes that deliver robust human resource management input to again influence skills demand, improve skills utilisation and increase productivity.
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