UK COMMISSION FOREMPLOYMENT AND SKILLS

The Role of Skills in Recession – and Recovery

CIPD/ACAS ConferenceLondon11 June 2009

Chris Humphries CBEChief ExecutiveUK Commission for Employment and Skills

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UK COMMISSION FOREMPLOYMENT AND SKILLS

Skills matter to earnings

21 24 27 30 33 36 39 42 45 48 51 54 57AGE

Source: Cabinet Office, Getting On, Getting Ahead: A Discussion Paper: Analysing the Trends and Drivers of Social Mobility, 2008

Gross median annual earnings (£) by age for men, disaggregated by skill level, 1994–2006

Gro

ss e

arn

ing

s (£

000s

)

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UK COMMISSION FOREMPLOYMENT AND SKILLS

Skills matter to employment status

Source: ONS, Labour Force Survey 2008

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UK COMMISSION FOREMPLOYMENT AND SKILLS

Skills matter to occupational choice

Source: ONS, Labour Force Survey 2008

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UK COMMISSION FOREMPLOYMENT AND SKILLS

Skills - the most damaging disadvantage?

The Low Skilled experience low and declining employment rates – the only disadvantaged group to do so

Source: UKCES, Ambition 2020: World Class Skills and Jobs for the UK, 2009, Chart 1.5, p 29 – DWP using Labour Force Survey

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UK COMMISSION FOREMPLOYMENT AND SKILLS

The current recession:Who’s lost their job?

Flows into unemployment April 08 – April 09 ‘In-flows’

Numbers % of total

Managers and Senior Officials 193,985 5%

Professional Occupations 133,980 4%

Associate Professional and Technical 251,165 7%

Administrative and Secretarial 439,810 12%

Skilled Trades 500,615 13%

Personal Service 187,630 5%

Sales and Customer Service 598,725 16%

Process, Plant and Machine Operatives 427,845 11%

Elementary Occupations 1,039,050 28%

Total 3,772,805

Source: NOMIS, and Oxford Economics, May 2009

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UK COMMISSION FOREMPLOYMENT AND SKILLS

Changing pattern of unemployment:April 2008 – April 2009

Source: The Guardian, 12 May 209 - http://www.guardian.co.uk/business/interactive/2009/jan/21/unemployment-map

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UK COMMISSION FOREMPLOYMENT AND SKILLS

Pe

rce

nta

ge

in

em

plo

ym

en

t w

ith

Le

ve

l 4

sk

ills

an

d a

bo

ve

Percentage in employment with Level 2 skills or below

Source: UKCES, Ambition 2020: World Class Skills and Jobs for the UK, 2009, Chart 2.1 – ONS Population Survey, Jan-Dec 2007

Percentage of working age population in employment by qualifications level

252729313335373941434525.0

30.0

35.0

40.0

45.0

50.0

UK

Scotland

Wales

Northern Ireland

London

South East

South WestEast Midlands

West MidlandsEast of England

Yorkshire & Humber

North East

North West

UK national/regional skills variations

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UK COMMISSION FOREMPLOYMENT AND SKILLS

The UK Qualifications Profile 1997-2007:Good progress over last decade!

UK QualificationAchievements

1997 2007 1997-2007 Change

1997 – 2007 % Nos (‘000s)

% Nos (‘000s)

% Nos (‘000s)

Level 5 3 1087 7 2274 110 +1187

Level 4 18 6101 24 8060 32 +1959

Level 3 18 5999 20 6738 12 +739

Level 2 21 6865 20 6912 1 +47

Below Level 2 21 7074 17 6019 -15 -1055

No Qualifications 18 5920 12 4351 -26 -1569

+44%

-26%

Source: Labour Force Survey, 2008 – Note: Working age population 19 – 59/64

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UK COMMISSION FOREMPLOYMENT AND SKILLS

0%

20%

40%

60%

80%

100%

25-34 year olds 45-54 year olds

Population with at least upper secondary education, 2006

UK Position:• 15th in OECD for ‘older workers’• 21st in OECD for ‘younger workers’

Source: OECD, Education at a Glance 2008, Table A1.2a

But progress at school level is too slow …

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UK COMMISSION FOREMPLOYMENT AND SKILLS

Population with tertiary education, 2006

0%

20%

40%

60%

Canad

a

Japa

n

Korea

New Z

eala

nd

Norway

Irela

nd

Belgi

um

Denm

ark

Franc

e

Spain

United S

tate

s

Austra

lia

Sweden

Finla

nd

United K

ingdo

m

Nethe

rlands

Luxem

bourg

Icela

nd

Switzer

land

Poland

Greec

e

Germ

any

Hungar

y

Portuga

l

Austria

Mex

ico

Slova

k Rep

ublic Ita

ly

Czech

Rep

ublic

Turke

y

25-34 year olds 45-54 year olds

… and at tertiary level too

Source: OECD, Education at a Glance 2007. Table A1.3a

UK Position:• 12th in OECD for ‘older workers’• 15th in OECD for ‘younger workers’

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UK COMMISSION FOREMPLOYMENT AND SKILLS

Typical UK behaviour in recession:1990-1992

• Employer training budgets were among the first cuts

• Redundancy was length of service based, not skills based

• Government training was ‘shotgun’, not targeted

• Recession was long and deep – first ‘white collar’ recession

• Companies that didn’t train were 2.5 times more likely to fail

• Long term unemployment exceeded 1 million for first time

• Recovery was slow – and led to severe skills shortages

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UK COMMISSION FOREMPLOYMENT AND SKILLS

Is this recession different?

The evidence strongly suggests:• Employer training budgets much more protected

– In some sectors, 80% plus protecting/increasing training budgets

• Staff retention based upon skills needed for recovery– Companies recognise that their people are their best hope

• Government training more targeted on skills for recovery– We understand more about skills for employability and success

Some personal predictions:• The recession will be deep but shorter than feared

– 2 months of +ve growth (NIESR), house prices, optimism returning• Unemployment will not reach 3 million• Unemployment will recover more quickly• Skills shortages will be much less severe

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UK COMMISSION FOREMPLOYMENT AND SKILLS

Conclusion

“The skills of our people are our best guarantee of future

prosperity – and the best investment an employer can make in challenging times.”

UK Commission for Employment and Skills, November 2008

The UK is learning – and learning pays!