Realising Impact: Making a difference through adult learning

Keynote Speaker: Michael Davis, UKCES

Transcript of presentation given 11th September 2015

So thank you and thank you to David for inviting me. So some of you will know the

Commission for Employment and Skills, but I guess many of you won't. So I just

thought, very quickly - and of course I am going to stand under my own slides if I stand

there - so just very quickly what does the commission do? It's probably easier to think

about the commission more and less about the name, the things that we do.

We do an awful lot of research about labour market trends, about skills needs,

employment needs, skills changes, skills gaps and those are just an example of some

of the things that we have been doing over the last 12 months.

We manage a programme called, Investors in People, which works with about 14,000

businesses across the UK. It helps them get the best possible alignment between their

people practices and their business goals. Perhaps less well known is we manage

something called National Occupational Standards which underpin, in the UK, the

apprenticeship frameworks and many of the vocational programmes that both young

people and adults participate in. But really what defines the commission and makes it

unique is how it's put together.

So it's a non-departmental public body but it's the leadership that comes from our

commissioners who are very senior business leaders, trade unionists and people from

the third sector. We've got a couple of vacancies on there at the minute, but normally

we have someone both from higher education and further education. It's that combined

leadership model; the expertise that they bring, the advocacy for in essence an agenda

which is that as an economy grows then it does so through the strengths and the

capabilities and engagement of people. It does that best when it does it collaboratively

in key sectors of the economy and in key localities.

Now I'm conscious that you've had a couple of days together now and I'm the last of

the speech, so I'm hoping to keep this relatively light and engaging. Actually I'm going

to start by telling you that tomorrow I go on holiday. So I'm kind of halfway out. I know

this is being recorded, so I'm going to say it really, really quietly. It's probably my

favourite holiday of the year because it's the one I go away with my friends and we go

away for a week on the motorbike. We don't take our other halves with us and kids

don't come with you. It's pretty much just great fun.

Sometimes we go round Europe and this year we're going to Wales. But this time last

year it wasn't so fun and it's because as you get older, the motorbikes that you own get

more and more complicated and the things that you used to be able to do when you

were 18, 19 and 20, you seem to have forgotten how to do. So the worst thing was

about a week before we were due to go, I started the motorbike, which is pretty much

all I do with it, all year round.

On came this light, which I didn't know what it meant, but it didn't look healthy. So I took

it to the local garage. They were absolutely fantastic, it was one week before I'm due to

go away. I spend my week down here in London. I said; just fix it. Not only did they fix

it, they returned it back to my house on the Friday night, cleaned, fuelled and for me to

leave on the Saturday morning at five o'clock. So as far as I was concerned I was very,

very happy, until I made the mistake of telling my friends who I go away with, who are

all, unfortunately, engineers and from the automotive sector about what had gone

wrong with it.

So their first horror was why hadn't I fixed it? Well I didn't have time and I can't any

more. Secondly - and this is the more substance of the - what I would like us to think

about in terms of the future of work and how jobs and so on is - their frustration was

why did the mechanic or the technician, why did he just simply - why did he replace the

broken part on the bike rather than repair it.

Now without boring you, which it would be utterly boring to tell you what was

specifically wrong with the motorbike, there are a few lessons that came out of that

example for me.

The first was he didn't repair the part that had broken, he replaced it. He replaced it

because it's simply easier to put a warranty on a part than it is labour. If it had taken

him more than an hour to repair the part it was cheaper to replace the part, because an

hour of his time with the overhead that goes with the garage makes it more expensive.

It's just simply cheaper to replace the part.

Ultimately, because he was now following a set of instructions which, actually that little

light meant that all he did was he plugged the motorbike into a computer. The

motorbike told him exactly what was wrong with it. Told him the part number, actually it

didn't tell him the part number to order, because the moment he had plugged it in the

part number had been ordered through the data system. All he had to do was replace

the part.

Now I think there's some really, really important things and they're the sort of trends

that almost move along imperceptibly on a day-today basis but they're having big, big

implications in terms of how our labour market works and the roles that people have.

So the first one for me was that he, in my mind, was being de-skilled. So he probably

absolutely had the skill and capability to repair that part, but the business model that he

worked within said; it's just simply cheaper, easier, safer to replace that part and that's

what he did. The diagnostic that was in the motorbike told him that that's what he

needed to do.

So for me there's an issue about individual skills' value of a person becoming

separated from them as a unit of lab our and that if individuals aren't clear about what

their value add is they find themselves just being a unit of labour and the value have

been done somewhere else. The value was the fact that the motorbike had the ability

to diagnose its own fault and to say what it needed to be replaced.

But the second thing is that there was some new jobs being created, which is that

when you hand over your motorbike in the slightly sort of stressed form but they give

you a lovely cup of coffee, you hand over lots of information about the motorbike.

You hand over its age. You hand over how few miles you've actually done on it. You

hand over the fact that you're clearly middle-aged and you bought a sports bike and it's

some sort of crisis. Really what someone else is now doing is collecting all that data up

and rather than this being a motorcycle part that failed because of excessive use, it

failed because of a lack of use.

Again without going into the mechanics of how the motorbike works, if all I keep doing

is starting the motorbike up for 10 minutes just to check it works but never ride it

anywhere, you get the build-up of deposits and dirt in the engine. So the part was

failing because it wasn't being used rather than the motorbike ever getting up to

temperature and being used. So there's someone else who can literally work anywhere

in the world who collects up the diagnostics of all of those part failures, and actually I

own a motorbike that it's an optional extra for it to start. You have to pay more for that.

So someone is collecting that data up and there a new job has been created.

So this was the first thing really, it was a report that we published in January 2014 and

it just starts to look at some of the trends, the big trends that are going on in terms of

the world of work. So the impacts of technology so that you look under the bonnet of

your car, or actually most of us don't even bother and they make it pretty difficult that

you're not supposed to. You see more and more technology, more and more

electronics are going into the car. The emergence of data, there's things that we can

analyse that we never thought possible.

I didn't see it on TV last night and I guess you all didn't because you were here at a

dinner. But Channel 4 has got their new programme called Hunted. I saw briefly this

morning David Abraham who is the Chief Executive of Channel 4 and he was

explaining to understanding how this programme is put together.

So this is about people trying to fall off the grid and disappear. Is that it doesn't matter if

you think right today I'm going to just run away today. I'll leave my mobile phone here I

won't take my Oyster card. I'll borrow some cash off Mark and I'll just disappear.

Because they'll go straight to your house and they already know the patterns of where

you've been last and they can work out an algorithm as to where it is that you are most

likely to go next.

So we've already got these huge, huge patterns of data that are more and more able

for us and will have an impact on the job roles that we create.

So then it comes onto the question of so what are the - so if that is the - if you almost

like the glacial shift in work because of things like technology and other factors then

what are the implications that in terms of the skills sets that we look for, for individuals?

Now many of you in this room will be familiar with a phrase that perhaps is less

common than it used to be. We always used to talk about the three Rs of reading,

writing and arithmetic. If you go back a little bit you can find that that phrase was first

coined by an MP in the Victorian era, Sir William Curtis, in 1827. He termed the phrase,

reading, writing and arithmetic. If any of you have read the second industrial age, the

authors of that book said; actually that just wasn't like a British phenomenon of reading,

writing and arithmetic. You could find it as a basis of all modern education systems that

we wanted people to be able to read, we wanted them to be able to write and we

needed them to be able to add up.

So he thought, well why on earth was it that that term was so prevalent across so much

of the educated world in the 1800s and 1900s. Of course it was because of the British

Empire. It was well what are the three things that you need to run a really, really big

empire? Well you need people to be able to write because they need to be able to

communicate to one another. You need the other person to be able to read what the

other person has written and you need them to be able to add up.

It feels like those are the skills sets that we still look for in individuals and of course

they are, really, really important. But the problem is that technology is really, really

good at doing those exactly same three things. So that doesn't feel so good as a

person and again it's not a plug for Channel 4, honestly, it's just the other programme I

watched was if any of you saw Humans, which was about the synthetic people that

were then living in the household. It's quite eerie as to some of the roles that were

envisaged for them.

So you then start to think about what are the things that actually technology can't do.

What are the things that people are really, really good at. Again from that Second

Machine Age, the three things that they identified was that firstly, actually one of the

things that people are really good at and technology is not so good at is the ability to

assimilate information and form pattern recognition.

So just go back to reading, writing and arithmetic. How on earth did you finish that up to

being the three Rs? How would you have programmed a computer to have figured out

that reading, writing and arithmetic could be called the three Rs? It's only a human

condition that can pattern form and assimilate that sort of thing. So that is something

that is unique to humans and should be something that we should see key in our

education.

The second is the ability to ask questions. Computers can ask questions if you've told

them what questions to ask, but they're not very good at forming the question that you

would like to have asked in the first place. Thirdly is the ability of people to collaborate

in ever more diverse forums. Just looking around the room and seeing all the different

national flags, that ability to work in different groups with different types of people also

seems a hugely important aspect for individuals to be able to have.

Then I think for those of you who are responsible for developing curricula qualifications

and assessment, my only slight worry is that I worry too much that, or perhaps too

often, that our assessment methodologies still feel much more comfortable with the

reading, the writing and the arithmetic . We like actually doing assessment

methodologies that have closed loops in them. Nothing easier than if the answer can

only be a, b, c, or d and then educating people to learn to do a, b, c, or d and actually

it's very easy to assess and it gives a certainty of marketing.

The problem is those are exactly the same things that again technology finds the

easiest to do. Those three skills that I'd identified are actually incredibly difficult to

assess and very, very difficult to design curricula around. Yet those are the sorts of

things that we are needing to be able to equip individuals with. So, in other words that

they are better able to work with technology that becomes all [evasive], that they

collaborate and connect to work with other people confidently. That as individuals

they've got that greater personal responsibility.

So if you like number one then is let's just think about the trends. Number two is what

are the skills sets, then the third one, because it as a topic that I know that you've been

talking a lot about over the last day or so was the whole issue about measurement. Let

me just offer you just something that is very pertinent in the UK at the minute, which is

the whole debate around productivity.

Now it's a bit harsh on a Friday afternoon to try to do a bit of macroeconomics. I know

so bear with me on this. Because this is the really the single, simplest way to think

about why do people get so worried about productivity. So remember, just productivity

is you take the output, take it at a company level, take it at a national level and you

divide it amongst the people that you employ and that gets you roughly productivity, or

in businesses they tend to call it value add per employee.

Over here what you've got is, if you like, time zero and what you're seeing in those

charts is how productivity grew in the UK from the bottom of each recessionary point.

So Eighties, Nineties, late 2000s which is the one that we've just gone through and I

could put on pretty much all recessions since the turn of the 1900s. What people have

got really exercised about in the context of the UK is that even in high unemployment

periods of the Eighties and the Nineties, for those people that were still in work they still

were more productive year-on-year, quarter-on-quarter in terms of what they did. But it

wasn't the case in the 2000s and that's become the real productivity challenge.

That yes, it's been great that we managed to hold on to such high rates of employment

but those people in work have simply not become more productive and indeed at some

points our productivity has got worse.

Now to connect this back this is an issue for me about measurement. Because if we

are really honest, and for those of you that studied economics, we know some of the

reasons as to why that's been going on. But actually we don't know quite a bit and so

it's genuinely called a productivity puzzle. In the UK the UK government actually just

recently started a review of how we do that big macroeconomic measurement.

Because it comes back to some of the things that we've been talking about earlier on.

It's some of the things that we value and we want to measure are intangible and they

are just very difficult to measure in terms of how we think about measurement at a

macroeconomic level.

Now, Alison, who's one of my colleagues is in the room and she told me I am not

allowed to do this slide. I'll do it just a tiny, little bit. So this was an article in The

Financial Times in February 2014; I am someone who reads The Financial Times and

The Economist and anything that they say must be true. So they - and - and they took

this from the Office for National Statistics so it must be doubly true. They said that

drugs and sex, basically contribute £10 billion to the UK economy.

Now what - then when you think about it for a minute more is well both those things are

illegal, so - or they are in the UK. So the question is how do you know that? How do

you know that it's £10 billion? A clear headline taken from the FT. So how do you

actually know that it's £10 billion? Now what I'm not allowed to do is tell you how you

go about working it out. But what I would encourage you to do is just be intellectually

curious as to how they know and there's actually there's a 20 page note from the ONS

that seeks to explain how they went about calculating it.

The only one bit I will do, is that roughly, just over half of that was decided to have

come from sex work. The ONS reckoned that there was about 60,000 odd sex workers

in the UK at the time and you divide that number of one over the other and you're left

with each sex worker earning about £80,000 to £90,000 a year. If you think about that

in terms of value add per employee across an average in the UK it's about 44,000. So

it just tells you there's something wrong with the number.

What it does is it just illustrates that whenever we think about these big numbers like

this we tend to present them as if they were an empirical fact. So an empirical fact is if

at eleven o'clock today one of you had noted down the weather temperature outside

that's an empirical fact. We definitely know that to be true. The moment you start telling

me what the weather is, temperature is going to be at six o'clock today, that's an

empirical construct. We have put together a model, we've made some assumptions

and we've come up with a temperature.

Most of the macroeconomic data we have when almost on the - you watch the news

and they say; today it was 18 degrees in Milton Keynes and in the last quarter

employment rose by 10,000. The first was absolutely known to be true, the second was

a model. The point is this that as the UK economy becomes much more service

orientated, much more intangible; the things that we value change then some of these

measurement things just simply get harder and harder to do.

Just to illustrate that point. When you look at the role of - or if you break down

economic growth between 1995 and 2007 what you see is that it's often the

intangibles, and I won't go into them in great detail, but - and the shades are a bit

difficult to follow, but basically this is tangible stuff. This is physical stuff that we can

fine quite easy to measure and count so investment in capital assets. All of the other

things are intangible, skills, people, human, how - human capital, competence of

people, so how those skills are used.

Then this delightful thing that economists call total factor productivity, which is simply

we don't know. But we make it a fancy term and call it TFP and then it makes it sound

like we do know. It's just a residual number. So it's something to do with how people

and assets are combined together to produce a particular outcome.

Again this is just another example of his where you, in the dark line you're seeing

through the economic cycle investment in physical assets so very predictably as you

get towards the recessionary period, you saw a decline in investment in physical

assets. But actually you didn't see a decline in investment in intangible assets.

So to give you an example of that my Chairman is Charlie Mayfield of the John Lewis

Partnership. If they open a new store, a new shop, that's investment in capital assets,

that's something very physical. If they invest in Click and Collect, that's software. As a

business they'll amortise that and they'll put that onto their balance sheet and

depreciate it over time. From a national accounting perspective, that's really hard to

define, because what's the difference between just investing in software because it's

just part of your run-of-the -mill business and investing in software because it's being

capitalised.

So again it's just an illustration of just how difficult some of these measurement pieces

are. So let me just try and bring that all back together in five points from a report that

we published last year.

The first is that whenever we're thinking about skills we do need businesses to play a

leading role. Not because they're better at it, or they know something more about skills

than government does, but simply because those skills are always played out within

the context of a business strategy. If you don't understand that business strategy it's

really difficult to think through how those skills should be designed and developed.

The second is that far greater importance that we need to place on what goes on inside

the workplace. So how skills are used, developed, deployed. So you can have lots of

skills' input in terms of qualifications but if those skills aren't utilised if people aren't

engaged, if the capital assets surrounding those individuals don't work properly then

you just don't get the productive outputs at the end of it.

Building more models of earning and learning, so the commitment that the government

has in England about apprenticeships. So trying to build those earning and learning

pathways I think is an important part when you look at how the labour market is

shaping out and trying to ensure that there are good quality jobs with learning designed

into them.

The need for that greater porosity between the world of education and work. I think

sometimes our own skills narrative isn't very helpful where you assume that the role of

colleges, training providers is to somehow skill and train people and almost they're just

thrown over the fence and then they land in a workplace and then the workplace

somehow uses them. When, of course, it's much, much more porous than that and

there needs to be much more interaction and of course you want businesses that

themselves are learning organisations just as you've got learning organisations that

have got real familiarity with business.

Then, finally, just completely, I think, consistent with some of the discussions that

you've been having today. That need to build up that broader set of outcome measures

so that we can't just simply measure educational attainment. Because, again, that

educational attainment worked in a world that was more certain, had more steady state

outcomes. But the more that the world trades in intangible assets, as the UK is more a

service-based economy, we need to know what those wider outcomes are. I think it's

incumbent upon us to design what those outcomes are. How we measure them, how

we continue to learn and develop thereafter.

At that point I'll stop. Thank you very much.