TAKING THE NEXT BIG STEP: TAKING THE NEXT BIG STEP: Fresh approaches to aligning Fresh approaches to aligning

skills, economic strategies and skills, economic strategies and economic development in economic development in

England, Wales and ScotlandEngland, Wales and Scotland

Ewart KeepEwart KeepESRC Centre on Skills, Knowledge & ESRC Centre on Skills, Knowledge &

Organisational Performance,Organisational Performance,

University of CardiffUniversity of Cardiff

ARRIVING AT A FORK IN THE ARRIVING AT A FORK IN THE POLICY PATHPOLICY PATH

Across the OECD skills policy is arriving Across the OECD skills policy is arriving (or will shortly arrive) at a (or will shortly arrive) at a fundamental choice about how, and in fundamental choice about how, and in which direction, to proceed.which direction, to proceed.

New policy and systems design models New policy and systems design models are starting to emerge. are starting to emerge.

OLD v. NEW MODELSOLD v. NEW MODELS

Old ModelOld ModelBuilding the biggest stockpile of skills or Building the biggest stockpile of skills or

qualifications (SUPPLY)qualifications (SUPPLY)

New ModelNew ModelSupplying the skills that are really needed; Supplying the skills that are really needed;

stimulating further demand for skill; and stimulating further demand for skill; and ensuring that skill, once created, gets used ensuring that skill, once created, gets used to maximum productive effect (SUPPLY, to maximum productive effect (SUPPLY, DEMAND & USAGE)DEMAND & USAGE)

WHY THE EMERGENCE OF WHY THE EMERGENCE OF NEW APPROACHES?NEW APPROACHES?A group of countries that:A group of countries that: • Have ticked the skills supply box and are asking why the Have ticked the skills supply box and are asking why the

bang isn’t bigger given the bucks expended.bang isn’t bigger given the bucks expended.

• Are heavily exposed to international economic competition.Are heavily exposed to international economic competition.

• Have concerns about spreading success across the whole Have concerns about spreading success across the whole population.population.

PLUS - research has shown us new ways of thinking about PLUS - research has shown us new ways of thinking about skills in the workplaceskills in the workplace..

THE NEW POLICY ‘CLUB’THE NEW POLICY ‘CLUB’

• SingaporeSingapore

• Republic of IrelandRepublic of Ireland

• Norway, Finland & SwedenNorway, Finland & Sweden

• AustraliaAustralia

• New ZealandNew Zealand

• ScotlandScotland

• Wales?Wales?

WHAT I AIM TO DOWHAT I AIM TO DO

• Take a look at what England, Wales Take a look at what England, Wales and Scotland can tell/teach us.and Scotland can tell/teach us.

• In the process, draw some links with In the process, draw some links with developments in other countries that developments in other countries that have inspired developments in have inspired developments in Scotland. Scotland.

A HEALTH WARNING!A HEALTH WARNING!

• The development of the New Model The development of the New Model of Skills Policy is in its early days of Skills Policy is in its early days across OECD.across OECD.

• There are no ‘proven winners’ or There are no ‘proven winners’ or easy-to-copy schemes yet - there are easy-to-copy schemes yet - there are some interesting experiments upon some interesting experiments upon which to reflect.which to reflect.

ENGLAND - HOW NOT TO ENGLAND - HOW NOT TO DO IT!DO IT!

English skills policy is stuck in a rut. English skills policy is stuck in a rut. Traditional skills supply-led policies Traditional skills supply-led policies prevail. prevail.

In 2005/2006 The Leitch Review of In 2005/2006 The Leitch Review of Skills tried to create a UK-wide skills Skills tried to create a UK-wide skills policy.policy.

THE LEITCH REVIEWTHE LEITCH REVIEW

• The Leitch Review chose to use The Leitch Review chose to use crude international benchmarking of crude international benchmarking of stocks of qualifications in other OECD stocks of qualifications in other OECD countries as their main analytical countries as their main analytical tool.tool.

• From this, Leitch concluded that the From this, Leitch concluded that the UK was not ‘world class’.UK was not ‘world class’.

SKILLS AS THE ANSWER SKILLS AS THE ANSWER TO EVERYTHINGTO EVERYTHING

Our nation’s skills are not world class and we run Our nation’s skills are not world class and we run the risk that this will undermine the UK’s long-the risk that this will undermine the UK’s long-term prosperity. Productivity continues to trail term prosperity. Productivity continues to trail many of our international competitors. Despite many of our international competitors. Despite recent progress, the UK has serious social recent progress, the UK has serious social disparities with high levels of child poverty, poor disparities with high levels of child poverty, poor employment rates for the disadvantaged, employment rates for the disadvantaged, regional disparities and relatively high income regional disparities and relatively high income inequality. inequality. Improving our skill levels can Improving our skill levels can address all these problemsaddress all these problems - Leitch Review, - Leitch Review, 2006: 12006: 1

SKILLS AND LITTLE ELSESKILLS AND LITTLE ELSE

The Leitch Review also concluded, The Leitch Review also concluded, though it never explained how it though it never explained how it reached this conclusion, that skills reached this conclusion, that skills are THE key policy lever that are THE key policy lever that government can control to improve government can control to improve economic performance and social economic performance and social equity.equity.

NEW TARGETS, MORE SUBSIDYNEW TARGETS, MORE SUBSIDY

Leitch commits us to:Leitch commits us to:

1.1. Becoming ‘world class’ on qualification stocks at every Becoming ‘world class’ on qualification stocks at every level (from graduates to adult literacy and numeracy) level (from graduates to adult literacy and numeracy) - world class = in the top 8 in the OECD league tables.- world class = in the top 8 in the OECD league tables.

2.2. Creating a demand-led E&T system, that provides Creating a demand-led E&T system, that provides

employers with what they want.employers with what they want.

3.3. Providing employers with more subsidy to encourage Providing employers with more subsidy to encourage them to upskill their adult workforce.them to upskill their adult workforce.

TRAIN TO GAINTRAIN TO GAIN

• T2G is a subsidy-led programme that aims to get more T2G is a subsidy-led programme that aims to get more employees to their first Level 2, 3 & 4 qualifications. employees to their first Level 2, 3 & 4 qualifications.

• At Level 2 state subsidy is 100%At Level 2 state subsidy is 100%

• Evaluation suggests very high levels of deadweight – Evaluation suggests very high levels of deadweight – like throwing £10 notes at a wet wall and seeing which like throwing £10 notes at a wet wall and seeing which stick. stick.

• No impact on employer attitudes or capacity, as No impact on employer attitudes or capacity, as everything is outsourced to training providers.everything is outsourced to training providers.

LONG-TERM DANGERSLONG-TERM DANGERS

Conforms to John Buchanan’s ‘employers Conforms to John Buchanan’s ‘employers whinge, state responds’ syndrome.whinge, state responds’ syndrome.

Welfare dependent employers whose first Welfare dependent employers whose first and last reaction is to ask for more.and last reaction is to ask for more.

Deflects attention from the wider Deflects attention from the wider environment in which skills are deployed environment in which skills are deployed and other sources of competitive and other sources of competitive advantage that need to be put in place advantage that need to be put in place alongside skills.alongside skills.

SKILLS AS AN ARMS RACESKILLS AS AN ARMS RACE

A generation ago, A British Prime Minister had to A generation ago, A British Prime Minister had to worry about a global arms race. Today a British worry about a global arms race. Today a British Prime Minister has to worry about a global skills Prime Minister has to worry about a global skills race…..because the nation that shows it can bring race…..because the nation that shows it can bring out the best in all its people will be the great out the best in all its people will be the great success story of the coming decades.success story of the coming decades.

So it is time for a wake up call for young people, So it is time for a wake up call for young people, employees and employers….that we now employees and employers….that we now summon ourselves to a new national effort and summon ourselves to a new national effort and mobilisation to win the new skills race.mobilisation to win the new skills race.

Gordon Brown, 28/01/2008.Gordon Brown, 28/01/2008.

LEITCH APPROACH REFLECTSLEITCH APPROACH REFLECTS

Traditional Policy Technologies:Traditional Policy Technologies:

1.1. International benchmarking of skill stocksInternational benchmarking of skill stocks

2.2. Subsidy and state expansion of E&TSubsidy and state expansion of E&T

3.3. Throughput Volumes and Output Throughput Volumes and Output VolumesVolumes

4.4. Targets as KPIsTargets as KPIs

Simple to plan, design and manage.Simple to plan, design and manage.

PROBLEM……PROBLEM……

1.1. Nearly all the issues this approach could Nearly all the issues this approach could deal with have been addressed.deal with have been addressed.

2.2. Predicated on a ‘supply push’ effect for Predicated on a ‘supply push’ effect for which the evidence is very limited.which the evidence is very limited.

3.3. Automatic usage and efficient and Automatic usage and efficient and effective deployment of skill is simply effective deployment of skill is simply ‘assumed’.‘assumed’.

THE FAILURE OF SUPPLY PUSHTHE FAILURE OF SUPPLY PUSH

Supply Push theory suggests that if the Supply Push theory suggests that if the state supplies more skills than are state supplies more skills than are immediately needed, the economy and immediately needed, the economy and labour market will, over time, find labour market will, over time, find productive uses for them, there will be productive uses for them, there will be spillover effects, and productivity and spillover effects, and productivity and wages will rise as a result. In other wages will rise as a result. In other words, in the end, the skills will be words, in the end, the skills will be used.used.

BUT…………..BUT…………..

SKOPE research on low wage work found SKOPE research on low wage work found many over-qualified for jobs and with many over-qualified for jobs and with little prospect of progression. There little prospect of progression. There was very little evidence that employers was very little evidence that employers had any interest in using the latent had any interest in using the latent capabilities of their workforce, either to capabilities of their workforce, either to improve product quality or productivity.improve product quality or productivity.

OVER-QUALIFICATIONOVER-QUALIFICATIONSkills Survey Data for Skills Survey Data for EnglandEngland YearYear % over-qualified% over-qualified

19861986 29.3%29.3%

19921992 30.2%30.2%

19971997 31.7%31.7%

20012001 35.1%35.1%

20062006 39.6%39.6%

SKILLS = PRODUCTIVITY IS SKILLS = PRODUCTIVITY IS WRONGWRONG

For details, see Scotland, Canada, the For details, see Scotland, Canada, the Russian Federation, Israel, etc.Russian Federation, Israel, etc.

For UK, skills accounts for one fifth of For UK, skills accounts for one fifth of our productivity gap with Germany, our productivity gap with Germany, one eighth with France, and about one eighth with France, and about zero with the USA. We could match zero with the USA. We could match all of them on skill and still see a big all of them on skill and still see a big productivity gap.productivity gap.

FRAMING THE PROBLEM FRAMING THE PROBLEM DEFINES THE ANSWERDEFINES THE ANSWER

Traditional Definition:Traditional Definition:

• ‘‘Skills crisis’Skills crisis’

• Skill ‘shortages’Skill ‘shortages’

• Poor international benchmarking scoresPoor international benchmarking scores

• Skills drives productivitySkills drives productivity

ANSWER = Boost supply (at public ANSWER = Boost supply (at public expense)expense)

PERHAPS THE REAL PERHAPS THE REAL PROBLEMS ARE…..PROBLEMS ARE…..

• Weak investment in the other drivers of Weak investment in the other drivers of productivity (e.g. R&D, plant & equipment)productivity (e.g. R&D, plant & equipment)

• Product market strategies and product Product market strategies and product specspec

• Weak innovationWeak innovation

• Poor employee relations and low paid workPoor employee relations and low paid work

• Poor job design and opportunities for Poor job design and opportunities for progression.progression.

IF THOSE ARE THE IF THOSE ARE THE PROBLEMS….PROBLEMS….

Then a simple skills supply approach will fail. Then a simple skills supply approach will fail.

The key issues lie with underlying levels of The key issues lie with underlying levels of DEMAND for skill, and POOR USAGE once it DEMAND for skill, and POOR USAGE once it is created.is created.

This sets a difficult, messy, complex policy This sets a difficult, messy, complex policy problem!problem!

AN APPROACH NOT TO COPYAN APPROACH NOT TO COPY

• England’s England’s ‘skills first, skills only’‘skills first, skills only’ policy approach is not one to copy.policy approach is not one to copy.

• Although Leitch was supposed to be Although Leitch was supposed to be UK-wide, Wales has rejected the UK-wide, Wales has rejected the Leitch targets, and Scotland has Leitch targets, and Scotland has rejected just about all of the Leitch rejected just about all of the Leitch policy agenda.policy agenda.

AND NOW FOR THE BETTER AND NOW FOR THE BETTER NEWS…….NEWS…….

In Wales, Scotland and the Republic of Ireland (and In Wales, Scotland and the Republic of Ireland (and also NZ) a range of new policy approaches and also NZ) a range of new policy approaches and instruments are starting to emerge. How well they instruments are starting to emerge. How well they will work and with what impact it is too soon to say.will work and with what impact it is too soon to say.

However, they offer clear signs that the Ecosystems However, they offer clear signs that the Ecosystems Projects are not a one-off. Others are grappling Projects are not a one-off. Others are grappling with the same issues about skills demand and with the same issues about skills demand and usage.usage.

WELSH WORKFORCE WELSH WORKFORCE DEVELOPMENT PROGRAMMEDEVELOPMENT PROGRAMME

• Centres on adult workforce skill enhancement as part of Centres on adult workforce skill enhancement as part of a wider business improvement and economic a wider business improvement and economic development agenda.development agenda.

• Not driven by volume roll-out targets.Not driven by volume roll-out targets.

• Not there to deliver a universal entitlement to learning.Not there to deliver a universal entitlement to learning.

• Not centred on qualifications – support is available for Not centred on qualifications – support is available for non-certified learning, though the employer has to non-certified learning, though the employer has to contribute more.contribute more.

HOW IT WORKSHOW IT WORKS

1.1. Company contacts Welsh governmentCompany contacts Welsh government2.2. HRD advisor undertakes diagnostic and HRD advisor undertakes diagnostic and

helps formulate a business plan and helps formulate a business plan and workforce development planworkforce development plan

3.3. Support targeted at ‘priority’ sectors.Support targeted at ‘priority’ sectors.4.4. Access to a range of financial support Access to a range of financial support

that aims to leverage employer that aims to leverage employer contribution.contribution.

THE THINKING BEHIND THE THE THINKING BEHIND THE WDPWDP

The drive for higher skills has to be promoted The drive for higher skills has to be promoted on the back of wider efforts towards business on the back of wider efforts towards business improvement to help organisations move up improvement to help organisations move up market and stimulate demand for skills market and stimulate demand for skills through adopting higher specification product through adopting higher specification product strategies and better quality jobs. This strategies and better quality jobs. This suggests we give as much attention to suggests we give as much attention to business support services, innovation, business support services, innovation, management and entrepreneurship management and entrepreneurship strategies, as to improving the supply of strategies, as to improving the supply of training and learning provision and training and learning provision and qualifications.qualifications.

WAG Skills and Employment Strategy, 2005: 27WAG Skills and Employment Strategy, 2005: 27

WEAKNESSESWEAKNESSES

The WDP is small in scale compared to the The WDP is small in scale compared to the funding being given to conventional skills funding being given to conventional skills supply through the mainstream E&T supply through the mainstream E&T system.system.

Expanding the existing network of 100 HRD Expanding the existing network of 100 HRD advisors is not proving easy, and relations advisors is not proving easy, and relations between them as contractors and between them as contractors and government are sometimes fraught!government are sometimes fraught!

SCOTLANDSCOTLAND

Scotland has a minority nationalist Scotland has a minority nationalist government, who have been willing to government, who have been willing to embrace some radical policy thinking.embrace some radical policy thinking.

They want to do it both different and They want to do it both different and better than England.better than England.

LOTS OF BUCKS, RELATIVELY LOTS OF BUCKS, RELATIVELY FEW BANGS!FEW BANGS!

A key issue for Scotland is that it has spent A key issue for Scotland is that it has spent proportionally far more on education than proportionally far more on education than England, and has a better qualified workforce England, and has a better qualified workforce as a result. The problem is that this has not as a result. The problem is that this has not translated into higher wages or enhanced translated into higher wages or enhanced relative productivity.relative productivity.

Policy makers started to ask what more they Policy makers started to ask what more they had to do to get a proper return on this had to do to get a proper return on this investment.investment.

THE RESULTTHE RESULT

A new Scottish Economic Strategy that A new Scottish Economic Strategy that benchmarks Scotland against the ‘arc of benchmarks Scotland against the ‘arc of prosperity’ (Ireland, Iceland and the Nordic prosperity’ (Ireland, Iceland and the Nordic countries). The aim is to join their elite, countries). The aim is to join their elite, high wage, high productivity club.high wage, high productivity club.

A new Skills Strategy that aims to develop A new Skills Strategy that aims to develop the means to improve the supply of skills, the means to improve the supply of skills, stimulate underlying demand for skill, and stimulate underlying demand for skill, and improve skill usage.improve skill usage.

THE SKILLS STRATEGYTHE SKILLS STRATEGY

Is just that – a statement of strategic intent. The Is just that – a statement of strategic intent. The development of policy instruments to bring about development of policy instruments to bring about the desired changes is currently under way.the desired changes is currently under way.

Much attention is focused on the Irish Republic’s Much attention is focused on the Irish Republic’s National Centre for Partnership and Performance, National Centre for Partnership and Performance, and its National Workplace Strategy. One of the and its National Workplace Strategy. One of the Irish model’s key components is to try and tie Irish model’s key components is to try and tie state funding/grants (e.g. for R&D) to wider state funding/grants (e.g. for R&D) to wider workplace innovation criteria.workplace innovation criteria.

LOOKING NORTHLOOKING NORTH

Scotland is also looking at Scandinavian Scotland is also looking at Scandinavian programmes centred around work reorganisation, programmes centred around work reorganisation, job redesign and workplace innovation.job redesign and workplace innovation.

These programmes have been around for 30 years, These programmes have been around for 30 years, and SKOPE has looked at their successes and and SKOPE has looked at their successes and limitations.limitations.

You can compare and contrast our findings You can compare and contrast our findings with experiences generated by the with experiences generated by the Ecosystems projectsEcosystems projects

WHAT DOES OUR RESEARCH WHAT DOES OUR RESEARCH SAY?SAY?

Work reorganisation and job redesign Work reorganisation and job redesign need to be viewed as the response to need to be viewed as the response to wider issues in the organisation:wider issues in the organisation:

• Problems with service or product Problems with service or product qualityquality

• Lack of innovationLack of innovation

• Weak productivityWeak productivity

• High labour turnover/low moraleHigh labour turnover/low morale

LESSON 2LESSON 2

Programmes need to be locally Programmes need to be locally focused - developing interventions focused - developing interventions which work with the willing (open which work with the willing (open minded managers and employees) minded managers and employees) and always start from the specific and always start from the specific challenges and problems they are challenges and problems they are seeking to grapple with.seeking to grapple with.

LESSON 3LESSON 3

Top-down, expert-driven organisational Top-down, expert-driven organisational engineering does not work. Avoid engineering does not work. Avoid ‘grand theory’ and attempts to ‘grand theory’ and attempts to transplant/diffuse innovative and transplant/diffuse innovative and successful practice, which may work successful practice, which may work well in one context, but not in well in one context, but not in another.another.

LESSON 4LESSON 4

Over time the intervention needs to go Over time the intervention needs to go beyond the individual organisation - beyond the individual organisation - building learning networks, clusters building learning networks, clusters or modules of organisation (in a or modules of organisation (in a particular sector, region or supply particular sector, region or supply chain) who are experimenting with chain) who are experimenting with innovation and can learn from (rather innovation and can learn from (rather than copy) each other’s experience.than copy) each other’s experience.

LESSON 5LESSON 5

This kind of activity is time consuming, This kind of activity is time consuming, resource intensive and does not always resource intensive and does not always generate ‘quick wins’. Programmes generate ‘quick wins’. Programmes need to be adequately resourced and need to be adequately resourced and given time to bed down and work. The given time to bed down and work. The balance between public support and balance between public support and what the subject organisation(s) put in what the subject organisation(s) put in needs to be thought through to avoid needs to be thought through to avoid deadweight.deadweight.

LESSON 6LESSON 6

Key to success is the development of a Key to success is the development of a cadre of researchers and experts cadre of researchers and experts who can go into organisations and who can go into organisations and support and facilitate a process of support and facilitate a process of change. The research-based change. The research-based approaches in Scandinavia could be approaches in Scandinavia could be a useful starting point.a useful starting point.

LESSON 7LESSON 7

Aim to help firms, and collective Aim to help firms, and collective employer and industry bodies to do employer and industry bodies to do more to help themselves.more to help themselves.

Public support is there to get the ball Public support is there to get the ball rolling.rolling.

NEXT STEPS……?NEXT STEPS……?

The old model of skills supply and supply The old model of skills supply and supply alone will soldier on, costing more and alone will soldier on, costing more and achieving less and less.achieving less and less.

The emergence of new models, policy The emergence of new models, policy instruments, interventions and institutions instruments, interventions and institutions to address skills demand and usage (and to address skills demand and usage (and new ways of dealing with supply) new ways of dealing with supply) represents a huge task.represents a huge task.

SUCCESS IS NOT ASSURED, SUCCESS IS NOT ASSURED, BUT WHAT’S THE BUT WHAT’S THE ALTERNATIVE?ALTERNATIVE?The success of efforts to develop and pilot The success of efforts to develop and pilot

new policy approaches is not guaranteed.new policy approaches is not guaranteed.

However, the only way to make progress is However, the only way to make progress is to try, see what happens and learn from it.to try, see what happens and learn from it.

If new approaches are hard and risky, what If new approaches are hard and risky, what is the alternative? The most likely answer is the alternative? The most likely answer is more of the same old skills supply is more of the same old skills supply interventions, which waste money and interventions, which waste money and create big problems.create big problems.