Skills are a sound investment for uncertain times

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Shot of construction worker's arm clutching protective helmet with digger and building site in distant background to illustrate skills

With Brexit likely to reduce British business’s access to talent, we need to radically boost our investment in skills if Britain is to continue to thrive, says Chris Jones, chief executive of the City & Guilds Group

Seven months on and the world hasn’t ended – yet. But even if the doomsday prophesies made ahead of the EU referendum vote (not to mention the election of Donald Trump) haven’t yet come to pass, it’s fair to say we’re living in a period of uncertainty.

Although Brexit hasn’t directly hit the labour market yet, with unemployment falling to the lowest level in 11 years, interest rates have been cut yet again and the pound has been in various rates of decline since 23 June.

The truth is we won’t know the full extent of the damage caused by Brexit for years to come, even after article 50 is triggered. What matters is that we focus on being practical to ensure that the UK remains in a strong, competitive position for the future.

During the referendum campaign, one of the major arguments of the leave camp was around immigration and the need for tighter restrictions. That’s not to say it was the deciding factor for every voter but, whatever your view, it’s undoubtedly a political hot potato.

Skills gap

Yet what was often omitted from the debate is how the modern workforce is multinational. That’s highly unlikely to change wherever we stand with the EU. In the UK – as in many countries – we rely on this global workforce, not least because of deep skills gaps across a number of industries.

Take the food industry. Ian Wright, director general of the Food & Drink Federation, noted shortly after the Brexit vote that his sector employs almost 100,000 workers from the EU. At the same time, he said, it is facing an emerging skills gap of 130,000 largely driven by upcoming retirement.

Construction is another example. According to the CIOB, 19 per cent of the UK’s construction workforce will retire in the next decade, so the industry will need 224,000 new recruits by 2019. Currently, 17 per cent of the construction workforce comprises non-UK-born workers, many of them from Europe.

Thirdly, look at the social care sector – predicted to face a shortfall of one million workers by 2037. Right now, one in five care workers are migrants, again many from EU nations.

Migration should not be a political football, but a practical challenge for business leaders. What will happen if there are restrictions on businesses’ access to skilled European workers? Do people really understand the realities of a post-Brexit British workforce?

My sense is that they don’t. In May, the City & Guilds Group surveyed over 2,000 Britons. At the time, with a few weeks to go until referendum day, only 32 per cent thought Britain would lose access to skilled workers if we left the EU, and only 20 per cent believed their organisation would struggle to get access to skilled workers. As the construction and food industries show, this optimism is unfounded.

Alongside this, many employees were confident in their own skills and abilities. The same research found that 92 per cent were confident in their skills, 94 per cent were confident that they had the right abilities to help their company succeed, and 55 per cent felt they were over-qualified for their job.

Thinking more long term, 75 per cent were confident Britain had the right skills to succeed in the global economy over the next decade.

Confidence about the future is one thing, but complacency is another. If businesses lose access to EU workers, they risk losing the skilled workers they need to be productive and competitive. This situation will be worsened by British workers who don’t recognise the urgency of developing their skills in the first place.

Productivity

In uncertain economic times, businesses are more likely to cut investment in skills and training – despite the threat of skills gaps. In the long term, this will lead to stagnant or decreasing productivity. Whole industries could be at risk.

As we negotiate our future relationship with Europe, addressing these questions and concerns around our workforce must be a priority. Skills education and training cannot be an afterthought, or viewed merely as a ‘nice to have’.

For employers, that means investing in skills development and aligning any training initiatives to long-term business objectives. This will ensure employers have the skilled workforces they need to succeed and grow, both now and in the future.

Likewise, if the government opts for a new points-based immigration system, it must be responsive to the needs of employers and the broader economy. It should take into account where the skills gaps are, and the jobs that employers are struggling to fill. And it must not favour academia over technical routes, as similar systems have done previously.

Skills development is essential to future growth. That’s one of the only certainties in these tumultuous times. Government must view it that way too, by protecting investment in skills and encouraging employers to follow suit.

Ensuring employers have a pipeline of talent to draw on is essential to the UK’s future prosperity.

 

About author

Chris Jones

Chris Jones

Chris Jones is group chief executive of City & Guilds. Before joining he held several senior management positions in Pearson and Reed Elsevier.

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