Skills: what will the post-recession era mean?

Changes in the labour market and in the skillset of those looking for work are presenting new challenges, according to interim findings from a six-month inquiry by the Skills Commission.

Manufacturing decline led to a knowledge-based economy. Picture: Steve Jurvetson

Post-recession Britain is a changed place for those seeking work and for companies seeking employees, an investigation into skills and the changing structures of work has found.

Its interim findings, published in time for this year’s party conference season, point out that a combination of cuts and outsourcing has reduced the size of the official public sector during the recession.

As a result, many employees have been reclassified as private sector workers. And the adult skills budget will face substantial cuts in the next few years, its report adds.

The Skills Commission, an independent body which carries out research and makes recommendations for skills policy reform, is co-chaired by Barry Sheerman MP and Dame Ruth Silver. Commission members include parliamentarians from all the main parties, and highly experienced practitioners from across the skills sector.

Wider changes

Its inquiry, whose full report will be published in late October, points out that wider changes in the labour market over the past quarter-century have also led to profound change. It says:

“The age of the average worker has also increased and demographic shifts have already necessitated the raising of the state pension age to 65 and older.” 

A decline in some labour markets, combined with increased participation in higher education, has meant more people entering the labour market later. Their routes into work, and their progress through their careers, are often marked with new levels of uncertainty.

The commission highlighted the decline of manufacturing and industry and a move towards a knowledge-based economy based on services and human capital as key changes. This had led to an expansion in the professions and the contraction of intermediate-level jobs such as technical, managerial and administrative jobs.

“Globalisation and technological change have put pressure on the middle tier of the job market. This trend coupled with the continued demand for low skilled labour across the service sectors has led many to describe the labour market as ‘hour-glass’ shaped and increasingly polarised between the top and bottom.”

Meanwhile, technology and innovation had also transformed some sectors, with some firms becoming more agile and networked. They relied less on traditional patterns of employment such as full-time work and instead moved to project based, zero hours and freelance contracts.

These changing patterns of work and the relationship between employees and employers had undermined many of the assumptions upon which current skills and employment policy were founded, the commission said.

Key alerts

The commission issued four ‘key alerts’ on which, it said, politicians should focus during discussions at their annual conferences:

  • Uncertainty around the responsibility for training in an increasingly flexible labour market.
  • Declining social mobility owing to a reduction in the alignment of skills provision to work.
  • Fragmentation in the system making it difficult for employers to engage.
  • Alarming policy dissonance between different central Government departments.

It also highlighted concerns that tensions between government departments could exacerbate a difficult situation:

“In a time of public austerity and in light of the challenges brought about by more flexible patterns of work, a difficult youth labour market and an aging workforce, co-operation between the departments of government and their agencies is vital. Further education is central to this, but it cannot be the strategic economic engine and respond if its resource base is ever diminished, due to pressures elsewhere in Departmental and Government budgets.” 

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