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The Leitch Review of Skills - TUC Submission

Issue date

The Leitch Review of Skills

TUC Submission

Introduction

The TUC represents 6.4m working people in over 70 trade unions. Unions have long had a strong interest in the issue of learning and skills. Many union members work in education and training and working people as a whole are affected by the outcomes of the UK education and training system. The TUC and affiliated unions are seen as a major stakeholder in the Government?s Skills strategy and represented on the Skills Alliance, the LSC nationally and locally, Sector Skills Councils (SSCs) and Regional Development Agencies (RDAs). The TUC therefore welcomes this opportunity to respond to the Leitch review of skills.

The National Skills Task Force Final Report recognised that there needs to be a broad definition of skill. It is necessary for employers to require not only specific vocational skills but also 'softer and transferable employability skills for the new and flexible forms of work organisation' which need to become the norm. There is also a need to avoid the danger of polarising between training and education. Transferable skills involve occupational competence and knowledge and understanding and often involve their certification in the form of national qualifications.

There is an urgent need for more employers to 'raise their game' and add value to their products and services through enhancing the skills of their workforce. Nevertheless, the lifelong learning needs of the workforce will always be more extensive that the aggregate requirements of employers. They include a wide spectrum of provision from basic skills to continuing professional development. Although not all this provision will be job related, the work context can be a powerful stimulant to increasing the demand for lifelong learning. There is thus a need to establish a balance between employer, employee and state contribution (in terms of funding and time) to this learning, with the greatest state support being given to the needs of employees without level 2 qualifications, where there is market failure. Striking the right balance between employer and employee contributions to lifelong learning is best achieved through collective bargaining arrangements.

Question 1a. Do you consider the current skills profile of the UK to be adequate?

There is a mismatch between the present skills profile and that which is required by the present economy. If that profile is to remain unchanged then it will be difficult to close the productivity gap with major competitors and it will take longer to overcome social exclusion. The UK has:

· a relatively high proportion of its workforce with degrees but

· too many 17 year olds leave education or training and

  • there are too few employees with vocational qualifications at level 3 and above and
  • there is still a large number of the adult population without level 2 qualifications and basic skills. Further
  • Disproportionately high proportions of women, people from black and minority ethnic groups and disabled people have no or low levels of qualifications.

This profile has led to :

  • the UK having the lowest proportion of its workforce qualified to level 2 and above, compared to major competitors such as the USA, France and Germany.
  • about a fifth of adults in the UK have inadequate literacy and numeracy skills
  • the vocational route has never secured parity of esteem with the academic route (this is evidenced by the significant difference in the pay premium between employees that have done general education courses and those who have completed vocational courses at similar level).
  • a long tail of companies (mainly SMEs) who do not train their staff. The LSC Employer survey showed that 40% of employers don?t offer formal training.
  • significant skills gaps in certain sectors, particularly at craft/technician levels
  • many firms lacking the capacity to train effectively and utilise the existing skills of the work force - no training plans/inadequate management.
  • a lack of synergy between employers? perceived skills needs and the supply of qualifications of the workforce below level 4
  • substantive differences between the skills used in jobs held by men and those in jobs (particularly part-time ones) held by women.
  • Disproportionately high proportions of women, people from black and minority ethnic groups and disabled people have no or low levels of qualifications.
  • high levels of occupational segregation, leading to skills gaps and pay inequity for women.
  • People with low skills are most likely to be unemployed, and there is a lack of incentives and opportunities for them to raise their skills to enter sustainable work.
  • reliance on short-term supply strategies rather than longer term demand-led skills strategies.
  • too little emphasis on how skills can be fully utilised used to develop high performance/high involvement workplaces.

The lack of investment in skills particularly in manual workers has been a feature of the essentially employer-driven, voluntary, training system that has prevailed since the 1980s. The Government however has stated that we are now entering a 'post- voluntary age'. This involves providing incentives for employers to train their workforce to a first level 2 qualification as well as incentives for individuals to take up learning. Options are also being considered for training employees up to a first level 3 qualification in some sectors where there is market failure. These moves are welcome and should be further developed

Question 1b. What impact does the current skills profile have and what do you consider to be the relative importance of the issues that you have identified?

The current skills profile implies a strong bias towards the young cohort as opposed to the existing workforce, to general as opposed to vocational education, to degree as opposed to sub degree provision and below, and to initial education as opposed to life long learning and continuing professional development.

The positive impact is very much associated with the clear economic benefits from a large cohort of young people entering higher education, with its relatively high outcomes compared with other countries. The future effect on social mobility however may well be limited through the introduction of policies, which increase the proportion of individual contribution to the funding of provision.

The policy priority of delivering a mass full-time higher education system has however led to the vocational route being given a lower status and marginalized. This decline accentuated when the industry training boards were abolished in the 1980s and apprenticeships fell steeply until the former Modern Apprenticeships (now Apprenticeships) were introduced.

The most negative impact of the profile is the lack of demand in the economy to train adults to level 2. This has resulted in a large cohort of the workforce unable to contribute fully to the productivity of the workplace or progress up the skills ladder since they cannot get on to the first rung.

On the one side, many employers feel that the education providers are not producing the competences, knowledge and understanding that they require of employees. On the other side, employers are reluctant to close this gap through providing off-the-job training and development, particularly in respect to non- graduate employees. A major issue is how to help employers and sectors identify their medium/ long- term as well as their short-term skill needs and to ensure that providers help them meet such needs.

This implies the need for the imbalance in the skills profile to be corrected through expansion based more on an 'alternance' system rather than full-time provision. This would result in a higher proportion of learners in England being already in the workforce and receiving paid time off to train - whether they be training up to level 2 under the Employer Training Programme, in apprenticeships, studying part-time for a Foundation Degree or on programmes of continuing professional development. It would however require enhanced employer commitment to provide such opportunities.

Question 2a. Drivers in Changing Skills

A number of potential major drivers are as follows:

  • Technological change has had major implications for industrial employment structure, as well as resulting in increased demands for IT skills across a range of sectors and occupations. For example, here has been a marked increase in between 1986 and 2001 in the number of jobs in which computing skills are considered to be an essential or very important component of the work (Green et al, 2002). Almost a quarter of people in such jobs thought that the acquisition of additional computer skills would make their performance much better.
  • Productivity growth through workplaces adopting high performance work organisation and moving from low skill equilibrium to higher value-production. Work organisation may be a much more effective demand lever than skills supply (DTI, 2003).
  • International competition in some sectors where industries need to enhance product specification to keep pace with developments in other countries or combat the cost advantages of low wage producers abroad.
  • The changing profile of the working population. By 2015, around 55% of those working will be aged over 40 (in 1995 that age group was the minority of the workforce). The proportion of women and people from black and ethnic minority backgrounds in employment will also grow. For example, the EOC estimates that 8 out of 10 new job vacancies will be filled by women.
  • Regulation in the labour market where there is a legal requirement for practitioners to have relevant vocational qualifications e.g. the care and the construction sectors.
  • Increased demand for personal development in order for employees to have greater transferable skills to help meet their long term lifelong needs.
  • Increased incentive to tackle skills gaps by retaining and retraining staff as opposed to recruiting new staff in times whenthe labour market remains tight and recruitment costs relatively high.

Which of the above factors will have the greatest effect on demand will depend on the sector.

Question 2 b. What do you expect the impact of these pressures to be on the types of skills that will be required?

There has been a low employer demand for skills at the lower end of the qualification spectrum. For example, there is a clearly a productivity problem in respect to a lack of basic skills in the workforce, the demand for such skills is weak. According to the Moser Report it was estimated that this deficit has cost the British economy more than £4.8 billion a year, as a result of poor quality control, lost orders, poor communication, and the need to recruit employees externally due to inadequate skills among the existing workforce. It is likely that this effect is being reduced through the take up of Skills for Life courses through Government initiatives since 1997, although the basic skills productivity effect must be high as more and more jobs require level 2 skills. There is a very low wage premium associated with the acquisition of basic skills/ vocational qualifications at levels 1 and 2, which indicates endemic market failure. Such failure could occur if firms cannot capture the full benefits of investment in training (e.g. where staff retention is low). In turn, this high turnover might be a direct result of low pay and relatively poor conditions at the workplace. It might also result from imperfect information whereby employers and employees cannot judge the benefits of training. This could be an important factor in low employer interest in the provision of basic skills even when they are given financial incentives under the Employer Training Pilots.

There is also a possible dilemma for the Government in confining learning entitlements to those adults without a first level 2 qualification and excluding those older workers who might have an outdated qualification which may not be relevant to their present job. There is an equity argument for doing this; although there might not be an economic one if through market failure that employee has no opportunity to upskill.

Although there has been growth in professional and managerial employment, there has also been growth in low paid jobs at the bottom end of the labour market, with the middle being hollowed out as technical/craft employment in manufacturing declines as a proportion of the labour force. The future is likely to see greater polarisation between good jobs (relatively well-paid, secure, high job satisfaction, high utilisation of high skills) and poor jobs (low paid, insecure, limited job satisfaction, under-utilisation of skills) ( Hogarth and Wilson, 2005).

There is likely to be greater employer demand for skills at the upper level of the labour market since the returns are much greater than for intermediate qualifications, certainly in terms of wage premiums. For example, the wage premium of a male graduate compared to one with a level 2 general education qualification is 45%. Employer demand is also closely correlated to workplaces with skills utilisation in relation to high-spec products and technical change. Whereas 19% of jobs in 'high-spec' product workplaces use degree-level qualifications, only 14% do in jobs elsewhere. At establishments with high levels of technical change some 42% reported skills needs had risen 'a lot' compared with only 25% in other establishments (Felstead et al, 2003).

Question 3. If education and training continues on its current course in the UK, are these future requirements for skills likely to be met?

It is not easy to forecast with any accuracy the skills required in 2010 since the nature and pace of technological change and work processes are difficult to predict.

A skills profile must however reflect the fact that the largest demand for skills will come from existing rather than new jobs. The volume of replacement and the skills that go with them may well be around five times the volume of new jobs (Campbel at al, 2001). For example, there will be a net requirement of +1.4m replacement jobs in elementary occupations (clerical and services related) even though the sector will contract by 154,000 jobs. This implies the need for an increase in provision for filling these jobs at level 2/3.

A quarter of the workforce does not have a qualification at level 2 - the minimum level for employability. Many of these have literacy and numeracy needs. Adults with such qualifications have a greater chance of avoiding unemployment. There is thus a need to get far more employees to the first base of level 2 qualifications. The Government?s PSA target is a 40% reduction in the numbers of the workforce without a level 2. This requires the number of those with such a qualification to increase by 3.6 million more adults between autumn 2001 and autumn 2010.

There has also been too little emphasis on the demand for level 3 and above vocational qualifications in the economy. Over the years, this has led to a wide skills gap with competitor countries such as Germany. About three quarters of the German and 60% of the US workforce has achieved this level compared to less than a half in the UK.

The reinvigoration of apprenticeships has resulted in over 250,000 16-24 year olds engaged in vocational training at NVQ levels 2 and 3. The government has a new target of raising by a least three-quarters the numbers successfully completing Apprenticeships between 2002/3 and 2007/08. There has however to be further engagement from employers and additional funding to make more quality places available.

Whilst the TUC is supportive of Apprenticeships, we are concerned that there is significant variation in Apprenticeships. Some Apprenticeships are low quality, with little or no training and low pay. Completion rates are also problematic, in some sectors as few as 16% of apprentices achieve the full framework. The TUC has been campaigning for increased union involvement in Apprenticeships, as unions can drive up employer demand for them through collective bargaining, and lever up quality by supporting apprentices to ensure they receive high quality training and fair pay.

Four out of five new jobs in the UK will be at level 3, or equivalent, by the end of the decade and this implies that there is a need to expand level 3 training in some sectors and not neglect these intermediate (craft, technician and associate professional) skills in the dash for degree level expansion. Although there will be a projected net fall of skilled manual and electrical trades, skilled trades have the largest share of all skill shortage vacancies at 18% - double its natural share of all vacancies. The expansion of level 3 jobs cannot all be met through apprenticeships for young people entering the labour market, particularly given the pull of the A level route to higher education. It has also to be met by upskilling adults already in the workforce to level 3 and above. Trials for adult apprenticeships are underway in a number of sectors, although at this stage there is no commitment to on-going funding. The EOC has demonstrated a link between gender segregation and skills shortages. Both economic and equality goals are compromised without action to challenge such occupational segregation.

Nevertheless, there do seem to be deficiencies in demand as well as supply in level2 and 3 qualifications. There are 6.4m people qualified to the equivalent of NVQ level 3 in the workforce, but only 4 million jobs that require this level of highest qualification. Similarly, there are a further 5.3m. people qualified to level 2 , but only 3.9m. jobs that require a highest qualification at this lower level. The other side of the coin is that there are only 2.9m. economically active people who possess no qualifications, there remains 6.5 m. for which no qualification would be required to obtain them (Felstead et al, 2002). The fact that someone is 'over-qualified ' in respect of a current job might mean that his or her qualifications might be necessary for a future job. This will become even more significant as recruits to the labour market will be doing more and more jobs during their working life. It also might indicate that employers fail to utilise the competences, knowledge and understanding within qualification outcomes to improve their medium and long-term business performance. On the other hand, there could be a problem also with the supply side- with an employer perception that some qualifications are not 'fit for purpose' or just use them as a screening device. The establishment of Sector Skills Councils could help tackle these multi- dimensional and complex issues.

As a result of demographic change, higher priority will be required to upskilling older workers in achieving the adult PSA target of a 40% reduction in the numbers of the workforce without a level 2 qualification between 2001 and 2010. Whereas in 2004, 79% of 25-29 year olds were qualified to level 2 or higher, only 67% of adults were. Less than a third of the 40-49 age group and less than 25% of the 50-65 age group received job-related training in the last 13 weeks compared to over 40% of 16-19 year olds (LFS, 2004).

In aggregate, there is an approximate balance between the supply of high level qualifications (level 4 or above) in the workforce and employers? utilisation of these qualifications across the economy (Felstead et al, 2002). Nevertheless, there needs to be a more balanced profile within higher education, with a much higher proportion of students going through a part-time vocational route to secure Foundation degrees and equivalent such as HNCs/Ds. This would help meet the requirements of occupations such as associate professionals where there is a high level of skills shortages in occupations such as social welfare, finance, health and IT. It is projected that there will be a net addition of 790,000 of these jobs in the labour market by 2010. It is thus important that substantial number of additional students come through the part-time vocational route in achieving the Government?s target of getting 50% of 18-30 year olds in higher education by the year 2010.

Question 4. What changes in the population?s skills would have the greatest effect on improving the UK?s productivity in 2020?

The UK?s performance in productivity has been relatively weak compared to most of our competitors. We were 10th out of 13 EU countries (in 2002) in GDP per hour worked and our GDP was 83.5% of the USA?s. Enhanced productivity matters to union members as well as to employers. For example, halving the productivity gap with the USA would be broadly equivalent to adding around £80 billion to GDP. This is equivalent to £2,000 for every worker in the country and adding £20 billion to the profits of the UK. Even raising productivity by just 1% is worth £10 billion. Workforce skills are one of the major drivers of productivity, the others being innovation, enterprise, investment and competition. Recent research has identified a statistical and economic effect of training on value added per head. An increase of 1.0% in the proportion of employees trained is associated with about a 0.6% increase in productivity and a 0.3% increase in wages (Dearden et al, 2005).

A major problem in the economy in relation to productivity is skills gaps (when an employer regards a member of their staff as not being fully proficient in their job) as opposed to skill shortages. As many as 11% of all employees were considered as having a skills gap by employers in England (affecting more than a fifth of employers) (NESS). This limits the implementation of high performance strategies - a third of establishments associated with skills gaps are being prevented from moving up market for this reason (Green et al). Overall, the association between a highly skilled workforce and organisational performance has been confirmed as a positive one (Tamkin et al, 2004). The UK?s top 10% of productive firms had workers with an average of two years additional education than firms in the bottom 10% (Haskell et al, 2003). Research shows however a sometimes complex link between what a business aims to achieve in terms of product or service specification, and the skill levels that are required to enable this specification to be delivered (Green et al, 2003).

A key determinant for increasing productivity is not just the supply of skills in general. Indeed, increasing the supply of skills does not necessarily create demand for them. The demand for high skills which are determined by many factors. Without significant changes to product market strategies, service standards, work organisation and job design, improving the skills of those who undertake these jobs may achieve only limited results and may lead to 'over-qualification' and to skills that are under-utilised or not used at all (DTI, 2003). This scenario will lead to limited improvement in productivity. In many sectors of the economy (e.g. hotels and food manufacture) there is a concentration at the lower end of the product market spectrum, producing relatively low quality, low specification goods and services that are sold primarily on the basis of price. They are caught in what has been termed a 'low skills equilibrium' (Finegold and Soskice, 1988).

There is evidence that devolving decision making to employees (e.g. through team working and quality circles) can enhance productivity. Yet although more skilled jobs typically require higher levels of discretion over job tasks, the rise in skills has not been accompanied by a corresponding rise in the control they can exercise over their jobs. Professionals witnessed a particularly sharp decline in their control between 1986 and 2001 (Green et al, 2003). This decline in task discretion might be the effect of the increasing imposition of targets and performance indicators.

Question 5. Is it necessary and possible to stimulate demand from individuals for improving their own skills?

It is necessary to stimulate demand for improving their skills. There are very few incentives for employees in the UK to do so. How best to stimulate demand from individuals is determined by the level of their existing qualifications and position in the labour market. Compared to the wage premium from obtaining general/academic qualifications, the wage premium in respect to low level vocational qualifications is relatively low (Campbell, 2002). This is thus endemic market failure in the lower levels of the vocational qualifications. It indicates that there is little incentive for employers and employees to invest in these levels of skills even though they are required to enhance productivity. This is why the Government have introduced incentives through the Employer Training Pilots and adult learning entitlements/grants for those to obtain a first level 2 qualification. The TUC has actively supported this intervention and welcomes the roll out of the ETPs into a national employer training programme. The programme will also provide incentives where there is market failure in level 3 training in certain occupations.

A recent poll of commissioned by the TUC has found that there is an individual demand for training but that barriers exist in terms of time and money (see Appendix 1). The survey found:

  • Half of employees would like their employer to train them in new skills that would help them get promoted or a better job; only one in five wanting to train to help them change their employer.
  • The demand for skills is not confined to training at work; over two in five would like to do some training or education outside work.
  • A quarter of manual workers however could not afford a course that they would like to do.
  • The demand to learn new skills is considerable amongst semi-skilled and unskilled manual workers (about a half); greater than that those in managerial/professional jobs.
  • Almost two -thirds of employees feel that it would be useful if their employer gave them more training in work time: over three quarters wanting paid time off.
  • A significant proportion of workers would find it helpful to have childcare whilst they studied (about a third of 25-44 year olds).

There is strong evidence that individuals collectively (though union collective bargaining) can increase the demand for skills and wage premium from the resulting skills formation. There is a statistically significant positive association between union recognition at the workplace and the individual training probability overall (Boheim and Booth, 2003). Indeed, there is evidence that union-set wages may actually increase the incentives for employers to invest in training in order to improve the productivity of their work force, and thus recoup the costs of their investment (Acemoglu et Pishke, 1999).

Another of the 'positive' effects lies in the fact that unions see training as related to flexible production and improved pay and employment prospects for their members and as a preventive measure against redundancy. It can thus militate against a low wage, low added value strategy, and thereby encouraging higher skill training and challenging the low skill equilibrium, which is endemic in a number of sectors.

The union influence is often more indirect than direct, with their presence likely to influence channels of communication and management behaviour as unions provide a 'voice' both for individual grievances and contributions to productive efficiency. This leads to lowering turnover, which, in turn, increases the incentives of both employer and employee to invest as they will reap a return over a longer period. Unions understand that where an employer invests more in the workforce it is more costly to replace them by external recruits, and they are thus better placed to bargain over terms and conditions. The lower labour turnover in unionised workplaces implies greater job security and employees will feel less threatened by alterations to working practices which may flow from investment in human capital. (Felstead et al, 2002).

This positive union effect could be much strengthened by the Government including training as a core bargaining issue in union-recognised workplaces within the statutory recognition procedure. This would send a signal to all employers that it makes sound business sense to discuss/negotiate on training with employees and their representatives. The TUC is pressing Government hard for this legislative change.

About 8,000 trained Union Learning Representatives are already doing much to stimulate employee demand for learning. They have already helped about 60,000 employees to take up courses. The Government?s target is for 22,000 trained ULRs by 2010. The Union Learning Fund projects have done much to help train and support ULRs as well as establishing the learning centres within the Trade Union Hub (see Appendix 2). ULRs in union recognised workplaces now have statutory recognition on the same lines as union representatives as a whole. The key functions undertaken by Learning Representatives are set out in the Employment Act 2002 and include:

· analysing learning or training needs

· providing information and advice about learning or training matters

· arranging learning or training

· promoting the value of learning or training

· consulting the employer about carrying out such activities

· preparation to carry out any of the above activities

This provides a considerable opportunity for employers and ULRs to work together to identify and meet the lifelong learning needs of the workforce. ULRs are boosting equality of opportunity in access to training, with many low-skilled people, women, and people from black and ethnic minority backgrounds and disabled people benefiting from union learning.

There are however still some barriers which are preventing ULRs to help them carry out these functions (Working Lives, 2004). That is why the TUC is proposing that where a union at a recognised workplace in which there is a recognised ULR requests a 'learning partnership agreement' with an employer around the statutory rights and functions of ULRs (either as an extension to an existing collective agreement or as a separate agreement) then the employer will be required to negotiate such an agreement. Machinery for implementing the agreement such as a joint union/management' learning partnership committee' should be established on the request of one of the parties.

The pathways to occupational segregation often begin early in school through subject choice and careers guidance. The TUC believes that equality should underpin the core curriculum in schools and this should include an emphasis on challenging stereotypes. Work-experience should actively encourage take-up in non-traditional areas for both sexes. Careers advice and guidance must also be high quality and offer objective information and support that are free from gender bias and stereotyping.

Question 6. Is it necessary and possible to stimulate demand from employers for skill improvements in the country/their workforce?

Skills and knowledge do not; of themselves necessarily add value, unless and until they are combined with a number of other critical factors. These have been identified as:

  • competitive and product market strategies that place a strong emphasis on competition on quality and customisation rather than price and economies of scale;
  • a marketplace that is willing and able to pay a premium for such goods and services; patterns of work organisation and job design that allow enhanced skills to be deployed to good effect;
  • human resource management and employee relations systems that provide high levels of trust, commitment and motivation.

An important lever in forcing employers in low pay sectors to move away from low skill, low added specificationstrategies would be through increasing the national minimum wage.

'The recent policy initiative to introduce a minimum wage may have helped to force some employers to adopt policies and practices that put a higher priority on raising skills and productivity. However the level at which it has been set means that its impact has probably been marginal. Raising the level could have significant effects but this is unlikely to be a popular policy amongst most employers'. (DTI, 2003)

The NMW is to increase to £5.05 an hour from October 2005 and £5.35 from October 2006 for all workers over the age of 22. The TUC submission to the Low Pay Commission was for it to be set at £5.35, increasing to £6.00, covering all employees from the age of 18.

There clearly needs to be much more collaborative approaches to stimulating demand:

· increase employer awareness of the medium and long term benefits of developing high performance workplaces.

· maximise employee involvement inhigh performance workplaces

· assist employers to identify skills gaps, skills enhancement and utilisation and their role in HWP.

· increase the stock of sector skills to combat skill shortages.

The aim of the Sector Skills Council network is to ensure that between 2004 and 2008:

  • 10 % more private and public service organisations will have introduced HWPs.
  • Skills gaps will be reduced by 30% and skills shortages by 25%

The main mechanism through which SSCs are to meet these objectives is through Sector Skills Agreements. Trade unions are involved in these agreements through their membership of the SSCs. There are a number of models which SSCs could take on board:

Regulation/licence to practice

As a way of ensuring health and safety on site, CITB-Construction Skills has introduced schemes such as the Construction Skills Certification Scheme whereby construction workers are trained and assessed to minimum vocational qualifications which are recorded on the registration card. An important feature of the card is recognition of workers health and safety awareness. By 2010 such certification will be legally required in order to work on construction sites.

In order to raise the quality of care in the care sector, from 2005 registered managers of care homes have had to achieve NVQ level 4 or equivalent and at least half of their non nursing staff have had to achieve NVQ level 2.

Training Levies

In order to sustain a skills base in an industry with many small companies with limited training capacity, the CITB levy/grant system has continued over many decades through employer and union support. Under the system, all employers (with the exception of very small enterprises) pay a training levy which is then disbursed to those employers who train. It is the smaller firms that train the most new entrants and receive most of the grant allocation (including the very small ones who do not pay a levy). The larger companies benefit however from the skills of the trained workers paid through the levy that they recruit later in their career. Without such a levy system, small firms would not be able to train operatives to the required occupational standards which would result in major skills shortages throughout the industry. There are a number of other sectors (e.g. print) where there are endemic market failures leading to serious skills shortages and where there has been a dialogue between unions and employers on the possible introduction of a statutory levy.

In the film industry, Skillset - the SSC - currently operates a Skills Investment Fund. It is a voluntary film production levy which has raised £3m. since its inception in 1999. The problem has been that only two thirds of employers have participated. This means that those who do contribute are subsiding training initiatives and trainees that benefit 'free-loading' productions that do not pay the levy. This has led to an overwhelming demand from the industry for a mandatory training levy. The Government is now consulting with employers and unions on the establishment of a new ITB for film with the power to raise a training levy.

The TUC believes that if there is evidence that an SSC agreement is not being met through voluntary collective action, with skills shortages persisting in a sector, then Government will need to introduce statutory levy grant arrangements. The possibility of this sanction should be made much more explicit by the Government.

Public Procurement

There is enormous potential for the Government to use its considerable purchasing power (for example as the biggest single buyer in the construction industry) to support its skills strategy . Public sector authorities spend £125 billion per year purchasing goods and services. That money can be spent in such a way that achieves value for the taxpayer but also promotes goals in terms of inclusion, equality and access to training. The TUC believes that the new EU Public Sector and Utilities Directives, and relevant case law, support our view that it is legal for contracting authorities to take into account social considerations and policy goals when awarding contracts. There is significant potential for this to occur at national level, but also at local and regional level through local authorities.

Procurement can be used in support of training, recruitment and work based learning if this can be demonstrated to be relevant to the contract. Since many contracts cannot be delivered without highly skilled workers, this can be easily demonstrated . It can also be used to promote equality and diversity policies carried out through the process of recruitment and training. Apprenticeships are a useful mechanism for achieving government policy goals in terms of workforce development and diversity. The use of the procurement route would provide a means for overcoming the lack of voluntary engagement in these areas by some employers. Indeed, many good employers bidding for public sector contracts report that they wish to train their employees but fear being undercut on price by poor employers if they do.

There are a number of recent examples where support for the use of procurement contracts to promote skills, training and equalities have emerged which indicate a momentum gathering around this agenda. The Apprenticeship Taskforce has shown support for the use of procurement to promote apprenticeships and the Manufacturing Forum has, likewise, supported proposals for contracts to include skills and training provision. Furthermore, the National Employment Panel has recently recommended the use of procurement contracts to support race equality, which met with a positive response from the Chancellor.

Question 7a. How do you think that the UK?s future skills needs can best be met?

The public education sector can do much to meet future skills needs. The further education service has had a long history of providing learners with the underpinning knowledge and understanding within vocational programmes such as apprenticeships and higher technician courses. Colleges have also played a pivotal part in providing Skills for Life courses and NVQ programmes, particularly under the Employer Training Pilots. There is however a need for:

  • Colleges to be given enhanced capacity to meet the increasing needs of learners at work by helping to design customised courses and by running them at the workplace. Examples include assessing construction workers on site doing NVQs or holding one-to-one basic skills sessions with learners at a workplace learning centre.
  • College staff to be given the professional development, support and incentives to carry out these functions effectively.

Good quality private providers with state-of-the-art facilities can also make an important contribution to work-based training. It is therefore important that the LSC continues to quality assure private providers offering publicly-funded publicly funded training.

There is a critical need to develop and promote a new vision for the FE sector that will highlight its crucial role in delivering on both the economic and social justice agendas in all our communities. And it is also essential that there is political buy-in for such a vision across all government departments and that funding is made available to translate the new vision into reality on the ground.

The FE sector is currently being pulled in a number of directions by differing political priorities. In particular there are the pressures to deliver key elements of the Skills Strategy, to increase the focus on addressing employer needs and work with schools to meet government plans for 14-19 education. There is no adequate funding to meet all three needs. The FE sector continues to be the ?poor relation? when it comes to its share of the DfES Budget and matters have been made worse by the fact that colleges have been a victim of their own success by recruiting many more of the Skills Strategy priority groups (e.g 16-18-year-olds and adults without a Level 2 qualification) over the past year.

FE is driven by targets which pay too little attention to the context in which FE Colleges work and which do not recognise the wider outcomes of FE: for example tackling prejudice and race discrimination, promoting social cohesion and encouraging citizenship and a sense of community among the disadvantaged. This broader concept of Public Value should underpin the role of FE, and more funding should be made available.

There is a critical need to develop and promote a new vision for the FE sector that will highlight its crucial role in delivering on both the economic and social justice agendas in all our communities. And it is also essential that there is political buy-in for such a vision across all Government departments and that funding is made available to translate the new vision into reality on the ground.

There is also a key role for universities to play in level 4 programmes such as HNCs/HNDs and Foundation Degrees. This requires incentives to support higher education programmes delivered at the workplace. Greater synergy between the work of universities and Regional Skills Partnerships will be needed in delivering the skills dimension of the Regional Economic strategies.

Question 7b. Do you think that organisations providing education and training should respond to the needs of the labour market?

There is a need for labour market demand to be informed and strategic and for supply to be flexible and responsive. This requires:

  • Employers to have the capacity to identify and articulate their longer term, as well as present, skills needs.
  • Brokers which can provide business support to employers such as diagnosis of business needs and training needs analysis.
  • ULRs to be involved in the training needs analysis as well as helping to deliver wider lifelong learning/CPD opportunities for the employees.
  • SSCs and awarding bodies to design programmes which can meet those needs as well as the wider requirements of the employees.
  • Providers to have the capacity to meet that demand.

Question 8. What are the three things that you think would have the greatest effect on the UK?s ability to provide the skills required to benefit society and the economy in 2010?

  • a concerted effort by SSCs, RDAs and Business Support to help many more enterprises to develop into high performance, high trust organisations with high product and process specs. Their training plans should ensure high union/employee involvement in changes to work organisation etc. This would be the key way of increasing employers demand for skills and utilising those skills.
  • raising employee demand for lifelong learning through increased employee voice by ensuring that training is a core bargaining item in recognised workplaces backed by statute. Union Learning Reps need to work with employers and brokers to help individuals to identify their needs and help deliver provision.
  • state intervention to address market failure through introducing:
    • regulatory standards as a condition of licence to practice in appropriate sectors in the form of required qualifications for staff.
    • Statutory levy grant systems where voluntary collective arrangements have not tackled serious skills shortages.
    • Learning entitlements including paid time off to study, with priority given to those with a low or no qualifications.

    · Measures in public procurement policy to promote skills, training and equality

    Question 9. Are there any domestic or international examples of good practice that you would like to bring to the reviews attention?

    There are many good examples of how unions and their Union Learning Representatives are increasing the demand and enhancing the delivery of learning. Many of these arise from the Union Learning Fund projects. Attached are three case studies covering engagement with Employer Training Pilots, Union learning centres and apprenticeships.

    The USA Community College system is often suggested as a model to be admired, which is more responsive to both employer and employee needs than the UK General FE College - but it is worth noting that Community College funding is generally about twice that of the UK. The UK ULR is a unique innovation (already being studied by some other countries), which is already having a major impact, but could have an even greater impact if allied to better FE funding and a stronger union role as argued above.

    Question 10. How would you like to see the Review building in the existing evidence base?

    Policy making on skills in the UK has often ignored the positive benefit that unions can have on their formation, distribution and utilisation. These are broadly set out in a TUC briefing The Union Effect (attached). It would thus be very useful to add an industrial relations dimension to the work of the review. CEDEFOP has done some in-depth country case studies work on social partnership involvement in education and training.

    Importing another country?s entire education and training system into another country is unlikely to be successful given the different political and cultural environments. Nevertheless, identifying good practice at workplace and sector levels in other countries could inform policy development for the longer term. For example, some interesting recent research has been done on the effect of union presence on performance in German multinational company subsidiaries in the UK (Tuselman, 2005)

    Question 11. Are there any additional issues?

    Nothing to add

    References

    Acemoglu, D. and Pishke, S. (1999) ' The Structure of Wages and Investment in General Training'. Journal of Political Economy, 107. 539-572.

    Boheim and Booth (2003), 'Trade Union Presence and Employer-Provided Training in Britain Journal of Industrial Relations'. Journal of Industrial Relations, Vol.44 July 520-545.

    Campbell, M. et al (2001) Skills in England 2001: Research Report, London: DfES.

    Dearden, L. et al (2005) The Impact of Training on Productivity and Wages: Evidence from British Panel Data. CEP Discussion Paper No. 674, London School of Economics.

    Finegold, D. and Soskice,D. 'The Failure of Training in Britain: Analysis and Prescription', Oxford Review of Economic Policy, Vol. 4, No 3.(1988)

    Felstead, A. et al (2003), Work Skills in Britain 1986-200. DfES.

    Haskell et al (2003), Skills and productivity in the UK using Matches establishment, worker and workforce data. CeRIBA.

    Institute of Employment Research/IFF Ltd (2004), National Employers Skills Survey 2003: Key Findings, Coventry: Learning and Skills Council.

    FILENAME \p Hogarth, T. and Wilson, R. (2003), Tackling the Low Skills Equilibrium : A Review of Issues and Some New Evidence . DTI.

    Hogarth, T. and Wilson, R. (eds.) (2005), Skills in England 2004 Volume1: Key Messages, Coventry, LSC.

    Labour Force Survey (2004), ONS.

    Moore, S. and Wood, H. (2004), The Union Learning Experience: National Survey of Union Officers and ULRs. Working Lives Research Institute, London Metropolitan University.

    Tamkin et al (2004), Skills Pay: The Contribution of Skills to Business Success, Wath upon Dearne, SSDA.

    TUC (2005), The Union Effect: How unions can make a difference to learning and skills.

    Tuselmann, H-J. (2005), German Multinational Companies in the UK: Employee Relations and Subsidiary Performance. Presentation to TUC.

    Appendix1

    How the TUC and unions are meeting learning needs

    TUC learning Services and the Trade Union Education have

    • Trained over 8,000 Union Learning Representatives who have helped 100,000 employees on to courses.

    · supported over 450 Union Learning Fund projects covering over 3000 workplaces and helping 14,000 people into learning.

    · Established over 90 learndirect learning centres within the Trade Union Hub, providing online learning to over 8,000 learners.

    · Brokered paid time off for training for over 1,250 union members under the first year of the Employment Training Pilots.

    • Trained almost 40,000 union activists annually through the Trade Union Education Service.

    The Union Academy

    The TUC with support from the DfES and LSC is extending this work through the establishment of a Union Academy. Its main functions will be to enhance union capacity over learning and skills; improve the quality of delivery and mainstreaming good practice.

    The Union Academy will bring together the Union Learning Fund, TUC Learning Services and Trade Union Education in order to provide a more coherent and sustainable service that all unions will want to buy into. But it is more than the sum of these parts. The Academy will also identify and disseminate good union practice in order to mainstream it; ensuring that it has maximum impact on the development and delivery of the Government's skills strategy. The Union Academy will ensure that there is a strong employee dimension to the strategy.

    The Government has provided £1.5m (2006/7) and £3m (2007/7) to contribute to the development of the Academy. A business plan is well advanced, the project team and budgets are in place and development work in identifying its centres in the regions is commencing. The aim is for the Academy to be fully operational in 2007.

    Appendix 2

    TUC Training at Work Survey

    Summary of Major Findings

    Methodology

    The TUC commissioned British Market Research Bureau to carry out opinion research on individual attitudes to training as part of an omnibus survey. It took the form of a telephone survey of 1,000 adults aged 16+ between 24-27.05.05. The survey questions are set out below.

    Demand for Learning

    There is considerable satisfaction with the amount of training employees get at work (three quarters are happy with the amount)

    Nevertheless, over half of employees would like their employer to train them in new skills that would help them get promoted or a better job (52%).

    This demand for skills is not however confined to training at work. Over two in five (42%) would like to do some training or education outside work that would help them get a better job.

    Employers need not fear that offering such learning opportunities would lead to their workers wanting to leave for better jobs and thus not getting a return in their investment. Only one in five (21%) stated that their main interest in training was that it would help them change their employer.

    These views however vary considerably across the age range. The older the worker the more satisfied he/she is with the training they get (81% of 55-64 year olds/73% of 16-24 year olds). The propensity to want to train in new skills is much more marked in the younger age group compared to older workers (70% of16-24 year olds/ 39% of 45-54 year olds/19% of 55-64 year olds). Older workers are also less likely to want to train in order to change their employer (11% of 45-54 year olds compared to 32% of 25-34 year olds).

    The desire to learn new skills is not determined by class. For example, half of semi-skilled and unskilled manual workers (DEs) would like their employer to train them in new skills to help them get promoted or get a better job and almost a third of them (31%) want it to help change their employer. This demand for new skills is higher than for managerial/professional (47% ABs); only 18% of which want the training to help change their employer. The greatest demand however comes from those in supervisory/junior management positions (60% C1s). The largest demand for learning outside work to help get a better job comes from unskilled and semi-skilled manual workers (47% DEs compared to 37% ABs). Many of these workers will have low or no qualifications, with the Government providing them with incentives through entitlements to free tuition up to basic skills and level 2 qualifications.

    Barriers to Learning

    There are a number or reasons why employees stopped taking up some new training or education in the last three years. Most of the reasons are time or funding related.

    As many as 29% of employees were working such long hours or had so stressful a workload that they did not have the time to take up a course. This was most marked for those in full-time work (35% compared to 16% of part-time workers). This ' work-learn' balance was more of a problem for workers in large workplaces with more than 250 employees (37%) as opposed to small ones with less than 50 employees (24%).

    Another barrier was lack of time to study because of dependants such as children to look after outside working time. As many as 29% of employees had this problem. It was a major barrier to learning middle aged women in low skilled, part-time jobs in large workplaces. As many as 42% of women did not have the time to learn. It was the greatest problem for workers in the 35-44 year age group (46%) and those in the lowest in unskilled manual jobs (32% DEs compared to 24% ABs).

    Money as well as time was also an issue. Over a fifth (21%) could not afford a course that they would like to do. This was much more of a problem for low skilled manual workers (25% DEs) compared to those in managerial/professional jobs (2% ABs). Funding was more of a problem for women (25%) than for men (18%).

    Some employees did not see learning as a high priority, with 27% saying that they 'had not got around to it'. This was particularly marked for those in low skilled jobs (41% DEs compared to 19% ABs). It also might be partly related to a lack of knowledge as to where to look for a suitable course (25% DEs compared to 2% ABs).

    Access to Learning

    Almost two thirds of employees (66%) felt that it would be useful if their employer gave them more training in work time and this demand was high throughout all the age groups except for 55-64 year olds where it fell sharply (38%). It was highest from supervisory/junior management grades (69% C1s), followed by low skilled workers (63% DEs). It was also highest amongst full-time (65%) as opposed to part-time (58%) workers and much more prevalent from those in large workplaces (72%) than small ones (57%).

    A major issue is how this should be done. There is a very high demand for paid time off from work to train. Over three - quarters (77%) of employees wanted such provision without losing pay. This demand was more prevalent in the age groups 16-44 (over 85%) compared to the age group 55-65 (56%). It was however high across all social grades. The demand however was greater from those employees working in large workplaces (82%) than in small ones (76%).

    Understandably, there was less interest in time off from work if it meant losing some pay. Nevertheless, about a third (32%) would find it useful. As with the demand for paid time off, the younger the age group and the larger the workplace the greater the demand. Those in part-time employment would find it more useful (37%) than full-time workers (30%). Interestingly, there was not a correlation between such demand and occupational status. The group that would find it the most useful was the semi-skilled and unskilled manual workers(34%).

    A high proportion of employees (42%) felt that more time off for study could be facilitated by employers not expecting them to work overtime, whether paid or unpaid. Almost half of young workers (48% 16-24) were of this view, which was only shared by a quarter of older workers (26% 55-64). It was those in supervisory and junior managerial jobs (48% C1s) who most held this view on overtime, as opposed to skilled manual (33% C2s). There was also a significant difference between full-time (44%) and part-time workers (37%), perhaps because of the lower incidence of overtime worked by the latter.

    A relatively high proportion of workers would find it useful to have child care whilst they studied (29% women/16% men). This was particularly a need for the younger age groups ( 35% 25-34 /29% 35- 44). This demand was highest amongst supervisory and junior managerial workers (27% C1s). Twice as many part-time (34%) than full-time workers (17%) would find child care useful whilst they studied.

    As many as 28% of workers would find it useful if they had more support from their spouse. This was particularly true for female workers (33%) and for semi and unskilled manual workers (36% DEs) - the 'Educating Rita' effect. It was also seen as more useful by part-time (33%) than full- time employees (25%).

    There has been a large increase in the number of trained Union Learning Representatives in recent years. Their statutory functions include providing support and advice on learning to colleagues. There is clearly a considerable demand for this type of person. Three in five felt that it would be useful to have access to help and advice from a colleague with special knowledge of what training is available. Almost twice the proportion of younger workers thought it would be most useful (74% 16-24) than older workers (38% 55-64). It was those in supervisory/junior management grades that thought it would be the most useful (69% C1s), followed by semi- and unskilled manual workers (63% DEs).

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