Select Committee on Trade and Industry Minutes of Evidence

Further memorandum by the BPF Ref 278, pg 32—How well do we do relatively on the skills front compared with European Countries, certainly Germany?


  Research carried out by the Performance and Innovation Unit (PIU) [7]has highlighted that the UK lags behind most other Western Countries in basic skills, productivity, in-company training and vocational learning. A large cultural change is required to bring the UK up to the standards of competitors, which are more highly skilled at the basic and intermediate level and can guarantee performance over different economic cycles. The current economic downturn and the increasing competitive pressures of globalisation could see the UK fall further behind if standards are not raised. The message from the Government's own advisers, indicates that the appalling state of the British further education system and the lack of training carried out by companies could turn the UK into the "sick man of Europe".[8]


  Over 20 per cent of adults in the UK have poor numeracy and literacy skills. Seven million adults do not have literacy and numeracy skills of a Level 1 standard, which means that one in five adults do not have the skills to perform simple everyday tasks. [9]

  Poor basic skills are a substantial barrier to the take up of further work force development opportunities. Without good literacy and numeracy skills, individuals are less likely to be able to engage in other skills development. Poor basic skills adds to business costs (because of the need for additional supervisory staff, higher error rates etc).

  The graphs below show OECD comparisons of basic skills. The UK rates very poorly with only Poland and Ireland having lower levels of literacy and numeracy.

% adults with low literacy % adults with low numeracy
New Zealand2020
Switzerland (German)19 14
Belgium (Flanders)17 17
Switzerland (French)17 13

Source: OECD.

  In terms of international productivity data, evidence suggests that the sizeable gap between the UK and the US is not due to skills levels, while the 4 per cent gap with Germany and the 3 per cent gap with France is due to the UK's lower levels of skills.[10] (Differences in physical capital account for the UK's productivity gap with the US and Germany; differences in technological innovation explain the gap between the UK and the US).


  The National Skills Task Force Research Paper (2000) [11]highlights that the gap in qualification levels between the UK and France and Germany is particularly significant for vocational qualifications.

  Similarly, the PIU Productivity report confirms that the UK has one third fewer people qualified to NVQ level 2 than France and Germany and only half as many people qualified to NVQ level 3 or above as in Germany. [12]

  Workers in France and Germany undertake significant work force development after the age of 21 in order to achieve level 2 and level 3 qualifications. This is not the case in the UK. British workers who do not achieve a level 2 or 3 before the age of 21 are less likely to make up for this later in life than their counterparts in France and Germany. See the table below for more information—taken from the PIU Productivity report.


Level 2+ Level 3+
UKFrance GermanyUK FranceGermany
All qualifications
Age 19-217081 654343 48
Age 25-286183 854154 78
Vocational qualifications
Age 19-212625 28145 26
Age 25-282843 521718 48

  In the UK, the proportion of employees receiving training increases with establishment size, with relatively low levels of training undertaken in businesses with up to 25 employees. Firms with fewer than 25 employees are significantly less likely to provide training, yet 11 per cent of the workforce is employed by such businesses. This reinforces the poorer chances for lower skilled employees to upskill, since approximately 50 per cent of those without level 2 qualifications are estimated to be employed in firms with fewer than 50 employees.[13]

  EAMA's original evidence outlined the problems SMEs face in providing training. While the need for management/cultural change is a huge issue, it must be recognised that SMEs do have distinctive needs, which cannot always be addressed by the standard business qualifications available within further and higher education. Barriers to training include the relatively higher costs of undertaking training and time-off for training, the inherently higher levels of uncertainty resulting in shorter time horizons regarding investment decisions (including training), the unsuitability of many training courses to small firms' needs, which are often more related to business lifecycle, the changing size of the organisation and the need to address immediate business problems. [14]

  Government does need to provide more incentives to encourage more SMEs to invest in training, as well as more evidence to raise awareness of the bottom line benefits of training.

  At the recent CIPD conference, The Future of Learning at Work, [15]delegates were asked which would be the most effective and politically acceptable way to stimulate skills training in employment. The results were as follows:

    —  Training Levy—35 per cent.

    —  Tax Credits—59 per cent.

    —  Advertising—4 per cent.

    —  Laissez Faire—1 per cent.

  EAMA welcomes the Chancellor's proposal to introduce new training subsidies, which will offer people with low skills up to 100 per cent of the cost of approved training and accreditation and offer employers compensation for employees' absence.


  The above figures on basic and intermediate skills needs to echo the experiences of UK engineering industry, which is experiencing severe skills shortages—the reasons for which were highlighted in EAMA's original evidence. Engineering industry is particularly concerned at the need to strengthen the pool of labour at the technician and crafts levels and there are real concerns to strengthen the supply of competent, committed and commercially aware technical people at every level. In the UK, in almost all engineering occupations, in all sectors half or more of the vacancies for which employers are recruiting are "hard to fill".[16]

  UK engineering industry lacks sufficient skilled people at the intermediate level but remains on a par with most western countries in terms of university engineering graduate output.


  A key issue in the UK is the promotion of the vocational route. Young people at school must be encouraged to consider the vocational route as a worthwhile option. Apprenticeships in industry, coupled with relevant part time vocational educational support are often a preferable route for many young people, who should be encouraged that this is not an option for the less able. Apprenticeships are a vital way of serving industry's needs, while the apprentices retain the option to return to Higher Education with the added advantages of better motivation and more practical experience.

  EAMA welcomes the Government's £16 million campaign to promote apprenticeships and its aim to increase the proportion of 16-22 year olds entering the scheme, from 23-28 per cent within two years. The success of the plans does however lie in the commitment of employers to take them up and NTOs, soon to be SSCs, will therefore have to play a vital role in explaining the benefits of apprenticeships within the context of labour supply and sectoral competitiveness. Red tape and the bureaucracy of funding are key issues currently deterring industry from investing in MAs. These issues will need to be addressed if Government is to reach its ambitious target of increasing participation in MAs, to 35 per cent, by 2010.

  In Europe vocation qualifications have much greater currency. OECD reports on vocational training systems in Europe[17] highlight how on the continent institutions are far more branded and defined by the needs of the labour market. Similarly, Chris Hughes, Chief Executive of the Learning and Skills Development Agency, recently outlined how vocational qualifications in Europe are linked to the market in quite particular ways, in some cases providing a licence to operate in a particular area. Qualification levels determine salary levels—rates of return for qualifications are therefore greater than in the UK and there is far more parity of esteem between the vocational and the academic route. [18]See Annex 1 for a Case Study highlighting Germany's renowned vocational educational system.

  In the UK there isn't the same connection between qualifications and the labour market. With the national qualifications framework, it's difficult for employers to fine tune a qualification to their needs. As Chris Hughes outlined in the above report, training provision should be more flexible, driven by what industry needs and should not just offer a set package of qualifications. In order for this to work business needs to play a part and needs to be more aware of the vital role it must play in improving the provision of vocational education.

  There is in the UK a very poor image of engineering industry, which again is symptomatic of the under promotion of the vocational route. For many people, an engineer is someone who mends cars. It is the lack of public distinction between the role of maintenance technicians and that of a professional engineer, which is preventing many students from entering a potentially rewarding career in engineering. A MORI poll carried out by EMTA showed how: 70 per cent of secondary school age children said they knew either not much or nothing about engineering, 50 per cent associate engineering with a dirty working environment, only a third associate the profession with good pay and only 4 per cent of girls would consider a career in engineering.

7   "In Demand: Adult Skills for the 21st Century". A report by the Performance and Innovation Unit (PIU). November 2001. Back

8   CIPD's Executive Briefing following CIPD Conference "The Future of Learning for Work". July 2001. Back

9   PIU Report. op cit. Back

10   Britain's Productivity Performance 1950-96: an International Perspective, NIESR 1999. Back

11   Skills for All: Research Report from the National Skills Task Force 2000. Back

12   PIU Report. op cit. Back

13   ibid. Back

14   For more info, see The nature of training and the motivation to train in small firms. DfES Research Brief No RB330. March 2002. Back

15   op cit July 2001. Back

16   For more information on skills shortages and skills needs within the UK's engineering industry, see: Skills Dialogues: An Assessment of Skills Needs in Engineering. DfES Publications 2000 ref.SD2. Sector Workforce Development Plan for Engineering Manufacture 2001-05. Produced by the National Training Organisation for Engineering Manufacture (EMTA). February 2001. Back

17   For more information see: or CEDEFOB at which is the European Centre for the Development of Vocational Education. Back

18   See A New Outlook: This country's tradition of vocational education needs to be reinvented at dated 12 March 2002. Back

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