Education, skills and productivity: commissioned research - Business, Innovation and Skills and Education Committees Contents

4. Intermediate skills development


'Intermediate' here refers to technicians, craft workers and other employees with qualifications and skills below university graduate level but who are above the low-skilled category. As with high-skilled workers, the principal mechanisms by which intermediate-skilled workers can contribute to productivity centre on innovation and efficiency. For example, incremental innovations in products, services, processes and modes of work organisation rely heavily on workers in direct production, marketing, finance and human resources departments who have developed new ideas through learning-by-doing in the course of their work (Toner, 2010).

Intermediate-level skills also make key contributions to absorptive capacity at firm level. Even if high-skilled employees such as professional engineers and scientists contribute disproportionately to firms' ability to identify and acquire useful external knowledge, the successful application of this knowledge will depend in many ways on intermediate-skilled employees as well as on high-skilled employees. For example, there are many key support roles for technicians in product design and development areas and for craft-skilled workers in improving production processes.

In countries like Germany with well-established apprenticeship training systems, intermediate-skilled workers are particularly well equipped to suggest ways in which efficiency (and hence productivity) can be improved. These contributions emerged with clarity in a series of comparisons of German and British sample of establishments in manufacturing and service industries in the 1980s and 90s (Prais, 1995). This qualitative research—largely based on site visits and semi-structured interviews with managers and supervisors—also highlighted the extent to which senior managers and professional staff in British establishments were caught up in dealing with daily problems ('fire-fighting') because of the relative absence of intermediate-skilled workers to deal with those problems, or prevent them happening in the first place (ibid).

What types of intermediate skills are most useful in enhancing efficiency and productivity? When employers in England were surveyed in 2013 about the skills that most needed improving among their intermediate-level employees, their responses pointed to a wide range of technical, practical and job-specific skills and also a number of generic skills such as communication skills, problem solving skills, team-working skills and customer handling skills (Winterbotham et al, 2014). Technical/practical skills and generic skills are often required in combination with each other (Dickerson and Green, 2004). Indeed, generic skills learned in classrooms only become economically productive to the extent that they can be applied in workplaces. For example, research on the use of quantitative skills in UK firms and organisations has shown that many jobs require only a 'simple' level of mathematics (in principle no higher than GCSE standard) but additional skills, knowledge and experience are usually required to apply this level of mathematics in the 'complex settings' of workplaces (Hodgen and Marks, 2013:7).

For this reason most assessments of different forms of vocational education and training suggest that, if classroom-based learning is to become useful, it needs to be reinforced by employment-based training in some way. Indeed, international evidence reviewed by Eichhorst et al (2015) suggests that apprenticeship training—centred on employment-based training but combining it with part-time attendance in vocational education classes or workshops related to the field of training—is superior to purely school-based vocational education in terms of trainees' employment and salary prospects. Labour market outcomes of this kind are useful indicators of how well different types of skill correspond with employer skill requirements.

We now go on to compare the provision of technician-level education and training, craft-level apprenticeship training and full-time vocational schooling in France, Germany, the UK and US.


In the last ten years skill assessments in the UK have identified a number of sectors where employer demand for associate or 'para' professional and technician-level skills is strong, for example, health services, financial services and some branches of advanced manufacturing such as aerospace and innovative areas of electronics and chemicals (FSSC, 2007; SEMTA 2009; Skills for Health, SEMTA and Cogent, 2010; Lewis, 2014). What is at issue is whether the relatively high level of graduate supply in the UK best meets the skill needs of employers (and the career aspirations of the individuals concerned) or whether there is a need for the mix of skills to include more technician-level skills, including practical skills developed through employment-based training.

Of the four countries under consideration in this report, the one which devotes proportionately most resources to technician-level education and training is France where (as noted in Section 2) a relatively large proportion of the workforce have acquired BTS or DUT qualifications from two-year technician-level courses. After completing these courses, students can choose between entering employment or going on to study for Bachelor or higher degrees. About half of students who complete DUT courses and 20 percent of those who complete BTS courses go on to further studies (CEREQ, 2010). For those who depart higher education at this stage, there are favourable prospects of finding technician-level employment at a salary appropriate to their qualifications (Nauze-Fichet and Tomasini, 2005).

The development of employment-related skills and knowledge on BTS and DUT courses is facilitated by work placements for those students undertaking full-time courses and the recent growth of apprenticeships for students on technician-level courses as well as students attending longer-cycle HE courses (Méhaut, 2008).

The position of BTS and DUT qualifications in the French education system bears some resemblance to Foundation degrees and Higher National qualifications in the UK which also usually require two years of study in the case of full-time students. In addition, the proportion of Foundation degree and Higher National students who go on to study for Bachelor degrees after completing their studies (about a third) is similar to the staying-on rate of BTS and DUT completers in French higher education (Mason, 2010). However, the numbers of UK students enrolled on courses at this level are proportionately much smaller than in France. Although Foundation degree student numbers rose steadily from their introduction in 2001 until 2010, they still only accounted for about 3 percent of all higher education enrolments in the UK in 2010. Higher National Certificate or Diploma enrolments represented only 2 percent of total higher education enrolments (ibid). Since 2010, enrolments on Foundation degree courses have declined quite sharply (HEFCE, 2014).

About half of all UK-domiciled students on Foundation degree and Higher National courses in 2008 were studying part-time, and a proportion of these students were also engaged in apprentice training. As yet, the numbers of UK apprentices being supported by their employers to progress to higher education are relatively small [6] but recent case studies of employers who do provide such support found that the perceived benefits—such as development of youthful expertise and improved staff retention—outweighed the costs so far as these employers were concerned (Kewin et al, 2011).

The US also provides many examples of short-cycle (two-year) tertiary qualifications serving as potential stepping-stones to either intermediate-skilled employment or to further study to Bachelor degree level. By 2000 an estimated one in five people holding Bachelor degrees had started as students in community colleges and other 'two-year institutions' (Bailey et al, 2004). In 2012 about 40 percent of all students enrolled in post-high school education in the US were at colleges of this kind. [7]

The main qualification offered by community and other two-year colleges is Associate degrees. Several studies have found that the average returns to these two-year qualifications are positive even though, as expected, they fall short of returns attached to Bachelor degrees (Kane and Rouse, 1995; Bailey et al, 2004). But a distinctive feature of the US higher education system is the relatively high proportion of community college students who depart their studies without gaining formal qualifications of any kind. While this may appear to represent a high level of wastage, it has long been argued in the US that community college students often succeed in upgrading their skills by attending courses even though they do not have certification to attest to this. Support for this proposition has now come from analysis of the National Education Longitudinal Study in the US which finds evidence of positive salary returns to uncertified community college study as well as to courses leading to Associate degrees (Marcotte, 2006).

Thus, in the US as in France, upper intermediate qualifications serve a dual purpose: helping to meet employer demand for technician-level skills applicable in workplaces while also serving as stepping-stones towards Bachelor degree study. In the UK context where certification is more established than in the US, Foundation degree and Higher National courses together with Higher Apprenticeships are already in place and could serve as a basis for expanded provision of technician-level skills while also recognising the strong incentives confronting UK students to aim (in the medium term) for Bachelor degree qualifications.


As shown in Table 2.1, holders of NVQ Levels 2-3 or equivalent qualifications in the UK are much less likely than their counterparts in France and Germany to have undertaken vocational education and training. Although skills acquired through general education are keenly sought after by employers, a strong case can be made (as discussed above) for employment-based training—especially through apprenticeships—as the best means of learning how to actually apply generic skills in work settings while also developing practical occupation-specific skills and experience.

Apprenticeship training remains strong in Germany, covering a wide range of occupations. In large part this reflects the deployment of skill-intensive business strategies which have co-evolved with labour market institutions that support apprentice training, for example, partnerships between strong employer associations and unions, statutory regulation of apprenticeship training standards and concerted efforts to modernise apprentice training in line with changing technologies and market requirements, (Thelen, 2004; Steedman, 2010).

However, it is notable that the number of young Germans engaged in 'pre-vocational' training outside the apprenticeship system is now almost as large as the number of apprentice trainees: 'the demand for training has grown far beyond what firms provide' (Powell et al, 2012:13). The bulk of this pre-vocational training is school-based and the trainees concerned experience difficulties in finding employment due to their lack of work experience which most German employers expect (ibid).

In France apprentice trainee numbers have grown substantially since the 1980s, financed in part by the proceeds of an apprenticeship tax on most employers (who are exempted from paying the tax if they train specified numbers of apprentices). This tax dates back to 1925 and has been modified and strengthened at intervals over the years, as well as being supplemented by tax credits for firms employing apprentices (OECD, 2009; Steedman, 2010; Dif, 2011). However, as many as three-quarters of young French people engaged in vocational training still attend vocational schools with limited exposure to workplaces (Eichhorst et al, 2015). Indeed, a sizeable proportion (roughly a third) of young French people gain vocational qualifications such as the CAP (Certificat d'aptitude professionnelle) or the Baccalauréat professionnel during their secondary schooling and only then start seeking employment. Following the 2008-09 financial crisis, unemployment rates have risen sharply for holders of both these qualifications (CEREQ, 2014).

Both the UK and US had a common heritage of apprenticeship training for manual workers dating back to the nineteenth century. In the UK this form of training remained strong until the 1970s and the early 1980s recession. In the US apprentice training declined much earlier and more steeply than in Britain, partly due to the earlier growth of mass production in the US and hence lower demand for craft skills (Gospel, 1994). In recent years apprentice training numbers have expanded rapidly in the UK but from a relatively low base by comparison with Germany (Steedman, 2010). In the US apprenticeship training now survives on a very small scale, for example, in some construction occupations (Eichhorst et al, 2015).

In consequence, large proportions of young British and American people engaging in vocational education do so through school-based courses at, respectively, further education colleges and community colleges. In both types of institution, the quality of training provision is restricted by markedly lower funding per student than that available to higher education (Kahlenburg, 2015; Wolf, 2015a).

In 2014-15 some 493,000 people started apprentice training in England, about 2.6 times higher than ten years previously and covering a much wider range of occupations and industries than was the case in the 1970s and 80s. Two distinctive features of the expansion that has occurred are the large proportion of adult trainees (43% aged 25-plus in 2014-15) and the 60% of trainees who were aiming for NVQ Level 2 qualifications rather than the Level 3 or higher qualifications which are typically associated with apprenticeship training in Continental Europe. [8]

In addition to concerns about the relatively low qualification aims of a majority of apprentice trainees, there are a number of criticisms of the quality of apprentice training received by many trainees. For example, there are still clear variations between different sectors in the amount of on- and off-the-job training and related vocational education that apprentices receive. Some training under the 'apprenticeship' heading for older workers in their existing jobs seems to amount to little more than short-duration skills updating or accreditation of existing skills (Richard, 2012; OFSTED, 2015; Wolf, 2015b).

Although some firms in England and other parts of the UK do provide high-quality apprentice training, overall employer commitment to apprentice training in the UK continues to be limited by comparison with Germany and some other Continental European nations. In large part this reflects the business strategies deployed by many British firms which do not seek to specialise in high skill, high value added product areas or to organise their workplaces in skill-intensive ways.

The UK retail industry provides a striking example of the different patterns of employer demand for skills in the UK and Germany. Although there has been recent rapid growth in apprenticeships in British retailing, these employees still represent only a very small proportion of the retail workforce and a large majority of retail apprentices are aiming only for Level 2 qualifications. [9] By contrast, the German retail industry has one of the highest shares (73%) of apprentice-trained workers in the whole German economy, something which may appear surprising to British retailers who tend to rely on relatively short company-specific training programmes (Mason and Osborne, 2008; Lewis et al, 2008).

The main reasons for this disparity emerge from comparisons of work organisation and skills utilisation in the two industries. In Germany sales assistants are typically responsible for the whole distributive process, including ordering, merchandising and advising customers and they do not receive daily instructions from superiors (Voss-Dahm et al, 2008). By contrast, in UK retail firms, work for sales assistants is typically divided up into bounded tasks which are relatively easy to carry out. Sales staff have limited autonomy and tend to follow day-to-day instructions by managers (Mason and Osborne, 2008). Thus, the predominant mode of work organisation in the British retail industry is entirely consistent with limited demand for Level 3 apprentice skills and also illustrates why the government is likely to encounter resistance from some employers to its recent proposal to introduce a levy on large firms to help fund apprentice training (HM Treasury, 2015).

6   In 2014-15 there were 19,300 Higher Apprenticeship starts in England-more than double the number in the previous year-but still representing only 4% of total Apprenticeship starts in 2014-15 (Source:; provisional data).  Back

7   Source: Table 303.70, Digest of Education Statistics, National Center for Education ( Back

8   Source:; provisional data for 2014-15. Back

9   Source as in Footnote 8. Back

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Prepared 5 November 2015