Higher skilled roles rise, as skills gap grows – CBI/Pearson Annual Report

More than three-quarters (79%) of businesses expect to increase the number of higher-skilled roles over the coming years. Yet two-thirds (66%) fear that there will be a lack of sufficiently skilled people to fill vacancies.  That’s according to the 2018 CBI Education and Skills Annual Report, in partnership with Pearson.

The report represents 28,000 businesses and reveals that 85% of firms are expecting to maintain or increase investment in training in their workforce. Currently UK employers spend £44.2 billion on training expenditure each year.

When asked about the impact of the apprenticeship levy, the report highlighted a drop in the number of firms offering apprenticeship programmes (from 83% in 2017 to 70% in 2018). Worryingly, 59% of those firms that offer such programmes have experienced difficulty in recruiting apprentices or expect to do so in the next three years.  And over a quarter (26%) have taken the decision to absorb the levy as an added cost of doing business.

Business engagement with young people in education reduced from 81% in 2017 to 75% in 2018.  Encouragingly, two-thirds of respondents (65%) want to play a greater role in supporting schools and colleges.

John Cope, CBI Head of Education and Skills Policy, said:

“This year’s survey shows the scale of the challenge to address skills gaps, with two-thirds of businesses deeply worried that there aren’t enough sufficiently skilled people to fill vacancies.

“Yet there’s room for optimism.  The vast majority of firms do expect to maintain or even increase their investment in staff training, as well as increase the number of higher-skilled roles over the coming years. This is the first time since 2014 that these numbers have been so positive.

“Policymakers, business, the education sector and the CBI all have their role to play, in helping the two-thirds of companies wanting to support schools and colleges.”

Rod Bristow, Pearson’s President, UK and Core Markets, said:

“It is impossible to ignore the primary trend in this report - the gap between what is learned in schools, colleges and universities and what is valued by employers.  Qualifications are one part of the mix, as indicators of achievement and ability, but nurturing the right attitudes, behaviours and skills as young people progress through the education system is just as important.”

1. Technical education is highly valued by firms, but requires urgent improvement

Businesses are committed to making the apprenticeship levy and T-levels work. Ongoing reform of the levy announced at Budget 2018, as well as collaboration with companies on T-levels and retraining reflects long-standing business advice and will help people adapt to the fast-changing world of work.

Firms look forward to working with the Government in the lead up to the Spending Review to agree how the apprenticeship levy can evolve into a more flexible ‘skills levy’.

Key apprenticeship levy survey findings:

• The apprenticeship levy must be reformed to include:
  • Allowing use of funds to cover a wider range of costs for training (59%)
  • Greater flexibility in spending levy funds including their transfer and pooling (51%)
  • Less bureaucracy to make the system more responsive and more user-friendly (47%).

Key T-level survey findings:

• 41% of employers think T-levels are important as part of developing technical qualifications fit for the future
• Given their early stage, it is unsurprising that 42% of companies were unaware of T-levels, demonstrating the importance of better communication of these reforms to employers
• Nearly two-thirds (64%) of businesses largely or wholly unaware of 45-day work placement element of T-levels.

 John Cope, CBI Head of Education and Skills Policy, said:

“While some companies are benefiting from the apprenticeship levy, big challenges remain. To its credit, the Government has listened and is delivering reform: making the system more flexible and slashing the cost for small businesses.

“But the end goal remains that the apprenticeship levy should evolve into a more accessible skills levy.”

Rod Bristow, Pearson’s President, UK and Core Markets, said:

“We believe that the 16-19 phase should continue to offer young people three quality educational pathways – a purely academic curriculum through the A-Level, a broad career-focussed route through the Applied General, and specialised options that allow students to prepare for a particular occupation through the incoming T-level system. This gives young people a range of options to enable them to go to university, start an apprenticeship or enter skilled employment.”

2. Links between business & education remain strong, but progress is stalling

Effective business-school and college partnerships have a key role to play in raising levels of academic attainment and helping young people develop their careers.

Survey results show:

• The top three ways businesses currently engage include visiting schools (83%), offering information about apprenticeships and traineeships (70%) and giving careers advice and talks (68%)
• The top two reasons firms struggle to engage with schools include:
  • 48% of firms say that there is too little guidance/support on how to make encounters worthwhile for young people
  • 47% find processes difficult and time consuming (including DBS checks and health and safety requirements)
• 81% of employers indicated that readiness for work is one of their three most important considerations when recruiting school and college leavers.

John Cope, CBI Head of Education and Skills Policy, said:

“Business has an essential role to play in improving social mobility and justice. Pupils who have four or more interactions with employers while at school are five times less likely to be out of work as an adult, so this really matters.

“This new evidence shows that while there is no lack of enthusiasm from business, too many still struggle to engage.  The CBI will continue working with the Careers and Enterprise Company to help bridge this gap.

“As well as inspiring and providing careers advice, employers can help make sure the curriculum and education prepare young people for work and the modern world.”

Rod Bristow, Pearson’s President, UK and Core Markets, said:

“Businesses must engage with young people and open up their doors to give them an insight into the world of work and the different career paths available. It is also vital that education becomes more attuned to the future world of work and skills and becomes more demand-driven.

“It’s disappointing to see progress stalling in this area and we advocate for a renewed focus on engagement from both sides - be this through formal apprenticeship programmes or through other means such as industry workshops, learning days, short courses or work experience.”

3. Higher education must meet the UK’s future skills needs critical for global competitiveness

A successful post-18 education system must prepare all our young people, regardless of background, for the changing world of work.  It must also provide the opportunity for those already in work to retrain and upskill.

Survey findings show:

• 87% of businesses that employ graduates have maintained or increased their levels of graduate recruitment over the last year
• 54% of those firms with ties to higher education have increased their engagement over the past year, with just 6% cutting back.

John Cope, CBI Head of Education and Skills Policy, said:

“Investing in the UK’s skills base is the best strategy for growth our nation can have.

“Universities and Colleges need to play a critical role in responding to the changing world of work by offering education and flexible training for learners from a variety of backgrounds and circumstances.”

Rod Bristow, Pearson’s President, UK and Core Markets, said:

“There is a gap in understanding of the range of options post-18.  The traditional three-year undergraduate degree isn’t the only option, and the Government needs to promote greater awareness of all higher education options, so that the full range of choices are understood by young people.”

4. There’s fresh impetus to re-skill existing workforces & instil a culture of lifelong learning

While it has been common practice to encourage employees to continue learning and developing throughout their careers, it’s now essential to upskill and retrain employees to stay competitive with technological advances changing the nature of work. Businesses will need to incorporate a culture of lifelong learning to provide training and development opportunities that meet the demands of the future.

Survey findings show:

• 62% of firms are expecting to retrain at least some employees to take up new roles in the year ahead, with over half of those businesses identifying new technologies or new services driving the need to retrain
• Nearly nine in ten (87%) anticipate upskilling employees in their current roles during next 12 months
• The single most common driver behind upskilling is the need for employees to acquire new skills/knowledge to raise productivity (reported by 74%) followed by the introduction of new technologies or services (63%).

John Cope, CBI Head of Education and Skills Policy, said:

“Automation, AI, and increasing use of technology is changing our world of work, so our education system must keep pace. The workplace into which today’s pupils emerge is unrecognisable from a generation ago. Many of the companies transforming the world today didn’t even exist 5 or 10 years ago.

“The Government, the CBI and the TUC have an unmissable opportunity through the National Retraining Partnership to address this.”

Rod Bristow, Pearson’s President, UK and Core Markets, said:

“Our nation’s future workforce will need to be ‘always learning’ and to respond and adapt to a dynamic labour market, so it’s encouraging to see that businesses are recognising this and investing more in training and upskilling their employees.”

5 November 2018

Notes to Editors:

The 11^th CBI Education and Skills Annual Report 2018 was conducted between July and August 2018, with responses from 379 businesses and trade associations representing over 28,000 businesses. The report was written in partnership with Pearson.

Participants ranged in size from firms with fewer than 50 employees to those with more than 5,000. SMEs accounted for more than a third of respondents (35%).

Respondents were also drawn from all sectors of the economy, ranging from manufacturing (27%), education (6%), professional services (44%), construction (7%), financial services (8%) and retail/wholesale/motor trades (9%).

There were responses from all parts of the UK, with more than two thirds of participants (67%) having at least some employees in Northern Ireland, Scotland or Wales.

Total UK employer training expenditure data is can be found in the Department for Education’s Employer Skills Survey 2017 (August 2018).