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COMMITTEE FOR EMPLOYMENT AND LEARNING Report on the Inquiry into Education and Training for Industry (Continued) Report 01/01R Section 1: Review of background material This Section provides a background to the Committee's Inquiry, by reviewing some of the previous literature in this field, and highlighting key issues. It must be emphasised that the views expressed here are not necessarily those of the Committee for Employment and Learning. Inevitably much of the literature, which included reports and papers from government departments and agencies and other sources, had a general UK focus. The Committee noted a general deficit of information with a specific Northern Ireland focus throughout the Inquiry, but was aware that this area was being improved. However, where possible the relevance of such studies to Northern Ireland has been highlighted, with reference made to Northern Ireland studies where available. A number of themes arose during the course of the Inquiry. Skills and training providers were seen as central issues. There was concern over the current level of skills in the workforce and the level of skills needed by the economy, both now and in the future. In terms of training providers, there was particular concern about vocational and craft training and the role of the further education sector. Lack of clarity concerning qualifications and the curriculum was another major theme. Underlying the whole Inquiry was the need to widen access to education and training. In all, eight themes arose throughout the Inquiry, and these have been used to organise and structure the report. The themes were as follows: (1) Skills; (2) Further Education; (3) Higher Education; (4) Other education and training providers; (5) Qualifications and the curriculum; (6) Removing barriers to education; (7) Careers education and guidance; and (8) Developing the enterprise culture. These provided a template for the consideration of the previous literature. 1.1 SKills A concern with skills lay at the heart of the Inquiry. It is therefore appropriate to begin by explaining why skills have been judged as so important. Higher levels of skills benefit three areas: the individual; the company or establishment; and the economy. A highly skilled person earns more, is less likely to be unemployed, and is likely to live longer than somebody with few skills. Higher skill levels, used effectively, raise productivity in companies. Finally, countries with a highly skilled workforce tend to have high economic growth, resulting in greater competition in the global market place. In parallel with the recent trend of falling unemployment in Northern Ireland and the rest of the UK, is the world-wide phenomenon of rapid technological change and the growth in 'knowledge-rich' jobs. This has led to an increasing disparity between the demand for those who are highly skilled, and those with low or outdated skills. Consequently, even when the economy is fairly buoyant there are a considerable number of people who are marginalised from the labour market as they are unable to take up the new employment opportunities. 1.1.1 Definitions Suitable definitions can be taken from the National Skills Task Force (NSTF) [2] A skill refers to the ability to do something well, with the idea of competence and proficiency implicit in the term. The NSTF referred to three main types of skills: generic skills; vocational skills; and personal attributes. Underlying and underpinning these were the 'basic skills' of literacy and numeracy. These can be seen as the building blocks on which other skills are built. n 'Generic skills' refer to transferable employability skills used across a large number of different occupations, eg communication skills, team working, problem solving and the ability to use Information and Communication Technology (ICT). n 'Vocational skills' are the occupational or technical skills needed to work within an occupation. n 'Personal attributes' are the characteristics which employers usually seek in their workforce, eg motivation, judgement and leadership. It is also important to distinguish between 'skill shortages' and 'the skills gap'. The NSTF identified two different kinds of skill deficiency: external skill shortages and internal skill gaps. According to the NSTF, external skill shortages refer to recruitment difficulties that are due to an excess of demand over supply of required skills in the external labour market. An internal skill gap is a divergence between firms' current skill levels and those that are required to meet firms' business objectives. These definitions require further explanation and elaboration. External skill shortages n Cyclical nature of skill shortages: It has been widely recognised that the reported incidence of skill shortages varies according to the general conditions in the economy, tending to rise during periods of rapid economic growth and falling unemployment, and fall during periods of high unemployment. n Sectoral differences: Skill shortages vary across different sectors, and also vary with the size of enterprise. Hard-to-fill vacancies tend to fall into two distinct categories: low paid jobs that traditionally have a high turnover rate in industries that have a poor image (catering, hospital porters etc.); and highly paid occupations that require specific technical skills. n The 'quality' of applicants: Difficulties in filling vacancies arise, in many cases, from perceived shortcomings in the 'quality' of job applicants, although there may be no deficiency in quantitative terms. n Lengthy training period: In some cases, recurrent skill shortages for certain skilled/highly-qualified positions may reflect the long duration of training required. If training is cut back, perhaps during a period of recession, the impact of skill shortages will be felt some considerable time later. n Exceptional growth: Exceptionally rapid growth or change in some sectors of the economy can result in recruitment difficulties. Internal skill gaps These refer to skill deficiencies among existing employees. In many cases internal skill gaps are identified and recognised as such by employers, but in some cases unrecognised deficiencies result in a skill gap that is 'latent'. An internal skill gap is defined as existing where lack of full proficiency (as perceived by employers) typically involves one-third, or more, of staff in at least one occupational area. Two surveys that looked at this issue found that skill deficiencies were reported in a wide range of technical and practical skills and also in generic skills [3] The proportion of employees considered by their employers as lacking full proficiency may be quite small, nevertheless the impact on a business can be considerable. This may especially be the case if managers, and others in key occupations, are those lacking in skills. 1.1.2 Research findings into skill shortages and skill gaps The National Skills Task Force noted that there has been a major shift in skill demand over the last 30 years, from skills related to manual work to those related to cognitive abilities. Generic skills, as defined above, were increasingly in demand, and the demand for technical skills was also high. In addition, skills in the technology sectors at intermediate level were needed. These skills were somewhat diverse, but included a focus on creativity and design and the ability to translate ideas into a saleable product. The introduction of new technologies, particularly in ICT, had driven up skill demands, as had increasing global competition. The proportion of young people with qualifications had risen substantially over the last 20 years. However, most of the growth in qualifications had been in the academic, rather than vocational field, and most vocational qualifications gained were at a low level - below NVQ Level 3. Furthermore, there had been little growth in the qualifications of the existing adult workforce. Consequently, a large minority of the workforce in the UK had either low or no vocational qualifications. Indeed, one out of every five adults had poor basic skills [4] The UK compared poorly with its competitors in terms of the proportion of its workforce holding vocational qualifications at Levels 2 and 3 [5] It is important to note that qualifications are used as a proxy for skills. It is recognised that many people who have no or few qualifications may be very skilled and experienced in their field of work. However, it is increasingly the case that people who lack qualifications are more vulnerable to changes and developments in the labour market. Four out of ten skill shortage
vacancies were in craft and technical occupations
[6]
In such instances, employers
would have been looking for specific technical skills in addition to generic
skills. The main effects of skill shortages for firms were difficulties in
meeting customer service objectives, delays in developing new products or
services, increased operating costs and difficulties in meeting standards of
quality
[7]
Regarding skill gaps, surveys indicated
that about one in five employers reported them. In the majority of these
cases, the employer stated that both generic and vocational skills were
lacking. Additionally, research suggested that many current skill gaps were
unrecognised by employers and, consequently, the situation regarding skill gaps
may have been seriously underestimated
[8]
The industries most affected by skill gaps have been identified as
hospitality, wholesale and retail, manufacturing, transport and communications,
financial services and public administration. Skills gaps were least reported in
the construction industry and in the education sector. (However, in Northern
Ireland, the Construction Industry Training Board reported severe skill shortages in their evidence
to the Committee. See Section 2.1.4.) The incidence of internal skill
gaps differs from the incidence of external skill shortages. It has been found
that skill gaps tended to lie in relatively low-skilled
occupations (such as sales, personal services and operative and assembly work), whereas
external skill shortages were at their highest in craft and associate professional
occupations. Only a
small number of establishments in the NSTF survey reported both kinds of skill
problem. The failure of companies to train
and develop staff was the main cause of internal skill gaps in nearly half of those
companies reporting such a problem. This presumably reflects an inadequate, or
limited, commitment to investment in training on the part of UK
management, which was well documented in previous studies
[9]
Other factors included the introduction of new working practices,
the development of new products, and the introduction of new technology. In the
survey, only 31% of companies attributed the problem to the inability of the
workforce to keep up with change. Problems caused by internal skill gaps often
indicate a lack of forward planning by the organisation for the new skills that
will be required to implement changes in product development and new services.
There is therefore a need for skills development strategies to be integrated
with product strategies. However, in some sectors the pace of change is so fast
that it is very difficult to plan ahead in a detailed way. A
further difficulty, as noted by the series of Department of Trade and Industry
competitiveness strategies in the 1990s, is that UK companies may lack the financial
incentives to upgrade their human capital. Given that wages, and other labour
costs in the UK (especially in Northern Ireland) are so much lower than in other
OECD economies, management may well feel that they can get by with routine products,
relatively simple production processes and comparatively unskilled labour. UK
companies may therefore be locked in a low level equilibrium: low wage, semi-skilled
and low productivity. However, long-term competitive survival demands that this
vicious circle be broken. The main effects of internal skill
gaps on companies as identified by the NSTF, were, as with skill shortages,
difficulties in meeting customer service targets, difficulties in meeting quality
standards, and increased operating costs. In addition, skill gaps among the workforce,
particularly at higher level occupations, hindered the development of new working
practices and the development of new products and services. In all, both skill
gaps and skill shortages reduced business competitiveness. Although
there has been considerable growth in higher education provision in ICT, there
is concern about the abilities of some ICT graduates, and about the extent to
which the supply of ICT-qualified people can keep up with demand, in terms of
quantity and the mix of skills offered. Personal
and social skills are increasingly seen as important for people to be effective
in the workplace. As McIntosh and Steedman noted: 'Adequate levels of literacy
and numeracy are now seen as necessary for employability but are only really
effective if accompanied by a range of softer skills'
[10]
Northern Ireland The situation in Northern Ireland in terms of overall skill shortages did not appear to be as critical as it is amongst its neighbours, though it should be noted that the regional labour market continued to tighten during 2000-01 [11] A study found that vacancies in 2000 were reported by 21% of employers, compared with 48% in Britain and 27% in the Republic of Ireland. Nevertheless, an increased number of employers reported vacancies, hard-to-fill vacancies, and skill gaps than in 1998. High proportions of current vacancies (64%), were considered by employers to be difficult to fill. The main reasons given for difficulties in filling vacancies were that there were not enough people interested in doing this type of work (21%); poor attitudes, motivation and personality (12%); and a lack of work experience required (10%). More than half (57%) of vacancies were considered to be difficult to fill for reasons other than a lack of skills. A gap between the skills of their current workforce and those needed to meet their business objectives was reported by 15% of employers [12] The occupational group with most hard-to-fill vacancies was the craft and related occupations (26% of all hard-to-fill vacancies). In sectoral terms, the hotel and restaurant sector had the highest proportion of current vacancies and the highest incidence of hard-to-fill vacancies (23% of these businesses reported recruitment difficulties) [13] 1.1.3 International
comparisons In terms of the level of skills in the population, Northern Ireland compared unfavourably with other regions in the UK and with other countries further afield. The proportion of the workforce with qualifications was lower in Northern Ireland than in the other UK regions. (See Figure 1.)
Figure 1 -
Percentage of working age population in the UK and in Northern Ireland
UK NI Source: Steedman Annex 1 A further problem
was that the qualifications of workers in Northern Ireland tend to be dated (in
terms of training content) and, by comparison
with other UK regions, more likely to be academic than vocational. In addition,
the proportion of the
workforce involved in job-related training at any one time tended to be lower
in Northern Ireland than in other parts of the UK. One indicator
of employer commitment to the development of its workforce lies in the
numbers, and proportions, of businesses achieving Investor in People
recognition. The Investors in People targets within Northern Ireland have
consistently not been met (though some individual sectors have been successful)
[15]
It has been known for some time that the workforce in the UK has lower qualifications relative to most other major industrial economies (See Figure 2). A study conducted in the 1980s compared the workforce of Britain, and in particular, Northern Ireland, with the workforce of what was then West Germany. The study found both quantitative and qualitative differences between the two countries. The German workforce was better qualified than its British counterpart, in terms of the relative numbers of Doctoral, Masters, Bachelors and technician level qualifications. It also appeared that the German courses and qualifications were of superior quality and more relevant to industry. It took, on average, more than twice as long to attain a first degree in Germany than in Britain (even the 'polytechnic' course in Germany is longer than the basic British degree). The authors observed that, 'the British enter the workforce relatively unskilled and there is little indication that this is compensated for by superior on-the-job training' [16] Furthermore, the research suggested that Northern Ireland is 'under qualified even by the standards of Great Britain' [17] A more recent study, which looked at the skill profiles of six European countries, found that the UK and Portugal had the highest proportion of people with low skills. The authors observed that, 'UK progress in reducing the low skill group has been less spectacular than that of Portugal', and 'the UK can expect to have around 1/5th of the young age group at the International Standard Classification of Education (ISCED) 0/1/2 level [18] by the year 2010 on present trends' [19] These findings suggested that the UK in general, and Northern Ireland in particular, could benefit from a careful examination of education and training systems employed in other countries. Figure 2 - Third
level, non-university and university, educational attainment (ISCED) percentage
of population aged 25 to 64 by country with at least this level of qualification
(1995) Source: Education at a glance OECD; Paris 1997 Table
A2.1 page 38. Note: Under 25s excluded as a large proportion 1.1.4 Future skill demands Survey findings from the NSTF pointed to 'potentially serious mismatches between skills supply and demand in the future' [20] Almost half of all establishments surveyed anticipated problems within the following two or three years arising from a shortfall of skills. The majority of establishments anticipating future skill-related problems tended to fall into one of two groups: high-performing establishments that maintained high aspirations as to future skill requirements; and weaker performers that have experienced a recent decline in sales or the market share, and recognised the need for their skill level to improve. In terms of external skill shortages, it tended to be the low skilled and low paid occupations, and higher skilled and technical/craft occupations that were most affected by hard-to-fill vacancies. It was often in the process of making changes in response to market pressures that skill gaps were revealed. Changes occurring within the employment structure led to the requirement for a proportionately greater number of workers with qualifications equivalent to NVQ Level 3 and above. This move, to an increased demand for skilled and qualified workers, and a decreased demand for unskilled and unqualified workers, is likely to continue. A recent report reflected this pattern of 'skill intensity within job growth' across all sectors [21] Given that the priorities for future Government spending on education and training lie in basic skills; generic skills; intermediate level skills; specialist ICT skills; maths skills; and the major adult skill gaps, these are discussed briefly in turn. 1. The International Adult Literacy Survey has indicated the scale of the problem of basic skills across a range of countries. It found that 24% of the adult population in Northern Ireland perform at the lowest levels of literacy [22] The problem in Northern Ireland (relative to other countries) is clearly illustrated in Figure 3. In terms of the UK, it was estimated that very few of those who are functionally illiterate or innumerate take part in a relevant course of study. Part of the problem lies with the fact that many people either do not realise, or will not admit, that they have a basic skills problem. Figure 3 -
Population (16-65) by IALS Literacy levels (prose literacy scale): Northern
Ireland, Source: Steedman, Annex 1 2. Most jobs call for a range of generic skills, personal attributes and technical and job-specific skills, with increased emphasis on more socially oriented generic skills such as communication and team working. The ability to understand and use ICT equipment is now a generic skill of increasing importance, although the current level of generic ICT skills is unlikely to be adequate to meet future skill demands. 3. The intermediate level skills most valued by employers typically require long programmes of employment- based training for their development. Intermediate skill supplies have, in the past, been hit by periods of recession that have caused employers to cut back on costly and lengthy training - thus storing up problems for the future. Higher intermediate jobs now tend to be filled by graduates. However, employers complain that graduates lack the skills that are most readily acquired through work-based training: work experience, commercial understanding and generic skills. 4. It is expected that employers will continue to report difficulties in obtaining specific kinds of ICT skills and work experience. Many employers prefer to seek ready-made ICT skills rather than to develop them in-house. 5. The UK does not produce a sufficient pool of young people with good mathematical skills, yet the ability to work with numbers and solve problems based on mathematical constructs is a vital skill for many occupations. 6. The majority of the workforce still has a low level of qualifications. While a focus on formal qualifications underestimates the skill levels of older workers, unqualified workers often lack complementary broader knowledge and understanding and wider generic skills. In consequence, they may be vulnerable to changing labour market conditions and unable to make the transition to new jobs [23] 1.2 Further education It is important that the further and higher education sectors should have a clear vision of the specific and unique contribution which they can make [24] The Department of Education in Northern Ireland (DENI), in 1999, offered the following 'vision' as a basis for discussion: 'To advance knowledge, to enhance individual learning and skills and to enrich the intellectual, economic, social and cultural life of society and the community'. It also made the important observation that further and higher education sectors, in bringing people together from across the traditional divide, have an important role to play in promoting a more peaceful society. In addition, the Association of Northern Ireland Colleges observed that the aim of Department of Higher and Further Education, Training and Employment (DHFETE) [25] is 'to promote a culture of learning and to equip people for work in a modern economy' [26] 1.2.1 The focus and role of further education Notwithstanding such mission statements, there may be a lack of clarity in further education's central focus and key strategic aims and objectives. Currently its student population falls into three main groups: vocational, academic, and adult/community education. It has been suggested that the sector requires a clearer strategic direction. In particular, clear guidance needs to be given to colleges on the relative strategic importance of their different student 'constituencies' [27] It is clear that more people trained in vocational and technical skills are needed. Indeed, further education colleges have been criticised recently for concentrating more on expanding apparently more prestigious higher education work, than on developing studies at the basic and intermediate level, where skill shortages are most severe [28] 1.2.2 The management and funding of further education colleges According to a study conducted in 1999 [29] there was general agreement among representatives of further education colleges in Northern Ireland that there would be an increased demand for skills in electronics, telecommunications, software, health technologies, tourism, construction and voluntary services. However, only a minority considered that the sector was adequately prepared to address the skill needs of these areas. The key issues regarding the development of college provision to be able to address such needs were identified as follows: n More capital investment. n Expansion of HND and other degree level courses, especially in ICT. n Course provision to be linked more closely to employer need - and more detailed labour market information needed.
n
More funding especially in capital-intensive occupational
areas.
n
More speculative forms of training (eg developing courses
that are based on projections of trends in labour demand)
[30]
1.2.3 Further education, the community and the economy The same stud [31] undertaken for DENI, found wide local variation, and major differences between individual colleges in terms of links between the further education sector and the economy. On the one hand, there was evidence of links with local employers in terms of Jobskills, Business-Education Partnerships (BEPs), the provision of job-specific training, and the alignment of qualifications of college graduates to current and future needs of local employers. In addition, some colleges had strong links into the local community and good relationships with local District Councils. On the other hand, there was only a limited amount of co-ordination within the sector and limited integration with the economic development agencies. This rather limited link between colleges of further education and economic development agencies is of concern and in need of improvement. Small and medium-sized enterprises (SMEs), technology and innovation, and tourism are vital to the economy of Northern Ireland. These areas form the focus of three of the main economic agencies, namely the Local Economic Development Unit (LEDU), the Industrial Research and Technology Unit (IRTU), and the Northern Ireland Tourist Board (NITB). The study suggested that developing much stronger relations between the Industrial Development Board (IDB), and its successor agency, and the colleges could enhance the role of further education in attracting inward investment. Centres of excellence It was also suggested in the report that designated centres of excellence should be established, in collaboration with the Training and Employment Agency (T&EA), within the further education network. These should provide applied research to support industrial development [32] (Applied research, as opposed to the more 'pure' research undertaken by universities, is largely characterised by technology transfer.) 1.2.4 ICT and further
education Some colleges have excellent ICT facilities. This is important not only because there are, and will continue to be, demands for skills in ICT, but also because it enables the colleges to benefit from initiatives with a strong ICT focus, such as the University for Industry (UfI). It has been suggested that it will be necessary to expand HND and other third level courses in ICT [33] 1.3 Higher
education Higher education is discussed here in terms of both the UK-wide system and the specific case of the Northern Ireland universities. 1.3.1 The focus and
role of higher education The UK has a strong position in the knowledge-based sector. Universities are at the leading edge of innovation and knowledge creation. 'The role of our universities in the economy is crucial. They are powerful drivers of innovation and change in science and technology, the arts, humanities, design and other creative disciplines. They produce people with knowledge and skills .....They are ..... the seedbed for new industries, products and services and are at the hub of business networks and industrial clusters of the knowledge economy' [34] Northern Ireland The participation rate in higher education in Northern Ireland is 46%, compared with 33% in the rest of the United Kingdom [35] Furthermore, participation is more widely spread across socio-economic classes (see also Section 1.3.3 - Higher education, the community and the economy). The Dearing Report recommended that more higher education places be provided in Northern Ireland, [36] and the Government responded at that time by providing an extra 2,600 places in the universities and teacher training colleges. However, in 1999 the observation was made that, 'the capacity of local institutions and the implications for the number of undergraduates pursuing courses in Great Britain and the Republic of Ireland remain a matter for further consideration' [37] In March 2001, the creation of 1,000 new higher education places over three years from 2002/03 was announced, with the increase in places designed to increase participation from lower socio-economic groups and to address skill shortages [38] This was in addition to the 4,400 places already announced in the Programme for Government. 1.3.2 The management and funding of higher education Recommendations made for elsewhere in the UK may have a bearing on the management and funding of the higher education system in Northern Ireland. For example, it has been suggested that the HEFCE (Higher Education Funding Council for England) should consider the possibility of a joint teaching and quality assessment to reduce the bureaucratic demands made on institutions and to give a more balanced view of overall performance [39] There is widespread disaffection across UK universities as to the bureaucratic burden of the Research Assessment Exercise (RAE) and the Teaching Quality Assessment (TQA), with some academics claiming that the RAE stifles original work. One measurable change since the introduction of the RAE is the decline in the number of academics writing books, which count for little in the RAE in many disciplines, whereas publications in peer-reviewed journals are valued highly. Consequently, there has been an increase in journal publications, as academics come under pressure to publish within a timescale that fits in with the next RAE, rather than wait for the completion of a project [40] The resignation in August 2001 of the chief executive of the Quality Assurance Agency (QAA) highlighted the contentious issues in the area of TQA. On the one hand, the Assessment is seen as a very expensive procedure that is both bureaucratic and prescriptive. Universities UK (UUK), the HEFCE and the QAA argued that a rigorous but cost effective assessment procedure can be developed, that involves an assessment of samples of courses rather than the 100% coverage of courses at present. On the other hand, concern has been expressed that a more limited assessment procedure would not provide effective quality assurance [41] 1.3.3 Higher education, the community and the economy Higher education institutions contribute to the economy through research, consultancy, Teaching Company Schemes, spin-off companies and technology transfer, science parks, and the production of a skilled workforce. Higher education institutions are also an important educational and cultural resource for the community and can play a role in addressing social inequalities. The two universities in Northern Ireland are more successful in providing access to higher education for students from lower socio-economic groups than universities in other regions of the UK. Northern Ireland has a relatively high proportion of the population in the lower socio-economic groups (48% of the population of Northern Ireland fall into classes IIIm, IV and V, compared with 45.5% for the UK as a whole). It might thus be expected that Northern Ireland universities would take a high proportion of students from these backgrounds as a reflection of its population. In fact, the Northern Ireland universities do take a disproportionately high number of students from groups IIIm, IV and V - 31.8% compared with the UK average of 28.3% [42] This does not necessarily imply that there is not room for improvement with respect to access. Research and Development The Dearing Report made a number of recommendations which are of relevance to this Inquiry. Dearing recommended that the Government should establish an independent body to advise on the direction of national policies for the public funding of research in higher education, on the distribution and level of such funding, and on the performance of the public bodies responsible for distributing it. The Report recommended that the Government should enable research councils to meet the full indirect costs of projects and programmes, preferably through the provision of additional resources. It also suggested that an Industrial Partnership Development Fund should be established to attract matching funds from industry, and to contribute to regional and economic development [43] According to the Northern Ireland Economic Council (NIEC), research and development (R&D) in Northern Ireland was too low, both in absolute terms and relative to its major economic competitors [44] There was a lack of co-ordinated and complementary government attention to both public and private R&D in government departments, industry and universities. In order to carry out their own R&D and to be innovative, companies need access to publicly funded R&D through networking, co-operation, and training and knowledge transfers. The report recommended the following: 1. A single institution or unit of Government should have responsibility for overall co-ordination of R&D policy and funding for R&D. 2. An annual survey of R&D and innovation in the economy, inclusive of university activity, should be commissioned. 3. An annual R&D and Innovation Budget and a single programme of publicly funded R&D and innovation activities, goals and priorities should be consolidated, set and monitored. 4. A co-ordinated R&D and Innovation Strategy should be developed with phased and balanced targets for both public and private R&D and innovation. 5. An R&D and Innovation Strategy should be fully embedded into a knowledge-driven economic development strategy. 6. Increased public expenditure should be committed in an appropriately balanced way to encourage both public and private R&D and innovation. 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