Confronting the Skills Paradox:
Maximising human potential in a 21st Century Economy
This provocation paper analyses the strengths and weaknesses of the emerging consensus – given expression by Lord Leitch in his review – around education and skills policy for the future. It argues that important elements of this consensus need to be challenged if the UK is to fulfil the laudable ambitions outlined in the Leitch Review and succeed in harnessing the talents of the whole population.
The various efforts to reform the systems that provide for improved levels of education and training have not so far provided a compelling answer to the central paradox of skills in the early 21st century:
While maximising the talents of the whole population matters more than ever in creating economic and social success, the danger is that skills formation becomes a source of greater polarisation rather than an antidote to it. The paradox, in this situation, is that funding and investment in skill formation still follows a ‘trickle down’ principle, in which those already well endowed and enjoying privileged status within the education and employment system enjoy the highest levels of investment and subsidy both from the state and from employers.
While maximising the talents of the whole population matters more than ever in creating economic and social success, the danger is that skills formation becomes a source of greater polarisation rather than an antidote to it. The paradox, in this situation, is that funding and investment in skill formation still follows a ‘trickle down’ principle, in which those already well endowed and enjoying privileged status within the education and employment system enjoy the highest levels of investment and subsidy both from the state and from employers.
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Comments
Feb 2 2007
The challenges to the emerging consensus are all valid. In particular, after a long senior career in UK industry, I would regard any attempt to engage employers in specifying skill needs as fatuous. However, the most serious issue concerns the demand side. This should not focus on skills, but simply on employment. A direct and substantial stimulus to job creation is the best way of reducing the exclusion of the unskilled and socially disadvantaged. Once more people, including disabled and older are working to the limit of their ability, skill enhancement will become a much more likely proposition for many individuals.
The fundamental policy changes needed are to the tax and benefit system in order to achieve the simultaneous objectives of increasing income levels at the bottom of the market while significantly reducing (say halving) the marginal cost to an employer of creating a new job. A citizens income approach may be appropriate. The current obscene levels of top executive pay in some large UK companies should also be tackled as part of the approach. It has been argued that global market pay levels are necessary to retain talent in the UK. Let them go, say I, and work a bit harder to replace them (for example two men each earning 25% of the original level).
There is no intrinsic shortage of management talent in the UK. And by international standards British managers compare very well, as I know from personal experience. Moreover, when women and immigrants are counted the idea of a shortage is even more silly. The main supply side reforms needed at the top of the market relate firstly to the pay setting mechanism depending as it does on a club approach, rather than market forces in the full sense. And secondly to unimaginative corporate recruitment "look for someone doing the same job only a bit smaller".
A fairer redistribution of income is much more likely to lead to creation of the "tipping points" referred to than a simple exhortation to the uneducated to go for a (long) shot at joining what might look like a corrupt gravy train. Moreover, a greater proportion of a marginal 10m gbp going to the bottom of the market will be spent directly in the UK, than will the same marginal 10m at the top. Two other benefits of starting with a boost to low skill employment are that it will help soften the impact of global competition - evidently the idea of a long term premium over China (in particular) based on faster innovative skills is absurd. And secondly it will be consisent with energy saving which will become popular now given global warming concerns.
Tim Hawkins, Dubai