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Productivity takes centre stage

02 September 2015

I find the issue of productivity being 'centre stage' now quite interesting. The UK's productivity has been in decline since the break-up of the British Empire and it's certainly been woeful compared to other advanced nations since the 1970s. There was no mention of it in the run up to the General Election and now, all of a sudden, along with austerity, it's the new 'game in town'. That aside, the kernel of the UK's productivity issue is closely linked to the 'skills problem' namely we have far too many 'poor' jobs - or 'low road' jobs as Professor Ewart Keep calls them. After Spain, the UK has the lowest demand for workers to have qualifications up to GCSE level and this has been highlighted by the OECD. The UK Commission for Employment and Skills (UKCES), in its reports of 2009 and 2013, clearly states that the future employment and skills system will need to invest as much effort in raising employer ambition and in stimulating demand as it does on enhancing skills supply; there is little point having a skilled workforce if skills are not used well. Professor Keep cites that 22% of the UK workforce is low paid and there's been much in the news over the last few years relating to zero-hours contracts and under-employment both in terms of hours (folk wanting to work more) and skills/qualifications (graduates working in call centres, for example). In effect, as Keep has said, we have a 'race to the bottom' by lots of employers in terms of employees' pay and conditions. To back this up, we spend around £50 billion on tax credits and housing benefits; people simply aren't being paid enough. With this in mind, investing in further education (FE) is going to be essential. Let’s not forget, the sector is economically productive. The Department for Business, Innovation and Skills (BIS) produced research a few weeks ago which highlighted a £20 return for each £1 invested in FE. Research soon to be released by City & Guilds and the Centre for Economic and Business Research is also likely to highlight an extra 1% increase in vocational skills would uplift the economy by £160 billion in a decade. Why would you cut investment in skills when it has so much positive economic return and it helps organisations meet their skills needs? For me, as a country we need to spend more on vocational education not less - Professor Marc Goergen and others recently stated we spend 70% less than the French and 55% less than the Germans on vocational education. Finally, the measures mentioned in the recent productivity paper, launched by the Government in relation to education and skills, largely focus on supply-side measures - new entrants (University Technical Colleges, Free and Studio schools), the conversion of 'coasting' schools into academies and, for us, Institutes of Technology and National Colleges. As highlighted in City & Guilds' paper Sense and Instability, we've had 30 years of this type of policy and it hasn't worked. There is no evidence to back up the change in structures. In fact, recent research suggests that a school which stays with its local authority is more likely to improve than being converted into an academy. I'm not saying all schools and colleges are perfect - there are quality issues to address in both sectors - but, for me, that's the key: address the standards, don't change the structures. Not necessarily in terms of supply, but in terms of demand, I like what's emerging in Scotland in relation to skills. There, the focus is on helping organisations to have a strategy which is 'high road' and not 'low road', encouraging the adoption of strategies which focus on quality and innovation as opposed to cost control. If this can be done, better quality jobs emerge with better pay and conditions which then can have other knock-on effects, such as less welfare payments (tax credits and housing benefit) as well as better health outcomes for employees, too. I don't think any of this will resonate with the current Government as its approach is one which is laissez-faire and not too interventionist - sort out the supply side and the rest will take care of itself. This has been the policy for around 30 years and it's got us to where we are today. Perhaps it’s time for us to try a different approach. Darren Hankey is the Principal & Chief Executive of Hartlepool College of Further Education.