How to boost UK jobs and skills after the pandemic: four priority areas for action

The IPPO-Economics Observatory roundtable on adult training brought specialists and policymakers from all UK nations together to discuss how bridging skills mismatches and encouraging a culture of learning will aid recovery. Here are the key action points that emerged

Geoff Mulgan

The impact of the COVID-19 crisis on jobs and skills is set to be one of the great issues of 2021. While the UK economy is bouncing back fast thanks to the success of the vaccination programme, many expect a surge of job losses and insolvencies over the next few months. The end of the furlough scheme in September is also likely to prompt a wave of redundancies.

The effects are very uneven. While many have adapted well to online working, others have lost out badly. Young people have been hit particularly hard, with nearly 80% of the jobs lost so far affecting under-35s, a fact with big implications given what we know about how badly early experience of unemployment can affect people’s life chances through ‘scarring’.

This note builds on the recent IPPO roundtable held with the Economics Observatory and a series of background papers commissioned by IPPO, and suggests some policy priorities for the rest of 2021 based on these discussions.

Background: COVID brings existing job challenges into sharper focus

Policymakers were already faced with big challenges around jobs thanks to automation and Brexit. Now COVID-19 is bringing these into even sharper focus with the interaction of:

  • The short-term risk of scarring – particularly for young people and those working in the most vulnerable sectors;
  • The medium-term challenges arising from weakened skills systems, with adult learning in particular having been sharply cut in the 2010s from an already quite low base, and the implementation problems facing the new arrangements for apprenticeships;
  • The longer-term problems of a system in which the more skilled you are, the more you are likely to benefit from both public and private spending on enhancing those skills.

The UK has worried about skills for well over a century, with consistent evidence that while the top end of the labour market does well, we lack anything comparable to the high-quality systems of apprenticeship and vocational training that are a mark of countries such as Germany and Switzerland. By some measures, our university graduates appear not much better skilled than school-leavers in countries such as Finland and Japan.

While the government’s latest white paper on skills and jobs pledges provision of a Lifelong Loan Entitlement – the equivalent of four years of post-18 education from 2025 – across the UK some 5 million working people lack even basic skills, with those in jobs at most risk of automation being much less likely to take up any new skills. Almost uniquely, our youngest workers are not only less experienced than our oldest workers, but also less qualified.

So what could be done? Some of these problems are deep rooted and not amenable to quick fixes. But our analysis and conversations have pointed to four priority areas for action.

1. A skills-focused successor to furlough

The first priority is to ensure the UK-wide furlough scheme is replaced with arrangements that address the skills shortage rather than merely financial support. This could include providing rewards for employers that retain staff so long as they provide training – potentially focusing on some of the economy’s most at-risk sectors. There could also be a scheme to ensure that anyone who is unemployed for more than a few weeks has easy access to courses at minimum cost and hassle.

2. Platform provision

The second priority involves provision of easy-to-use platforms. A huge amount of work has been done around the world during the crisis to provide easy online access to accredited courses of all lengths and subject areas, offering qualifications and also micro-credentials. With millions stuck at home on furlough, 2020 was a unique opportunity to drive up levels of human capital using these online tools.

In the past, the UK led the world in this space, from the Open University in the 1960s to the University for Industry/LearnDirect in the 2000s and FutureLearn more recently. At one point, LearnDirect was the second-biggest training provider in the world – although it struggled with problems of quality after its privatisation in 2011.

With COVID-19 having potentially brought about a step-change in willingness to learn online, this is definitely a space to return to. As well as having a strong edtech and online learning industry, the UK can learn from the many examples around the world of ambitious platforms that have been used over the last year, from Estonia to China and India. The LearnDirect or Futurelearn models are not so far from what’s needed: i.e. providing a range of different courses in a very easy-to-use format, often with peer interaction as well as purely online knowledge transfer.

3. Advice and navigation

The third area for action is advice and navigation. People need much better guidance on their likely employment prospects, not least to help them find the courses best suited to their needs. This requires governments to bring together data on current jobs and skills demand, and the best-available forecasts on which jobs and skills are likely to grow and shrink.

Ideally, any new learning platforms in the UK would combine easy access to courses with both self-assessment and navigation tools that help people understand their best routes to greater employability (an issue I have written about in the past, in relation to the many options now available for using labour market data).

4. Credits and learning accounts

Finally, looking to the longer-term, there are good arguments for wanting to ensure the UK tax system rewards employer spending on skills, particularly at the lower end of the labour market. While Singapore has long had one of the most sophisticated tax systems in this respect, many countries have recently introduced learning accounts and skills credits – in some cases strongly weighted to people with lower skills. These look set to be an essential part of any future skills ecosystem that helps people to adapt to growth sectors, and much has been learned from the failed introduction of individual learning accounts in the 2000s.

Conclusion: an opportunity to help those hit hardest by COVID-19

Overall, the issue of adult training and upskilling has been a relatively neglected area of policy over many decades – perhaps reflecting governments that tend to be dominated by Oxbridge graduates and the private school-educated, who have relatively little direct connection to the issues being faced.

It’s also a field that has been prone to disconnected and subscale initiatives which rarely achieve breakthrough in terms of public understanding. As a result, the 50% of each age cohort who don’t go to university still face a bewildering landscape of qualifications, courses and pathways. Many would argue that it would be better to stick with imperfect policies than to chop and change in search of one that is perfect.

The pandemic and its aftermath are likely to destroy many jobs – more than 800,000 payroll jobs have already disappeared. But the crisis will also create many new roles: some of these will be in digital, some in care and health, and some in what looks set to be a revival of ‘proximity services’, providing support in neighbourhoods rather than city centres as many office workers shift permanently to working one or two days each week from home.

Some £350 billion has already been spent on COVID-related rescue packages, an extraordinary commitment to the immediate trauma of the crisis. Perhaps a small fraction of that could now be spent on ensuring that those hit hardest by the pandemic can be helped with skills and advice to thrive in the years ahead.