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Scotland Skills 2030 the Future of Work and the Skills System in Scotland

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Scotland Skills 2030 the Future of Work and the Skills System in Scotland REPORT SCOTLAND SKILLS 2030 THE FUTURE OF WORK AND THE SKILLS SYSTEM IN SCOTLAND Rachael Thomas and Russell Gunson May 2017 © IPPR Scotland 2017 Institute for Public Policy Research ABOUT IPPR SCOTLAND ABOUT THE PROGRAMME IPPR Scotland is IPPR’s dedicated cross-party progressive thinktank The JPMorgan Chase global New Skills at Work programme focusses for Scotland, based in Edinburgh. Our research, together with our attention on what can be done to overcome unemployment, ranging stimulating and varied events programme, seeks to produce innovative from macro strategies to boost job creation, expand labour market policy ideas for a fair, democratic and sustainable Scotland. participation and develop the skilled workforce for the future, through to specific innovations that improve the skills of the workforce and IPPR’s purpose is to conduct and promote research into, and the meet local employers’ needs. education of the public in, the economic, social and political sciences, science and technology, the voluntary sector and social enterprise, public services, and industry and commerce. IPPR Scotland ABOUT JPMORGAN CHASE Hayweight House JPMorgan Chase & Co (NYSE: JPM) is a leading global financial 23 Lauriston St services firm with assets of $2.5 trillion and operations worldwide. Edinburgh EH3 9DQ The firm is a leader in investment banking, financial services for T: +44 (0)131 281 0886 consumers and small businesses, commercial banking, financial www.ippr.org/scotland transaction processing, asset management and private equity. More Registered charity no: 800065 (England and Wales), information is available at www.jpmorganchase.com. While this report SC046557 (Scotland). has been supported by the JPMorgan Chase Foundation, the This paper was first published in May 2017. © 2017 contents and opinions in this paper are those of the authors alone The contents and opinions expressed in this paper are those and do not reflect the views of the JPMorgan Chase Foundation, of the authors only. JPMorgan Chase & Co, or any of its affiliates. IDEAS to CHANGE LIVES CONTENTS Summary ...................................................................................................... 3 1. Introduction .............................................................................................. 6 2. Policy changes in recent years ............................................................... 9 Current policy agenda ............................................................................. 10 3. Outlining the current skills system ........................................................ 15 Funding ................................................................................................... 15 The different learning routes ................................................................... 16 4. Scotland’s labour market and economic performance: Poor progression, pay and productivity ................................................ 18 5. Shape and trends in the skills system: Gaps and overlaps ................................................................................. 26 Funding of post-16 education, learning and skills activity over time ...... 27 Conclusion .............................................................................................. 35 6. Learning and skills in the workplace: Are employers plugging the gaps? ....................................................... 36 Conclusion ............................................................................................. 42 7. Future challenges .................................................................................. 43 The labour market of 2030 ...................................................................... 43 Demographic change ............................................................................. 44 Technological change ............................................................................. 46 Climate change ....................................................................................... 47 Brexit and Scotland’s place in the world ................................................. 48 8. Conclusions and recommendations ..................................................... 50 Scotland in 2030: The future world of work ............................................ 50 Recommendations for change ................................................................ 52 Wider conclusions and reflections .......................................................... 56 References ................................................................................................. 58 Appendix: Methodology ............................................................................ 62 1 IPPR Scotland | Scotland skills 2030: The future of work and the skills system in Scotland ABOUT THE AUTHORS Rachael Thomas is a research fellow at IPPR Scotland. Russell Gunson is director of IPPR Scotland. ACKNOWLEDGMENTS The authors would like to thank representatives from across the skills sector in Scotland for their input and feedback on the report, and for their support throughout this process. Many thanks also to IPPR colleagues Joe Dromey, Izzy Hatfield, Clare McNeil, Carys Roberts and Alfie Stirling for their very helpful comments and research support. Download This document is available to download as a free PDF and in other formats at: http://www.ippr.org/publications/scotland-skills-2030 Citation If you are using this document in your own writing, our preferred citation is: Thomas R and Gunson R (2017) Scotland skills 2030: The future of work and the skills system in Scotland, IPPR Scotland. http://www.ippr.org/publications/scotland-skills-2030 Permission to share This document is published under a creative commons licence: Attribution-NonCommercial-NoDerivs 2.0 UK http://creativecommons.org/licenses/by-nc-nd/2.0/uk/ For commercial use, please contact [email protected] 2 IPPR Scotland | Scotland skills 2030: The future of work and the skills system in Scotland SUMMARY 60-SECOND SUMMARY The world of work in 2030 will be very different to that in 2017. People are more likely to be working longer, and will often have multiple jobs, with multiple employers and in multiple careers. Over 2.5 million adults of working age in Scotland today (nearly 80 per cent) will still be of working age by 2030. At the same time, over 46 per cent of jobs (1.2 million) in Scotland are at high risk of automation. We will therefore need a skills system ready to work with people throughout their careers. There have been improvements in the Scottish labour market in recent years in terms of pay and productivity, while qualification levels have been steadily improving and are higher than levels in the UK as a whole. However, Scotland continues to have lower rates of in-work progression and lower rates of productivity than the UK as a whole, and pay rates, although increasing, have reduced in real terms and are still behind rates in the UK overall. Within the skills system, there are gaps and overlaps in provisions, with a clear gap in mid-career provision, which employers are not addressing. While we have the best record within the UK nations for employers investing in training, there is still much to be improved on, with too many employers adopting a low-skill business model. We make a number of recommendations in this report, which include a proposal for a new Open Institute of Technology (OIT) for Scotland, to provide a flexible and transferable mid-career learning route, as well as a focus on in-work progression, productivity and pay outcomes and tests of demand from classroom to boardroom. By making changes now, we can ensure the skills system is at the centre of supporting Scotland’s economy through the short- and long-term challenges it faces, and delivering the inclusive economic growth we wish to see. KEY FINDINGS Scotland faces multiple opportunities and challenges around demographic change, technological change and decarbonisation. Changes brought about by Brexit and potential changes to Scotland’s constitutional future and place in the world add to this moving picture. This report outlines how the skills system could be at the centre of navigating a path through to 2030 in a way that delivers the inclusive economic growth we need to see. We go into these next few years with pre-existing weaknesses around career progression, pay and productivity – including a productivity gap in our low wage sectors compared to European competitors. Equally, we see a skills system that has overlaps and gaps, and in particular a gap in terms 3 IPPR Scotland | Scotland skills 2030: The future of work and the skills system in Scotland of mid-career provision with much of the skills system is focussed on early or pre-career learning. In a future world of work – with longer working lives potentially in multiple jobs, for multiple employers and in multiple careers – we will need to do more in terms of mid-career learning. Over 2.5 million adults of working age in Scotland today, or 78 per cent, will still be of working age by 2030. Equally, over 46 per cent of jobs – some 1.2 million – in Scotland are at high risk of potential automation over the next few decades. While there are gaps in the publicly funded skills system, these do not seem to be being plugged by employers themselves. Investment in training by employers has dropped in recent years across the UK, and too many employers are pursuing a low-skilled business model. This investment also has a social dimension, with high-skilled workers
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