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Solving Future Skills Challenges in Wales

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Solving Future Skills Challenges in Wales CONTENTS EXECUTIVE SUMMARY 2 RECOMMENDATIONS TO RESPOND TO WALES’ FUTURE SKILLS NEEDS 4 INTRODUCTION 6 1. THE CHANGING WORKPLACE IN WALES 8 1.1 ‘INDUSTRY 4.0’ 8 1.2 THE WELSH WORKFORCE 8 1.3 CHANGING DEMOGRAPHICS 10 1.4 WHAT THE CHANGING WORKPLACE MEANS FOR WALES 11 2. THE FUTURE SKILLS NEEDS OF WALES 12 2.1 WHAT ARE HIGHER LEVEL SKILLS? 12 2.2 THE CURRENT PICTURE FOR HIGHER LEVEL SKILLS IN WALES 13 2.3 RECENT DEVELOPMENTS IN HIGHER LEVEL SKILLS 18 2.4 WHAT SKILLS WILL WALES NEED? 22 3. IMPLICATIONS FOR GOVERNMENT AND STAKEHOLDERS IN WALES 26 REFERENCES 28 1 EXECUTIVE SUMMARY SKILLS IN WALES - THE CHANGING WORKPLACE IN WALES. THE CURRENT LANDSCAPE Technological advancement and the There is a consensus among the literature on automation of tasks are set to impact a large automation that higher level skills will be in number of jobs globally, potentially shrinking increasingly large demand in the coming employment opportunities in a number of decades and that jobs held by graduates will sectors and particularly at lower skills levels. be less exposed to the risks of automation. Estimates of the proportion of jobs ‘at risk’ vary greatly but Wales has a high proportion In 2017/18 there were 129,585 students of jobs in the three sectors deemed most enrolled on higher education courses ‘at risk’: manufacturing, transport and in Wales with 66% of higher education students storage and public administration. in Wales aged 24 or under. There is a wide These three areas alone account for a range of subject-specific skills currently fifth of the Welsh workforce. being studied by students in Wales and 48% of higher education students in Wales Although it is expected that ‘new jobs’ will are currently studying science subject areas. be created to replace jobs that are displaced, these new jobs will not necessarily be created Higher level skills are also delivered through in the same region, may require higher levels work-based learning including higher level of skills than the displaced jobs, or may not apprenticeships. Currently, 19% of all offer the same income or security as apprentices in Wales are on a higher level displaced jobs. apprenticeship. Higher level apprenticeship delivery is largely concentrated on ‘health Wales will also undergo large changes in its and public services’ and ‘management demography in the next 20 years with the and professional’ with 87% of all higher number of people aged 16-64 projected to level apprenticeships being delivered in decrease by 4.2% between 2016 and 2041, these areas. and the number of people aged 65 and over projected to increase by 36.6%. Overall, the population in Wales has lower Similarly, excluding potential immigration, qualification levels than the populations of there will be a decrease in the number of England or Scotland. In 2017, 37.4% of the new entrants to the workplace in the next population in Wales was qualified to level 4 ten years as a result of the current or above, compared to 40.7% of the demographic dip in 18 year olds. This population in England and 47.2% of the presents additional challenges in ensuring that, population in Scotland. as the pool of new entrants to the workforce shrinks, there is a sufficiently skilled population This aligns with the analysis of the 2011 to mitigate the risks of automation. census which found that in Wales 26.5% of the usual resident population aged 16-64 Nonetheless, automation presents opportunities had a degree compared to 28.7% of those for Wales and has, historically, made a positive in England. The increasing demand for higher contribution to productivity. The extent to which level skills, the lower qualification levels in Wales is able to take advantage of these Wales and the ageing population presents a opportunities will in part depend on how quickly particular challenge for policymakers in Wales. the education system in Wales is able to respond flexibly. Flexible learning, including part-time provision, will be an important part of responding to that challenge. Professor Sir Ian Diamond’s review of higher education funding and student finance arrangements included a focus on strengthening part-time provision in Wales. The recommendations from the Diamond review included an improved package of maintenance support for higher education students in Wales, including part-time students. 2 Between 2008/09 and 2017/18 the number of or above will increase by 150,037. part-time higher education students in Wales As well as increasing demand for higher level decreased from 53,575 to 32,810. The new skills, occupations that have a high proportion maintenance package for part-time students of people with higher level skills are likely to was introduced in 2018/19. Early figures be less exposed to the risks of automation. from the Students Loan Company suggest PricewaterhouseCoopers estimates that a 35% increase in the number of part-time occupations with those with low levels of students receiving student support in Wales education (level 2 or lower) have a much in 2018/19, bringing the number of awards for higher risk of automation (44%) than those part-time student support to a five-year high. with a level 6 qualification or above (11%). As well as the introduction of new student A recent report on adult learning systems by support for part-time students, other new the OECD concluded that the extent to which forms of higher level skills delivery have individuals, firms and economies can harness been developed including the introduction of the benefits of automation was critically degree apprenticeships in Wales. The first dependent on the readiness of countries’ adult degree apprentices in Wales started their learning systems to help people develop skills level 6 apprenticeships in digital in 2018/19 throughout their working lives (OECD, 2019). with the development of the level 6 advanced The report notes that, generally, adults with manufacturing and engineering degree low skills levels are three times less likely to apprenticeship ongoing. Universities report participate in training than those with high significant employer demand for degree level skills. Given the comparatively low skill apprenticeships across a wide range of levels of the population in Wales, this presents subject areas at level 6 and level 7. an additional challenge to upskilling and reskilling the population. These developments demonstrate the substantial demand among people and Wales continues to have the lowest productivity employers in Wales for new ways to access in the UK. Work by the CBI – ‘Unlocking university study at bachelor’s and master’s Regional Growth’ – found that areas with more level. The lower qualification levels among the graduates in the workforce are significantly population in Wales and the need to provide more productive than those with fewer and for a high-skilled workforce in response to that a firm was 17% more likely to export if it technological developments means that had graduates within its workforce. finding innovative and flexible ways to deliver level 6 and 7 provision will become Although technical and subject-specific STEM increasingly important. skills will continue to play an important role in Wales, there will also be an increasing SKILLS IN WALES - importance placed on the higher order cognitive, FUTURE SKILLS NEEDS social and behaviour skills which are difficult to automate. A number of reports have identified increasing demand for higher level skills in Similarly, the focus on being able to draw on the UK. The CBI’s 2018 education and skills knowledge from various fields and to think survey found that by 2024 almost half of all jobs and behave across boundaries, will increase. will require workers who have completed some This interdisciplinarity is an important feature form of higher level education (level 4+). The of higher education in Wales. A study by survey also found that employers in Wales were King’s College London, commissioned by the less confident than employers in Scotland and Learned Society for Wales, found that the England about their ability to access employees impact of Welsh research showed considerable with high level skills. interdisciplinarity. For example, 12 different research disciplines contributed to the research Labour market projections by the UKCES topic of ‘Business and Industry’. Any approach to Working Futures programme suggest that higher level skills must recognise the importance between 2014 and 2024 the number of people of student choice and interdisciplinarity. in the workforce in Wales qualified at level 6 3 RECOMMENDATIONS TO RESPOND TO WALES’ FUTURE SKILLS NEEDS As well as being less exposed to the risks 2. DEGREE APPRENTICESHIPS TO of automation, evidence suggests there is RESPOND TO BUSINESS DEMAND an increasing demand for graduates, and higher level skills more broadly, across Wales Demand for degree apprenticeships has risen and the UK. This, coupled with the changing sharply across the UK. The initial degree demography of Wales, means providing apprenticeship offer in Wales has been well- opportunities for people of all ages and received by employers and individuals alike but backgrounds to gain higher skills will be universities report strong demand for degree vitally important if Wales is to stand to apprenticeships in a broader range of areas and benefit from the creation of new jobs in the at bachelor’s and master’s level. wake of automation. To this end, Universities Wales makes the following recommendations: Enabling the post-16 education system in Wales to be responsive to skills needs and provide 1. DELIVER DIAMOND work-based routes to level 6 and 7 qualifications would provide opportunities for many people Positive steps have already been taken in Wales to go through the upskilling or in Wales with the Welsh Government’s reskilling necessary to prepare for the changing implementation of Professor Sir Ian Diamond’s workplace in Wales.
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