25 November 2016

Low skills within the workforce are a key driver of the UK's low productivity, an Open University expert has warned.

The nation's economic productivity is lagging behind its major G7 competitors by the widest gap on record, and a number of commentators have pointed to the low quality of work available – that is low-skilled, and low-paid.

Steve Hill, External Engagement Director at the Open University, commented on new figures from the Office for National Statistics that show there was a rise of 14,000 in the number of 16-to-24-year olds Not in Education, Employment or Training (NEETs) between July and September of this year.

"The UK has long suffered from the so-called productivity puzzle, which sees us lag behind our G7 counterparts in terms of output per worker," he said.

"The NEETs problem is another facet of the fact that the skills needs of businesses up and down the country are not being met, and is of course a tragedy for a generation of young people as well,” he added, urging the government to "urgently consider more high-quality, work-based training options, which tailor skills provision to the world of work".

Indeed, the Institute of Employment Rights has this year called for a rebalancing of the economy to incentivise businesses to upskill staff and provide opportunities for advancement from low-skilled to higher-skilled work.

We argue that the UK's current economy relies too heavily on competition based on low wages and conditions, encouraging companies to undercut each other on employment rights rather than investing in their workforce, research and innovation.

A recent report from the Social Mobility Commission echoed our concerns, warning that only 10% of those on low pay ever escape to a higher wage, and that intermediate jobs are disappearing, leaving people with few opportunities for progression within a work climate increasingly skewed towards low-skilled jobs and low pay. The Commission warned that if current trends continue, the UK is headed for a skills crisis.

The new ONS figures show that the proportion of 16-to-24-year-olds now in the Neet category has increased to 11.9% from 11.7%, with the total number reaching 857,000. Nearly half – 43% - of this group were available for and looking for work.

Professor Keith Ewing, President of the Institute of Employment Rights, explained how the 25 recommendations in our Manifesto for Labour Law – now adopted by the Labour Party – can help to avert a skills crisis. The overarching aim of our proposals is to shift the focus of labour law from statutory minimums, which provide employers with floor to aim for; to collective bargaining at sectoral and enterprise levels, which introduce an upward pressure on wages and conditions.

"Policy over the last 35 years has focused on destroying collective bargaining, making it easier to hire and fire workers, provide them with insecure positions such as zero-hour contracts, and pay them low wages. This has led to a business model reliant on churning out low-quality services and products and disposing of, rather than training, existing staff. We know this reduces productivity in our economy, and low productivity leaves us vulnerable to financial collapse," Professor Ewing said, adding: "It should be a national priority to invest in our population."

Click here to read more about our Manifesto and purchase your copy