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Professor Geraint Johnes
Professor of Economics at Lancaster University
T 020 7976 3516
Professor Geraint Johnes

Bridging the skills canyon

Authors: Professor Geraint Johnes Director of The Work Foundation

04 September 2014

Today (4th September) sees the launch of an important new report by the Centre for Cities and the Joseph Rowntree Foundation. The report concerns the role that cities need to play over the coming years in providing individuals with a route out of low paid employment and into more productive and remunerative work.

The squeezed middle of the skill distribution has received considerable attention of late. There is much evidence, in the new report and elsewhere, to suggest that the demand for intermediate skills is falling in relation to that for skills at the top and bottom ends of the distribution. This has often been put down to the effects of new technology. Robots can undertake many of the tasks that have been performed by workers of intermediate skills, heretofore. Moreover, new technology could replace some functions of highly skilled workers, taking over the role of diagnosis from medical practitioners, for example.

Carl Benedikt Frey and Michael Osborne at Oxford University have gone so far as to suggest that around 50% of current jobs could vanish over the next 20 years as a consequence of computerisation. This has, understandably enough, led to some hysteria. But the reality is that jobs are each made up of a number of tasks; it is the tasks, not the jobs themselves, that are taken over by technology. As workers find technological solutions to make their jobs easier, the technology takes on some of the burden of their work, but the humans turn their efforts to other tasks. Jobs don't vanish. They morph. And, even if a job currently undertaken by a human were to vanish, that human would still be available to do other jobs.

The squeezed middle is nevertheless a real phenomenon, and we do face the danger that some people might get locked into low productivity, low pay work, and that they might be unable to traverse the canyon that is emerging between such jobs and the high quality jobs that are well remunerated. It is crucial to remember at this point that it is the demand for skills that is bifurcating, not the supply. Workers are as able to make incremental improvements to their skill sets as they ever were. The gap between the low paid jobs and the well paid jobs should not be harder for them to bridge simply because the canyon is wider - many of those in low skill work have skills that exceed those required to perform their jobs, and it should in principle be possible for them to upskill and make the jump to a better quality job. In a world populated by baristas and bankers, many of those in low productivity occupations already have the ability and many of the skills needed to undertake higher productivity work. Identifying those who can and investing in them offers the prospect of huge returns.

There is, however, a great difference between what should be possible and what actually happens. Ensuring that as many workers as possible are empowered to make the most of their abilities is going to be more crucial than ever to economic development. The reward is that, in this new world, relatively small investments in skill development can lead to substantial changes in the qualitative nature of the jobs that (at least some) workers can do. These investments are critical to the growth of productivity. By ensuring that the investments are made, cities, regions and the national economy stand to gain much in terms of output growth.

Cities have a key role to play, not least because the skill sets required within one urban area can differ substantially from that needed in another. Fully taking advantage of opportunities to enhance productivity requires a local steer. Ensuring that human resource development meets industry needs calls for training that is led by business. Cities, employers, education providers and central government all need to work together to face the new challenges. In focusing on the role played by cities, the new report admirably draws a road map that will be useful in tackling the challenges that lie ahead.