The Skills Dilemma
10 January 2012
Skills are the cornerstone of modern economies. They are critical for national economic growth and prosperity, and are central to individual life chances and social mobility. But, do we always develop and use our collective skills in the most efficient and beneficial way?
In new our new research report, The Skills Dilemma, we argue that policymakers need to close the growing mismatch between the qualifications people have and the jobs which are available. Many people suffer from “skills-underutilisation” in this way, particularly at the lower-end of the labour market. Between 1986 and 2006 the number of people in the workforce with no qualifications fell by 5.5 million, whilst the number of jobs requiring no qualifications for entry fell by just 1.2 million. We need to think more in terms of not just developing skills, but how these skills are subsequently used in the workplace.
Supply-side interventions in education and training can help to boost competitiveness and also have an important influence on individual labour market outcomes. Yet if we are to move away from a “low skills equilibrium”, we must also invest in better skills utilisation.
The concept of skills utilisation is about the ability of individuals to effectively use their skills in the workplace - increasing their own job satisfaction and well-being as well as increasing their performance and productivity to the benefit of their employer.
Skills under-utilisation is most likely in low-wage sectors – some 43 per cent of those working in the retail sector report feeling over-skilled for their work, in the hospitality sector it is 56 per cent. The drivers behind the relatively poor utilisation of skills in these low-wage sectors include the prevalence of low-road business models, the forms of work organisation and job design used to service these models, poor conceptions of work, and high turnover of staff.
In England there is no established skills utilisation policy. In international terms we are behind the trend. In Scotland there is a skills utilisation programme which is funding a number of pilot projects; Norway, Finland, New Zealand, Australia and Singapore have all invested in better skills utilisation. Policymakers in England need to design better policies for skills utilisation and support employers to encourage innovation in business models and job design.
Better skills utilisation is no magic bullet to improve the lot of low-wage workers; however it can help to make work more meaningful, interesting and satisfying. It may also help to encourage more material effects such as better wages and progression opportunities. Skills utilisation policies also offer the potential benefit of being a win-win, as workers using their skills more effectively can help boost firms’ productivity and profitability, and reduce their staff turnover.