Transcript The Importance of Skills to People and Places in the Knowledge

Making Widening Participation Relevant
in the 21st Century:
The Importance of Skills to People and
Places in the Knowledge Economy
Alexandra Jones, Associate Director, The Work Foundation
14 March 2007
This presentation
1. How is the economy changing?
2. What does this mean for skills?
3. What does this mean for places?
4. What is the link between skills and cities? What does this mean for
economic and social regeneration?
5. Recommendations
© The Work Foundation.
Changing Economy: Employment in knowledge
based industries in 2005
60%
54%
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48%
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45%
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43%
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Share of total employment using Eurostat definitions (high to medium tech manufacturing, finance,
business services, communications, health, education, cultural services, air and sea travel).
US estimate is Work Foundation estimate for share of employees derived from US Bureau of Labor
Statistics from similar industries.
© The Work Foundation.
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Share of knowledge based industries in gross value added (current OECD definition: high to medium
tech manufacturing; financial services; telecommunications; business services; education and health
services)
© The Work Foundation.
Most new jobs in knowledge based industries
UK 1995-2005
Total employment 1995-2005 Eurostat industry definitions and categories
50%
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© The Work Foundation.
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Demand & Supply in the Changing Economy
• Character of demand changing
– Service sector expenditure doubled between 1970 and 2005
– ‘Identity spending’
• “Cognitive Transformation”
– 1974 more than half men and two thirds women no qualification
– 2001 13 per cent of men and 15 per cent of women no qualification.
– Degrees quadrupled.
• Changing Supply
– Business models - technology-enabled responsiveness, rise of
network & disaggregated supply chains
– Changing economic geography
– Growing “knowledge economy” (but how do you measure this?)
© The Work Foundation.
What does this mean for skills?
• Skills matter to individuals…
– Likelihood of employment
– Income – NVQ 2 and above wage premium
– Physical and mental health
– Impact on family
• Skills matter to firms…
– Firms employed skilled workers likely to be more productive
– “Relationship economy”
– ‘Knowledge’ creates added value
• Skills matter to countries…
– Low levels of skills constrain growth and innovation
– High numbers of skilled workers increase likelihood of affluence
© The Work Foundation.
But real challenges associated with skills
• Using skills
– Managing codified knowledge
– Exchanging tacit knowledge
– How do you support innovation?
• Demand for skills
– ‘Hourglass demand’?
– Employer uncertainty about what skills required
– How do you measure ‘skills’?
• Supply of skills
– Qualification focused
– What employers / UK need?
– Those who are already trained get more skills
– Leitch Review responding – but more needs to be done to put skills in
context of places & economic and social regeneration
© The Work Foundation.
Why cities matter in the knowledge economy
• “Internationally, cities’ contribution to the national economy (in terms of
GDP or income) is greater than their share of the national population,
and the contribution of larger urban centres is proportionately greater”
HM Treasury (2006)
• Cities offer productivity benefits…
– Economies of scale
– Access to markets & labour pools
– Exchange of tacit knowledge
• …and consumption benefits
– Goods, services, cultural facilities & social opportunities
© The Work Foundation.
Ideopolis: Knowledge City-Regions
• An Ideopolis is a sustainable knowledge city that drives growth in
the wider city-region
• It has:
– Economic success based primarily on knowledge intensive
industries & occupations
– High levels of high skilled workers
– Diverse industry base with specialist niches
– Powerful university
– Strategies to work with communities
• Medium-sized cities are what we would call “Partner Ideopolises”
© The Work Foundation.
Nine Drivers of Knowledge (1)
1. Physical knowledge city
• Infrastructure and investment in office and residential accommodation
2. Building on what’s there
• Playing to the city’s strengths and weaknesses
3. Diverse specialisation
• Diverse industries & specialist niches
4. High skill organisations
• The ‘high road’ to productivity
5. Vibrant education sector
• Working with universities, investing in schools and FE
© The Work Foundation.
Nine Drivers of Knowledge (2)
6. Distinctive ‘knowledge city’ offer
• ‘Offer’ for those living, working, investing in the city
7. Leveraging strong connectivity
• Strong communications & transport
8. Strong leadership around knowledge city vision
• Civic and private sector leadership, built on networks
9. Investing in communities
• The challenge of the hourglass economy
Some drivers relevant even if not a knowledge city – but knowledge cities
must consider all drivers
© The Work Foundation.
Knowledge and Cities: Key Findings
• Knowledge is more than science and technology
• City-regions & relationships between cities matter – real economic
geography
• Size matters
• Knowledge drives economic success…
• But not necessarily quality of life
• Not every city can or should become a knowledge city
• Economic and social policies should be linked
© The Work Foundation.
How are skills and cities linked? Responsive
labour market
• Adapting to change
– Providing skills for new and growing industries – mix of skills
– Retraining those in shrinking industries
– Makes city more attractive place for businesses to locate
• Economic and social outcomes improved
• BUT real challenges in most cities
– Quality and responsiveness of supply side in some cities
– Proportion of population with low or no skills
– Creating high quality jobs for ‘knowledge’ workers
– Higher demand for poor quality jobs
• Joining up skills policy, giving places greater autonomy
© The Work Foundation.
How are skills and cities linked? Embedded
education institutions (1)
• Innovation
– All successful knowledge cities have strong universities with close
business relationships (Cambridge, Helsinki)
• City and university joint offer
– Can be both that attract students / workers / businesses (Munich)
– Production and consumption benefits in cities
– Stronger reason for business location decision than ‘sweeteners’
(Newcastle)
– That plus availability of jobs can help retain students
– Responds to local demand
– Growing sector e.g. construction, environmental services
– Mix of skills
© The Work Foundation.
How are skills and cities linked? Embedded
education institutions (2)
• Generates local demand
– Student demand for services
– Changes feel of city
– Strength in research attracts businesses (Glasgow)
• Social inclusion
– Job opportunities at different levels – if linked to the community
– Lifelong learning & knowledge transfer
• BUT challenges
– Balancing different agendas
– Need mutually beneficial partnerships around clearly defined issues
– Skills policy needs to link to other regeneration policies (e.g. Tesco,
Bullring)
© The Work Foundation.
How are skills and cities linked? Investing in
communities
• Polarisation
– Uncertainty about how much hourglass labour market exists
– BUT undoubtedly polarisation within places
– Barriers include: lack of appropriate skills; mental health problems;
caring responsibilities; poor transport; lack of appropriate
employment.
• Skills can help
– Skills – hard and soft – are important way to help deprived
communities
– Need to be linked with local employment opportunities, welfare to
work, regeneration, transport, health, housing etc.
– Impacts include happier, healthier, wealthier residents and lower
transaction costs
© The Work Foundation.
The Work Foundation Recommendations
• Putting Place back into Policymaking
• Work with employers to understand skills demands
– Hard, soft and service sector skills
– Thinking about specific needs of places
– Challenging employers to be aspirational
• Investing in quality of supply at all levels
• Raising aspiration from businesses, individuals and cities
• Link skills to other policy agendas – firmly at heart of regeneration
agenda
• Education institutions working in partnership with cities
© The Work Foundation.