Presentation by Chris Humphries at the Acas CIPD conference 2009 London, UK. (Acas.org.uk/summit09)

1. UK COMMISSION FOR
EMPLOYMENT AND SKILLS
The Role of Skills in Recession – and Recovery
CIPD/ACAS Conference
London
11 June 2009
Chris Humphries CBE
Chief Executive
UK Commission for Employment and Skills

2. Skills matter to earnings UK COMMISSION FOR
EMPLOYMENT AND SKILLS
Gross median annual earnings (£) by age for men, disaggregated by skill level, 1994–2006
Gross earnings (£000s)
21 24 27 30 33 36 39 42 45 48 51 54 57
AGE
2
Source: Cabinet Office, Getting On, Getting Ahead: A Discussion Paper: Analysing the Trends and Drivers of Social Mobility, 2008

3. Skills matter to employment status UK COMMISSION FOR
EMPLOYMENT AND SKILLS
3
Source: ONS, Labour Force Survey 2008

4. Skills matter to occupational choice UK COMMISSION FOR
EMPLOYMENT AND SKILLS
4
Source: ONS, Labour Force Survey 2008

5. Skills - the most damaging disadvantage? UK COMMISSION FOR
EMPLOYMENT AND SKILLS
The Low Skilled experience low and declining employment rates –
the only disadvantaged group to do so
5
Source: UKCES, Ambition 2020: World Class Skills and Jobs for the UK, 2009, Chart 1.5, p 29 – DWP using Labour Force Survey

6. The current recession:
Who’s lost their job? UK COMMISSION FOR
EMPLOYMENT AND SKILLS
Flows into unemployment April 08 – April 09 ‘In-flows’
Numbers % of total
Managers and Senior Officials 193,985 5%
Professional Occupations 133,980 4%
Associate Professional and Technical 251,165 7%
Administrative and Secretarial 439,810 12%
Skilled Trades 500,615 13%
Personal Service 187,630 5%
Sales and Customer Service 598,725 16%
Process, Plant and Machine Operatives 427,845 11%
Elementary Occupations 1,039,050 28%
Total 3,772,805
6
Source: NOMIS, and Oxford Economics, May 2009

7. Changing pattern of unemployment:
April 2008 – April 2009 UK COMMISSION FOR
EMPLOYMENT AND SKILLS
7
Source: The Guardian, 12 May 209 - http://www.guardian.co.uk/business/interactive/2009/jan/21/unemployment-map

8. UK national/regional skills variations UK COMMISSION FOR
EMPLOYMENT AND SKILLS
Percentage of working age population in employment by qualifications level
Percentage in employment with Level 4 skills and above
50.0
London
45.0
40.0
Scotland
35.0
UK South East
Wales
North West South West
Northern Ireland
East Midlands
30.0 West Midlands
North East
East of England
Yorkshire & Humber
25.0
45 43 41 39 37 35 33 31 29 27 25
Percentage in employment with Level 2 skills or below
8
Source: UKCES, Ambition 2020: World Class Skills and Jobs for the UK, 2009, Chart 2.1 – ONS Population Survey, Jan-Dec 2007

9. The UK Qualifications Profile 1997-2007:
Good progress over last decade! UK COMMISSION FOR
EMPLOYMENT AND SKILLS
UK Qualification 1997 2007 1997-2007 Change
Achievements
1997 – 2007 % Nos % Nos % Nos (‘000s)
(‘000s) (‘000s)
Level 5 3 1087 7 2274 110 +1187
+44%
Level 4 18 6101 24 8060 32 +1959
Level 3 18 5999 20 6738 12 +739
Level 2 21 6865 20 6912 1 +47
Below Level 2 21 7074 17 6019 -15 -1055
No Qualifications 18 5920 12 4351 -26 -1569
-26%
9
Source: Labour Force Survey, 2008 – Note: Working age population 19 – 59/64

10. But progress at school level is too slow … UK COMMISSION FOR
EMPLOYMENT AND SKILLS
Population with at least upper secondary education, 2006
100%
80%
60%
40%
UK Position:
• 15th in OECD for ‘older workers’
20% • 21st in OECD for ‘younger workers’
0%
d tria
m y
ey
Hu t es
Po ly
m
Po ain
Fr y
ov Re re a
M al
Ne s s
Un A rk
ite Ze lia
G m
Be nce
No ny
pu c
er d
Sw da
nd
er d
e
Tu o
Ca lic
Fi en
Ki nd
De nd
G gar
a
Au nd
ec
Re bli
it z lan
an
ic
Ita
ug
iu
do
a
rk
Un w tra
rw
a
na
b
la
ed
a
us
Sp
nm
la
d ala
Ko
ex
a
ak pu
la
lg
re
Ne Irel
St
rt
n
Sw n
ng
er
th
ite
Sl h
ec
Cz
25-34 year olds 45-54 year olds
10
Source: OECD, Education at a Glance 2008, Table A1.2a

11. 11
C
20%
40%
60%
0%
an
ad
Ja a
pa
N
ew K n
o
Ze re
al a
a
N nd
or
w
Ire ay
l
B and
el
g
D iu
en m
m
a
Fr rk
an
U ce
ni
te Sp
d ai
St n
A ate
us s
tr
Sw alia
U ed
25-34 year olds
ni
te Fi en
… and at tertiary level too
d nl
K a
N ing nd
et
h do
Lu erl m
xe an
m ds
bo
ur
Sw Ice g
itz lan
er d
la
Po nd
la
G nd
UK Position:
re
G ec
er e
m
H an
un y
Population with tertiary education, 2006
Po gar
rt y
ug
45-54 year olds
Sl A al
us
ov t
ak Me ria
R xi
ep co
C ub
ze lic
ch
R It a
e p ly
• 12th in OECD for ‘older workers’
ub
l
T u ic
• 15th in OECD for ‘younger workers’
rk
ey
UK COMMISSION FOR
EMPLOYMENT AND SKILLS
Source: OECD, Education at a Glance 2007. Table A1.3a

12. Typical UK behaviour in recession:
1990-1992 UK COMMISSION FOR
EMPLOYMENT AND SKILLS
• Employer training budgets were among the first cuts
• Redundancy was length of service based, not skills based
• Government training was ‘shotgun’, not targeted
• Recession was long and deep – first ‘white collar’ recession
• Companies that didn’t train were 2.5 times more likely to fail
• Long term unemployment exceeded 1 million for first time
• Recovery was slow – and led to severe skills shortages
12

13. Is this recession different? UK COMMISSION FOR
EMPLOYMENT AND SKILLS
The evidence strongly suggests:
• Employer training budgets much more protected
– In some sectors, 80% plus protecting/increasing training budgets
• Staff retention based upon skills needed for recovery
– Companies recognise that their people are their best hope
• Government training more targeted on skills for recovery
– We understand more about skills for employability and success
Some personal predictions:
• The recession will be deep but shorter than feared
– 2 months of +ve growth (NIESR), house prices, optimism returning
• Unemployment will not reach 3 million
• Unemployment will recover more quickly
• Skills shortages will be much less severe
13

14. Conclusion UK COMMISSION FOR
EMPLOYMENT AND SKILLS
“The skills of our people are our best guarantee
of future prosperity – and the best investment
an employer can make in challenging times.”
UK Commission for Employment and Skills, November 2008
The UK is learning – and learning pays!
14