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Manufacturers driving investment in skills as shortage becomes key concern

12 November 2012

The latest EEF/JAM Recruitment survey says government should resist vested interests and put employers in the driving seat for training whilst cutting national insurance for apprenticeships.

Britain’s manufacturers are substantially increasing investment in skills in response to greater demand for more highly skilled employees but even without a strong recovery, many firms are reporting skills shortages, according to a major survey released today by EEF, the manufacturers’ organisation and JAM Recruitment. 

The survey shows that even whilst applicants are increasingly lacking technical skills, work experience and relevant qualifications. Companies are responding by increasing investment in training, Apprenticeships and in developing better links with schools and FE colleges.

However, only a minority of manufacturers are reporting that the government’s efforts to create a simpler demand-led skills system have made it easier for them to invest in the skills that they need.

Manufacturers’ growing need for skilled R&D, design and technical, project management and craft and technician employees also show that we need raise our level of ambition for Apprenticeships and work harder to ensure that more young people are leaving education with good grades in key subjects like English and Maths. 

Commenting, EEF Head of Employment & Skills Policy, Tim Thomas, said: “Manufacturers are taking the initiative to ensure that skills gaps don’t hold them back from their ambitions to develop new products and services and expand into new markets. But despite the government’s best efforts, investing in apprenticeships and finding the right qualifications, training courses and provider is still far from straightforward.      

“The time is ripe to go further and put employers in the driving seat by giving them the power to set the standards for their industry, the scope to decide how to train their apprenticeships and by routing public funding for training through the firms that invest in it. In doing so the government should resist the vested interests of training providers to maintain the status quo and the calls to add more bureaucracy to the system by giving LEPs control of skills budgets.”  

“We also need to raise our level of our ambition on apprenticeships and the government should targeting any increase in resources for apprenticeships on those lead to higher skills” 

Commenting, John Morris, CEO of JAM Recruitment, said: “Over the last few years, we have seen the definition of what is considered to be a ‘hard-to-fill’ position widen at an alarming rate. To remain internationally competitive, UK manufacturing needs a skilled, flexible labour force. 

 “That will only happen if the government ensures the training market is coherent, accessible and delivering what employers need. In the long term it’s vital that STEM subjects are prioritised in the education system and that we get the message across to a new generation that there are fantastic career opportunities manufacturing. 

“This report is a clear message from manufacturers that they are alive to the issues but need more assistance in tackling the skills shortage for the benefit of the UK as a whole.”

According to the survey, over half of respondents said their training spend had increased in the past two years and six in ten said it would increase in the next two. Seven in ten companies offer work experience to young people with others offering factory visits, internships and placements.

 Furthermore, manufacturers are investing significantly in Apprenticeships with three quarters of companies having started manufacturing or engineering apprenticeships in the past 12 months, with most lasting four years. Whilst the investment by manufacturers is significant, the survey shows there would also be substantial payback for government by increasing the subsidy for Apprenticeships as three quarters of companies offer all their apprentices full time employment on their completion.

However, only a small minority of manufacturers report an improvement in the training market in terms of the relevance of vocational qualifications, the responsiveness of providers or the ease of finding appropriate courses and access to funding. 

In its ‘Route to Growth’ Industrial Strategy (1), EEF set out four ambitions, which are key to growth, including a need for the UK to have a more productive and flexible workforce. Underpinning this, EEF is urging government to adopt the following three targets to meet employers’ skills needs and those of the UK economy:

- 65% of school leavers to achieve five GCSEs at A-C grade including English and maths 
- 25% increase in level 3 and above STEM Apprenticeships 
- A reduction in the proportion of ‘hard to fill’ vacancies to 20%

To achieve these amongst EEF’s key recommendations to government are the following:                           
- Improve the priority for and, quality and relevance of, teaching in STEM related topics. This should include a review of the case for capping fee repayments for teachers in key subjects and a requirement for teachers to spend 2-5 working days a year in business.

- Ensure young people have a better understanding of industry and career options. This should include reintroducing compulsory work experience at Key Stage 4.

- Expand advanced and higher level apprenticeships by prioritising increases in public funding to achieve this.

- Re-direct funding to employers via reductions in National Insurance Contributions. This would encourage greater ownership by employers, as well as more responsiveness and innovation by training providers. 

- Accelerate the Employer Ownership of the Skills Pilot model, which routes a proportion of publicly-funded training to employers, and look to ways of making it more accessible to businesses of all sizes. 

- Task Local Enterprise Partnerships (LEPs) with bringing together employers and providers to encourage greater collaboration. This should not, however, include giving LEPs control of skills budgets.

The full report can be read online here.


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