The other side of the skills debate

Skills within the workforce are too often neglected – particularly among the lowest paid, argues Paul Sissons. It’s a lose-lose situation for workers, employers and the government

Skills are critical for national economic growth and prosperity, and are central to individual life chances and social mobility. In his autumn statement, George Osborne announced a number of changes to skills provision. These included a new pilot fund which aims to give employers greater ownership of skills funding.

The previous government, spurred on by the findings of the Leitch Review, invested heavily in the population’s skills. However, when skills are discussed by policymakers, it is almost always in the context of the supply of skills, neglecting how these skills are actually used in the workplace.

Of course the supply of skills is very important in terms of both national productivity and international competitiveness. It has important implications for the ability of employers to recruit a suitably qualified and skilled workforce.

However, as our new report The Skills Dilemma argues, the supply of skills is only part of the story – the other side of the skills debate concerns employer demand for and use of skills. The evidence on this suggests that much greater attention needs to be paid to improving how we use our skills in the workplace.

The under-utilisation of skills is particularly pronounced in low-wage sectors; 43% of those working in the retail sector report feeling over-skilled for their work, in the hotels and catering sector it is 56%. The central cause of low employer demand for skills in these sectors often relates to employers’ corporate and product market strategies. Low-paid employees are more likely to be found in firms which compete on cost rather than quality.

As Professor Ewart Keep describes, many employers with low-cost strategies view their workforces as ‘a cost to be minimised, rather than as assets and sources of competitive advantage in their own right’. This strategy informs the organisation of work and job design adopted by many low-wage employers; with low-wage jobs often organised using Taylorist forms of job design which give workers little task autonomy, discretion or flexibility.

However, the problem with such a strategy is twofold: on the one hand, employers are wasting a valuable resource by failing to capitalise on their employees’ skills; on the other, underuse of employees’ skills can lead to a less motivated, less engaged workforce. Both aspects can have serious implications for the productivity of a business.

Our report argues that more needs to be done to tackle this problem through encouraging innovation in business models, improving job design and upgrading product market strategies. However, in England there is currently no established skills utilisation policy.

In international terms this means we are behind the trend. In Scotland there is a skills utilisation programme which is currently funding a number of pilot projects; Norway, Finland, New Zealand, Australia and Singapore have all invested in better skills utilisation.

Improving 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 can also bring material benefits such as improved wages and progression opportunities. Moreover, workers using their skills more effectively can help to boost a firm’s performance, productivity and profitability. Skills utilisation policies therefore offer the potential of a win-win scenario for both employers and their employees.


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