Skills issue needs to headline budget speech, CIPD claims

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Written by Seun Robert-Edomi on 24 February 2014 in News

CIPD calls for a fundamental review of the UK skills policy

The Chartered Institute of Personnel and Development (CIPD) has today urged the Chancellor to focus on skills when he delivers his 2014 Budget next month. 

The organisation has put forward a package of three proposals to help champion better work and working lives for the benefit of individuals, business, the economy and wider society. 

The three calls to government are:

• A fundamental review of UK skills policy, together with a new focus on the workplace, the nature of jobs for the future, and how skills are being utilised. This, the CIPD argues, is critical if the necessary leap in productivity is to be delivered to boost real wages.

• To help young people make the all-important transition between education and work by allocating £50 million to the National Careers Service (NCS) to boost their work with schools and to improve the labour market prospects of the UK's young people by helping to bridge the gap between education and work.

• To ensure Universal Credit works for the benefit of employers, employees and jobseekers by producing targeted communications aimed at jobseekers to increase their understanding of the new system and to drive positive engagement, and to review whether an increase in the employer National Insurance Contributions (NICs) threshold from £148 to £220 a week or more could encourage employers to increase the hours of some existing staff.

Peter Cheese, chief executive at the CIPD, said: "The UK economy has finally started to grow solidly again but the deepest recession for decades has exposed critical underlying issues in our competitiveness and utilisation of skills. It' s important that government, key policy makers and businesses come together to work on improving the UK's productivity, where poor relative performance predates this financial crisis. 

"Productivity growth is vital to our international competitiveness, but also must underpin growth in real wages. Effective people management and development is essential in supporting productivity, effective skills utilisation, innovation and growth."

Recent research from the Office for National Statistics reveals that skills utilisation lies at the core of the UK's productivity problem. Labour productivity fell sharply during 2008 and 2009 and is still nearly four per cent below its pre-recession level. And on an output per worker basis, UK productivity was 19 percentage points below the average for the rest of G7 in 2012. 

The number of young people unemployed now stands at approximately 600,000; a figure which the CIPD believes is exacerbated by the skills-work mismatch apparent in the UK. The CIPD's Learning to Work campaign aims to tackle this problem and improve employer engagement with young people. Research reveals that out of the employers surveyed, more than 53 per cent believe that young people do not receive adequate careers guidance. With extra funding the NCS could help to bridge that gap.

"Government and businesses need to work together to ensure we don't create a generation of wasted talent, with high systemic youth unemployment and under-utilisation of skills. We need to promote labour market inclusion and the development of productive, inclusive, and engaging workplaces, to create a stronger and more sustained demand for employment at all levels. Just focusing on the supply of skills is not enough, Cheese added.


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