Professor Anna Vignoles looks at skills policy in her report to the Commission on Living Standards. She examines what skills policy can do to help those on low to middle incomes boost their earnings potential. The paper highlights that those in the low to middle income group generally hold low and intermediate skills, which are not in demand in the current labour market. She examines why this is the case and explores which policy solutions would bring about future change.
Professor Anna Vignoles is a Professor in the Economics of Education at the Institute Of Education and a Deputy Director of the Centre for the Analysis for Youth Transitions (a DfE funded research centre). She has published widely on the value of skills and qualifications in the labour market. Her research interests include issues pertaining to equity in education, education efficiency and finance and the economic value of schooling.
- We need to doggedly stick to the mantra that investments in the early years are the surest route to later achievement, and that school children need to acquire excellent cognitive and non-cognitive skills in school. There is no substitute for continuing to push for improvements in the education system.
- We need to shift our focus from quantity to quality. We need to understand why some of the level 2 and level 3 qualifications on offer do not apparently meet the needs of employers in some sectors, and ensure that employers understand the value of the qualifications people gain, and are able to distinguish good from bad.
- We need to take a more targeted approach to raising the supply of skills, focusing on specific gaps and types of skill – such as basic and low level skills, and literacy and numeracy qualifications – rather than blanket increases in supply.
- We need to focus more attention on raising the demand for skills. To do so we need to ensure that the design of the skills system takes account of the need to involve employers and encourages demand. Potentially we might also look to a wider range of policies beyond the skills system, encompassing regulation, business support, industrial policy and more, though the wider issue of industrial policy is beyond the scope of this paper.
- We need to devise schemes that encourage both individuals and firms to train. Individuals and firms are likely to make better choices about the training they require, so in principle we would want to see more decisions made by individuals and firms. This might be achieved via more targeted tax subsidies or training levies on firms, though care is needed to avoid subsidising training that firms would have done already, or encouraging firms to undertake training that is not very valuable.
- We need to encourage training providers to focus on real outcomes for their students. For example, we could reward training providers on the basis of whether their students earn more or get better jobs.