West Midlands LSC Strategic Analysis Report 2008

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West Midlands LSC Strategic Analysis Report 2008

  1. 1. West Midlands Strategic Analysis 2008 November 2008 Of interest to partners, providers and any other parties interested in 1 learning and skills in the West Midlands.
  2. 2. Introduction.............................................................................................................................. 3 1 The Strategic Context..................................................................................................... 4 1.1 Enabling the System to Deliver................................................................................... 4 1.2 Leitch .......................................................................................................................... 5 1.3 Demand Led Funding ................................................................................................. 5 1.4 Public Service Agreements / Local Area Agreements................................................ 6 1.4.1 Local Area Agreements ........................................................................................... 7 1.5 World Class Apprenticeships / National Apprenticeship Service ............................... 8 1.6 Qualifications Credit Framework (QCF) / Foundation Learning Tier .......................... 9 1.7 Integrating Employment and Skills ........................................................................... 10 1.8 Adult Advancement and Careers Service................................................................. 11 1.9 Train to Gain ............................................................................................................. 11 1.10 National Skills Academies ...................................................................................... 13 1.11 Sub National Review .............................................................................................. 14 2 The Demand for Skills .................................................................................................. 16 2.1 Regional Economy.................................................................................................... 16 2.2 Overall Skills Performance ....................................................................................... 18 2.3 Qualification Attainment............................................................................................ 19 2.4 Employer Skills Issues.............................................................................................. 21 2.5 Demographic Changes and the Supply of Skills ...................................................... 24 2.6 Trends in Labour Market Participation...................................................................... 27 2.7 Sector Analysis ......................................................................................................... 31 2.8 Implications for Education, Training and Skills Delivery ........................................... 32 3 Provision Analysis........................................................................................................ 34 3.1 Young People (14-19)............................................................................................... 34 3.1.1 The National Context ............................................................................................. 34 3.1.5 Level 2 and Level 3 Attainment by age 19 ............................................................ 46 3.2 Adult.......................................................................................................................... 66 3.3 Employer................................................................................................................... 71 3.4 Quality and Provider Development ........................................................................... 76 4 Key Regional Strategies............................................................................................... 80 4.1 The 14-19 Strategy ................................................................................................... 80 4.2 Regional Economic Strategy .................................................................................... 81 4.3 Regional Spatial Strategy ......................................................................................... 82 4.4 Regional Skills Action Plan ....................................................................................... 83 4.5 The West Midlands Train to Gain Plan for Growth Improvement Plan .................... 84 4.6 Integrated Employment and Skills ............................................................................ 85 4.7 National Apprenticeship Service – West Midlands Regional Action Plan ................ 88 4.8 Quality Strategy ........................................................................................................ 90 4.9 Learners with Learning Difficulties and/or Disabilities (LLDD) ................................. 91 4.9.2 Learning for Living and Work Developmental Activity ........................................... 92 4.10 Economic Development and Regeneration ............................................................ 92 4.11 Skills for Life............................................................................................................ 93 4.12 Offender Learning and Skills Service (OLASS)...................................................... 93 4.13 Equality and Diversity Action Plan .......................................................................... 94 4.14 Information Advice and Guidance .......................................................................... 95 4.15 The Third Sector ..................................................................................................... 96 4.16 Capital Strategy ...................................................................................................... 97 4.17 European Social Fund ............................................................................................ 99 4.18 Olympics 2012 ...................................................................................................... 101 4.19 Rural Agenda ........................................................................................................ 102 2
  3. 3. Introduction The West Midlands Strategic Analysis 2008 has been developed by the LSC Learning Planning and Performance (LPP) team in the region. It has been produced with the support of a Strategic Analysis steering group comprised of LSC colleagues from across the region and local area offices including members of the Skills team, the Economic Development teams, Partnership managers and representatives from the LPP team. The report forms a key part of the Learning and Skills Council’s annual business cycle. Its purpose is to underpin the Regional Commissioning Statement for 2009/10 by providing the evidence to inform decisions about our strategic priorities and the learning provision we need to commission from our providers in the West Midlands. The Strategic Analysis is intended to provide a comprehensive picture of the needs of learners, employers and communities in the West Midlands, and to assess the extent to which the mix and quality of the region’s LSC funded learning provision meets these needs. The intended audience are the local office Partnership Teams, the Economic Development teams, the Regional Skills team, the Learning Planning and Performance team and all of our colleges, providers and Local Authorities. The report has drawn on the extensive evidence base which now exists within the region through for example, the work of the West Midlands Regional Observatory and the LSC Regional Research and Data Teams, covering economic performance, employment and skills issues. It addresses the regional and sub regional perspectives in particular, but it also draws out the Local Authority perspective where this is particularly relevant to the 14-19 agenda in the region. It contains detailed skills analysis on twelve of our key sectors in the region and the report also disaggregates data and information down to local authority level for all Young People (14-19) LSC funded activity. The report demonstrates for example that the LSC in the West Midlands has already made great improvements in the number of young people achieving Level 2 and Level 3 qualifications, moving more young people into courses at this level and maintaining good levels of retention. Between 2003/04 and 2006/07 achievement at full Level 3 for Young People increased by nearly 7 per cent, one of the highest increases in the country. Gaining further improvement in Level 2 and Level 3 participation and achievement both for Young People and Adults remains a high priority for the region in meeting the challenges outlined in our Skills Action Plan. The region is still dealing with the economic, social and structural consequences of its past dependence on traditional industries, which is reflected in some poor performance across a number of indicators. Significant progress has been made in raising the adult qualifications attainment levels in the region and whilst there are wide local variations among the West Midlands population, the analysis report demonstrates that regional productivity levels, qualifications attainment and participation in learning remain below the England average. The economic challenges facing the region, exacerbated by the current economic downturn require the further education sector to respond in new ways to ensure that the West Midlands region has the skills base to guarantee prosperity and social cohesion. Hopefully this report will help to inform key partners and stakeholders so that they are better equipped to understand and tackle these challenges in the West Midlands. 3
  4. 4. 1 The Strategic Context Major reform programmes for 14-19 year olds and adult skills have been put in place backed by substantial investment. Those reforms are bringing about real progress and are based upon several key reports and policies from Government. The Further Education sector will continue to see progressive and effective change with new policy drivers in place prompting the need for different organisational structures. The following section summarises the policies and reports setting out the strategic context for these changes. 1.1 Enabling the System to Deliver The Secretaries of State of the Department for Innovation, Universities and Skills (DIUS) and Department for Children, Schools and Families (DCSF), announced the Machinery of Government (MoG) changes in their publication Enabling the System to Deliver in March 2007. The starting point for these reforms is the ambition to raise the education participation age and deliver better outcomes for all young people, an ambition which has been at the heart of the Every Child Matters agenda and which was emphasised again in the recent Children’s Plan. The reforms provide an opportunity to bring together in one place responsibility for the outcomes and achievement of all young people aged 0-19. The reforms build on the existing role and expertise of local authorities as commissioners of a wide range of services which will help support pre-19 education and training. From 2010 subject to legislation), local authorities will have a statutory duty to provide learning places for pre-19 year olds. Local Authorities will be supported in this by a new Non Departmental Public Body, the Young People's Learning Agency (YPLA) The future commissioning process requires local authorities to work together to develop and agree plans in sub regional groupings. Commissioning decisions need to be made collectively to ensure that the decisions of one LA do not adversely impact on another and ensure purchasing decisions provide the best value for money, promote provider stability and provide the highest quality and choice of provision for the learner. Regional Planning Groups of LAs and key partners will agree the plans of the sub-regional groupings; ensuring coherence regionally. A two stage, Government Office led, process has seen initial sub regional groupings outlined, with DCSF feedback due to be given by November 2008. Comprehensive proposals submitted as ‘ready’ between November 2008 and February 2009, with feedback given by March 2009. For adults and employers there will be a new Skills Funding Agency (SFA), which will oversee the distribution of funds to the sector and manage the performance of FE colleges. The Agency will also house the National Apprenticeship Service (NAS), the National Employer Service, and the Adult Advancement and Careers Service. As has already been announced, the Train to Gain brokerage service will transfer to Regional Development Agencies in April 2009. 4
  5. 5. Meanwhile, the LSC continues to have a statutory role in post-19, and must continue to focus on expanding the Train to Gain programme, and to tackle adult basic skills, including securing closer integration between skills and employment, and ensuring that a wide range of engagement/progression routes are available to support economic and social inclusion. A blueprint of the future post 19 delivery will be made available in the Autumn 2008. 1.2 Leitch The LSC has been instrumental in delivering improvements in adult education and skills training. However the Leitch review has shown how much further there is to go if we are to develop the highly skilled workforce that we will need by 2020. The Leitch Implementation Plan (LIP) is the Government’s response to the Leitch Review (in England), and was published in July 2007. The main reforms announced in the Leitch Implementation Plan are focused on the need to bring about a culture change in developing aspirations and responsibility for skills development among individuals and employers. These include meeting the Leitch skills targets, moving to a demand-led system of skills delivery and integration of employment and skills and will require a step change in the adult skills delivery landscape. The plan set out an endorsement of the need identified in the Leitch Review for a significant increase in adult skills targets, in Apprenticeship places, and in the participation and achievement rates of young people. An increasing proportion of funding for adult skills will be ‘demand-led’. The balance of public investment will be focused on ensuring that individuals have a platform of skills for employability and progression. Colleges will increasingly need to focus on providing flexible training that meets learner/employer needs in order to attract ‘demand-led’ funding. New standards for employer responsiveness and vocational excellence will be introduced in 2008. The advent of Skills Accounts and the growth of Train to Gain sees a radically different model of organisation of the skills system, where the government role is to ensure customers are empowered, well informed and well supported so demand can lead supply. 1.3 Demand Led Funding The FE White Paper Further Education: Raising Skills, Improving Life Chances (March 2006) set out the commitment to develop a new approach to funding and to move to a position where more funding is driven directly by employer and learner choice. The Leitch Review of Skills also called for a fully Demand-Led system. The LSC consulted with the sector on a new funding approach in January 2007 in the document Delivering World-class Skills in a Demand-led System (LSC, 2007). Following this consultation the LSC has developed a new funding approach, Demand Led funding. The new funding approach has been introduced for 2008/09 replacing the funding methodologies for Further Education, School Sixth Forms, Work Based Learning and Train To Gain. For 2008/09 the LSC now has three Demand Led Funding models: the 16- 18 learner-responsive, the adult learner-responsive and the employer responsive. The introduction of Demand Led funding is also seen as a simplification of process, with greater transparency over the impact of performance on funding Levels. There is commonality across all three models which all utilize Standard Learning Numbers 5
  6. 6. (SLN) as a standard unit of learning volume, each SLN will be subject to the national funding rate and a provider factor with variations in respect of reconciliation and payment rules across the three models. Guidance on the funding principles, rules and regulations for Demand Led Funding for LSC providers can be found on the LSC website http://www.lsc.gov.uk/providers/funding-policy/demand-led- funding/Further_Education_Funding_Policy_Documents_2008-09.htm The LSC will work to embed the new funding approach in 2008/09 undertaking reviews as necessary for 2009/10. 1.4 Public Service Agreements / Local Area Agreements Public Service Agreements (PSA) are fundamental to the Government’s approach to delivering world-class public services, combining clear national goals with unprecedented Levels of transparency. They inject ambition into the public services, whilst providing the public and the users of services with more information than ever before with which to hold services to account. Building on the success of the previous PSAs, the Government has been working with frontline professionals, the public and external experts to renew the performance management framework for the next decade. The 2007 CSR announced the culmination of this work, with 30 new PSAs setting a vision for continuous and accelerated improvement. New PSAs set out the key priority outcomes the Government wants to achieve in the spending period (2008- 2011). The relevant PSA Targets to the LSC are: PSA 10 – “Raise the educational achievement of all children and young people so that by 2010/11”: • 82% of young people achieve Level 2 by the age of 19 (PSA 10 Indicator 5) • 54% of young people achieve Level 3 by the age of 19 (PSA 10 Indicator 6) PSA 11 – “Narrow the gap in educational achievement between children from low income and disadvantaged backgrounds and their peers” (PSA 11 indicator 6) In addition the LSC to lead on: • Increasing the number of 17 year olds in education or training so that 86% are participating in 2010/11 • Reducing the inequality gap in attainment at Levels 2 and 3 PSA 14 – “Increase the number of children and young people on the path to success”. • reducing the proportion of young people Not in Education, Employment or Training (NEET), by 2 percentage points by 2010, from a baseline of 10% (PSA 14 Indicator 1) 6
  7. 7. PSA 2 – “Improve the skills of the population, on the way to ensuring a world-class skills base by 2020”. The LSC is expected to improve the skills of the population by 2011, consistent with the 2020 objectives of the Leitch Review of Skills – by helping to ensure that: • 597,000 people of working age to achieve a first Level 1 or above literacy qualification, and 390,000 to achieve a first Entry Level 3 or above numeracy qualification. (PSA 2 Indicator 1) • 79% of working age adults (men and women aged 19 to pension age) qualified to at least full Level 2 (PSA 2 Indicator 2) • 56% of working age adults (men and women aged 19 to pension age) qualified to at least full Level 3 (PSA 2 Indicator 3) • 130,000 apprenticeships to complete the full apprenticeship framework in 2010/11 (PSA 2 Indicator 4) PSA 4 - Science and Innovation – “help achieve the Government’s ambition to deliver world class science and innovation in the UK through”: • The number of young people in England taking A Levels in mathematics, physics, chemistry and biological science (PSA 4 Indicator 5) In addition the LSC is expected to support the higher education sector to achieve the HE PSA participation target. • Increase participation in Higher Education towards 50 per cent of those aged 18 to 30 with growth of at least a percentage point every two years to the academic year 2010/11. The LSC is also expected to lead on the delivery of agreed key indicators including: • An Apprenticeship completion success rate target for 2008-09 of 65% • An FE learner Success Rate of 80% for FE colleges by 2010/11 • The Framework for Excellence The PSA Delivery Agreements and the Service Transformation Agreement are all available on the HM Treasury website at 2007 PBR CSR: Public service agreements 1.4.1 Local Area Agreements The new national indicator set for local authorities and local authority partnerships was announced as part of the Chancellor's Comprehensive Spending Review 2007. The new national indicators will be the only means of measuring national priorities that have been agreed by Government. The number of national indicators has been radically reduced, from the around 1200 that local authorities and their partners reported on, to 198. The headline definitions for the 198 are contained in the document The New Performance Framework for Local Authorities and Local Authority Partnerships: Single Set of National Indicators. The national indicator set will be the only measures on which central government will performance manage outcomes delivered by local government working alone or in partnerships. From April 2008, all other sets of indicators, including Best Value Performance Indicators and Performance Assessment Framework indicators, have been abolished. 7
  8. 8. In each area, targets against the set of national indicators will be negotiated through new Local Area Agreements (LAAs). Each Agreement will include up to 35 targets from among the national indicators, complemented by 17 statutory targets on educational attainment and early years. There will be no other way of setting targets, no other way of Whitehall managing local authority performance. Setting the targets will be the subject of genuine negotiation between central Government and the local area. Even where targets are set out for Public Service Agreements at national Level, local areas will have the flexibility to respond to these national ambitions in the most appropriate way in negotiation with Government Offices. The Local Area Agreements are a three-year agreement between a local area and central government. The LAA sets out how local priorities will be met by applying local solutions. The LSC has a legal obligation to participate in the LAA’s and as one of the local strategic partners we are actively engaged in the process. 1.5 World Class Apprenticeships / National Apprenticeship Service The creation of the National Apprenticeship Service (NAS) was announced in June 2007 as part of the ’Machinery of Government’ proposals to reform the education and skills sector. The intention to develop NAS represented the delivery of the recommendation by the Government Select Committee on Economic Affairs, which called for a "new and powerful unit, reporting directly to a cabinet minister to 'own' and take responsibility for apprenticeships”. In January 2008 the Government published the strategy for the future of Apprenticeships in England, ‘World-Class Apprenticeships: Unlocking Talent, Building Skills For All’. This document set out the importance of improving skill Levels in England and outlined a range of activities required to enable Government to meet these challenges, including significantly improving the Apprenticeships experience for employers and individuals and removing bureaucracy in the system. The new National Apprenticeship Service (NAS) will be the organisation which will take end-to-end responsibility for Apprenticeships. Via a fieldforce working with employers, learners, partners and stakeholders to raise the profile and uptake of Apprenticeships, it will aim to achieve the significant expansion of the Apprenticeship programme first described in the 2006 Leitch Review of Skills. A National Delivery plan has been developed to manage the change process associated with establishing this new organisation and approach. Whilst the performance of the Apprenticeship programme is strong – with the number of Apprenticeship completions now running at record Levels and 2007/08 seeing an increase nationally in starts of around 22% - the Government aspiration is to double the size of the programme to 400,000 apprenticeships, with 1 in 5 young people engaged, by 2020. Apprenticeships are seen as one of the ways in which young people will be encouraged to stay in learning once the participation leaving age is extended to 17 in 2013 and to 18 in 2015. As part of this vision, legislation is in hand to create an ‘entitlement’ to an Apprenticeship. The NAS will be fully functional by April 2009, initially within the LSC, although ultimately sitting within the Skills Funding Agency from 2010. It will have a direct relationship and funding arrangement with both DCSF and DIUS and will work with Local Authorities to secure Apprenticeship provision in line with their 14-19 Commissioning Plans and local/regional patterns of employer and learner demand. 8
  9. 9. In September 2007, as part of these proposals, the Prime Minister announced the intention to create a country-wide vacancy matching service (VMS) for Apprenticeships. The VMS will be ready for the promotion of Apprenticeship vacancies by providers and employers in December 2008 and will be available for use by potential applicants from January 2009. 1.6 Qualifications Credit Framework (QCF) / Foundation Learning Tier The UK Qualifications and Reform Programme have been set to create a system that is more responsive to the demands of employers and learners. It consists of several major areas of reform; the sector qualification reform (led by Sector Skills Councils) the development of a unit based credit and qualification framework (led by QCA) and planning, funding and delivery systems to support the reform (led by the LSC). The new Qualifications and Credit Framework (QCF) is a new framework for recognising and accrediting qualifications in England, Wales and Northern Ireland. The framework is at the heart of a major reform of the vocational qualifications system designed to make the whole system simpler to understand and use and more inclusive. It will be operational outside of a test and trial basis for 2008/09. It is anticipated that by 2010 the QCF will be complete and will replace the current National Qualifications Framework (NQF), during the three year transition period the LSC will fund a mix of QCF and NQF provision with an increasing emphasis on delivery and shift to QCF provision as it becomes available. Providers need to be aware that the LSC will not be expecting to fund any new enrolments on provision outside of the QCF from 1st August 2010. As part of the implementation of UK VQRP, the LSC is also working to better align the adult learner-responsive and employer-responsive funding models within the UK VQRP, part of which involves working trials of unit funding and ensuring current performance measures can better support flexible patterns of achievement in the QCF. The Foundation Learning Tier (FLT) is a programme of work to develop a more focused and strategic approach to Entry Level and Level 1 for learners aged 14 and over within the QCF in order to raise participation, achievement and progression amongst learners at these Levels. Progression Pathways within the Foundation Learning Tier will be the main organising structure, consisting of three distinct components, Vocational knowledge, skills and understanding and functional skills and personal and social development. These components are supported by a wrap around of information, advice and guidance, effective initial assessment, comprehensive ongoing review and provider collaboration. Pathways are specifically designed to promote progression to Level 2 and beyond or to other positive destinations as well as helping learners to achieve qualifications at Entry Level and Level 1 from the QCF. Progression pathways will replace current provision such as Entry to Employment (E2E) Foundation Learning in FE and First Steps Provision. Provision for those with Learning Difficulties and/or disabilities (LLDD) is within the scope of the programme. The first year when Progression Pathways become an established part of mainstream provision will be 2010/11. We will expect to see a significant increase in the number of providers delivering progression pathways and a substantial downturn in existing provision for E2E and First Steps in 2009/10 in preparation for full implementation in 2010/11. The full implementation in 2010/11 will see the 9
  10. 10. implementation of a complete set of pathways and all legacy provision replaced by Progression Pathways. 1.7 Integrating Employment and Skills The expression “Integrated Employment and Skills” (IES) was first used in the Leitch report in 2006 as a call on the separate parts of the public sector responsible for skills and employment to work together to deliver an integrated service to the unemployed and low skilled. The two key agencies charged with bringing about this integration are Jobcentre Plus and the LSC. IES is not a specific programme of support, a funding pot, or a new offer to unemployed adults, but it is being used increasingly as a “wrap around” term for a wide range of initiatives and programmes emerging from the Department for Work and Pensions and the Department for Innovation, Universities and Skills. IES is an aspiration for a more joined-up offer to the unemployed which will avoid the current risk that arises when adults move from being unemployed into work and often gain a job but do not continue training or learning. It recognises that if the cycle of unemployment, to poorly paid low skilled work, then back to unemployment is to be broken, training solutions need to be developed to bridge periods of unemployment and employment. This in turn requires that JCP and the LSC programmes of support for the workless must become seamless at the point of delivery. Getting people into work has moved up the political agenda with greater ministerial attention paid to this area. A number of documents and papers including, “Ready to Work, Skilled for Work” and “Opportunity, employment and Progression: Making Skills Work” both published jointly by DIUS and DWP, in recent months, indicating Governments’ direction of travel. “Work Skills” published in June 2008 provided us with an ambitious target for 2010 of helping over 100,000 people to gain sustainable employment and achieve a recognised qualification. The UK Commission for Employment and Skills in its 2010 review of the integrated employment and skills system will consider whether more needs to be done to put employers at its core. Skills Accounts are being developed during 2008/09 and 2009/10 for full rollout from 2010 through to 2015. They will be one part of the interface that individual learners have with the integrated skills and employment system. In 2009/10 there will be a national trial of Skills Accounts in all nine regions of England. This will involve: • Opening up online access to Skills Accounts across the country so that individuals within all regions can open and access Accounts; • A limited number of colleges being identified to open accounts for individuals; • All colleges in the region accepting Skills Account vouchers as the trigger for course enrolment; • Other partners opening accounts for individuals they engage with – face to face nextstep advice services, the national telephone advice service; • Making Skills Accounts available to Jobcentre Plus clients as part of the integration of employment and skills services 10
  11. 11. 1.8 Adult Advancement and Careers Service The Government’s intention to establish an adult advancement and careers service in England by autumn 2010, working in close partnership with Jobcentre Plus, was set out in Opportunity, Employment and Progression: making skills work (November 2007). “Work Skills” (June 2008), also set out how the new service, together with Jobcentre Plus, would play a key role in supporting the integration of welfare and skills services across the country, alongside Skills Accounts (an online personalised account for individual learners). The adult advancement and careers service will be a single service, available to everyone, shaped by local partnerships and innovative ways of working. In each local area, partnerships of advice services and providers will deliver advice to individuals that bring together everything they need to know to advance in work and life. The partnerships will operate as a flexible network, sharing information and expertise to deliver a personalised offer of advice and ongoing support. Colleges – which already provide advice and support and act as powerful engines of social mobility – will be part of these arrangements. And together with national web and phone services, and appropriate referral arrangements through to local services, these partnerships will form the new adult advancement and careers service. The advancement service will provide a universal offer – for all those in and out of work – and will also provide targeted support focusing on those with specific barriers to getting into and on in work. The service will work with Train to Gain skills brokers to offer advice to those in work, building on the new qualifications system we are creating to allow people to study for units and credits. And it will also be seamlessly integrated with support from Jobcentre Plus for those seeking work, as set out in Work Skills in June 2008. People looking for a job – whether long-term unemployed or those suddenly made redundant – need comprehensive support to help them improve their skills or acquire new ones, and move into sustainable employment. In addition, Skills Accounts will be rolled out as an integral part of the new service, to ensure that the personalisation and integration of advice is mirrored by the personalisation and integration of funding support for skills, giving people greater control over how Government funding is used to deliver training. Skills Accounts will give people: These innovative new policies will be brought together to create a new adult advancement and careers service for England. 1.9 Train to Gain In August 2006 the Train to Gain service was launched nationally by the Learning and Skills Council (LSC) to help businesses get the training they need to improve their productivity and competitiveness. The programme is at the very heart of the government Skills Strategy and it contributes directly to the achievement of Public Service Agreement (PSA) targets. Train to Gain offers: • A commitment to jointly invest in training, by employers and government • Access to free and quality assured advice in identifying organisational skills needs • Assistance to identify high quality training and qualification solutions which meet employer needs, including those paid for in part/full by the employer 11
  12. 12. • Access to Government subsidised training and qualifications for employers and their employees • Available to all employers, prioritising those who do not currently train The ‘Train to Gain Plan for Growth’ published by the Learning and Skills Council in November 2007 set out a series of evolutionary changes to ensure that Train to Gain evolved and continued to respond to the feedback from employers and consequently remained on track to become a world class service across all parts of the country and provided a more flexible, responsive and inclusive service. Changes included making volunteers and the self employed eligible for Train to Gain support; positioning Apprenticeships firmly within the Train to Gain ‘offer’; better supporting those wishing to return to work; and specific ‘sectoral compacts’ to drive up demand in individual sectors. The Plan included details of the actions and investments that were required as well as the impact on the numbers of employers and employees who would be up- skilled. Train to Gain A Plan for Growth November 2007- July 2011 All businesses now have access to: Full funding for: • Basic skills support at all levels • First full level 2 qualifications (equivalent to 5 GCSEs) and • First Level 3 (equivalent to 2 A-levels) for 19-25 year olds • Some first Level 4 for 19-25 year olds who do not already have a Level 3 • Some funding for people who already have qualifications at Level 2 and 3 and would like to take another. Shared investment between the employer and Government for: • English for Speakers of Other Languages qualifications at all levels • Apprenticeships • For businesses with between 10 and 250 employees, support towards the costs of leadership and management development In addition, the Train to Gain service continues to be able to help businesses source full cost, higher level and bespoke training support. Support tailored to meet sector specific needs The LSC recognises the particular needs of different sectors, and that is why DIUS, LSC and Sector Skills Councils have worked together to tailor and enhance Train to Gain through sector compacts. At 10 November 2008, ten compacts have been agreed and more are expected to follow over the following few months. Businesses have access to a range of benefits including: • Tailored, sector-specific advice from Skills Brokers • Joint Sector Skills Council-LSC marketing about the specific skills offer to employers in specific sectors, with information about qualification routes to meet industry standards • For businesses with more than 250 employees, a full subsidy is available echoing the offer to smaller, private sector businesses at Level 2 and partially subsidised at Level 3 for people who are already skilled at that level for qualifications that SSC’s say are the most important to the sector. 12
  13. 13. The Skills Pledge The Skills Pledge, which was launched in June 2007 has helped thousands of companies get the skills they need to succeed. The Skills Pledge is a voluntary, public commitment by the leadership of a company or organisation to support all its employees to develop their basic skills, including literacy and numeracy, and work towards relevant, valuable qualifications to at least Level 2. It provides an opportunity for the leaders of an organisation to show publicly the importance they place on investing in the skills of their people. The Skills Pledge is open to all employers of all sizes in the private, public and voluntary sectors. The LSC’s Train to Gain service plays a key role in the Skills Pledge, providing employers with a free and impartial brokerage system to identify their skills needs and identify routes for them to access work based training. Future enhancements to support small and medium sized businesses In October 2008 as part of a Government-wide package, the support available through Train to Gain has been tailored and enhanced to help small and medium sized, private sector, businesses get the help they need to survive and prosper during tougher economic times. In addition to the main Train to Gain offer, small and medium sized, private sector, businesses can also get support for: • From January 2009 – Smaller, focused, training programmes in subjects demanded by businesses including: business improvement; business systems and processes; team working and communications; sales and marketing; IT User, IT support; customer service; new product design; finance and credit; cash flow and profit management and risk management. • From January 2009 – Fully funded Level 2 qualifications and partially subsidised Level 3 qualifications, regardless of whether the employee already has a qualification at this level. • From November 2008 – Funding for leadership and management training extended to businesses with 5-10 employees. In addition, businesses with less than 50 employees can still receive a contribution to wage costs to cover the cost of time off to train. Full details on these new flexibilities will be available by the end of November. 1.10 National Skills Academies Specialisation Agenda The Leitch recommendations identified the importance of delivering “demand led” provision to meet the current and future needs of employers seeking to remain competitive in a global economy. To achieve this and to ensure a suitable qualified workforce the Learning and Skills Council has developed a range of measures both regionally and nationally to better engage with employers. 13
  14. 14. National Skills Academies are employer-led centres of excellence. They deliver the skills required by key sectors and sub-sectors of the economy, contributing to world- class competitiveness through world-class skills. Nationally there are now 12 NSAs in operation with a further 4 which were approved in October 2008. It is planned to have a NSA for each major sector of the economy. The following National Skills Academies are active in the West Midlands region • Construction • Financial Services • Manufacturing • Food and drink manufacturing • Hospitality • Process Industries Levels of activity vary depending on their maturity but all are engaging with employers and working with providers to develop curriculum to meet their needs. Specialist Provider Networks (SPNs) Nine Specialist Provider Networks operate in the region reflecting the regions priority sectors. Their main purpose is to improve the quality of provision, share best practice and to ensure the network understands and meets the needs of their sector. Membership includes training providers, NSAs, Sector Skills Councils, the brokerage service, Business Link and any other organizations with a key role to play in the sector. The Networks key focus is on improving apprenticeships, Train to Gain and the Integrated Employment and Skills service. 1.11 Sub National Review In July 2007, the Government published its review of sub-national economic development and regeneration (sometimes referred to as the sub-national review or SNR). The review, which is currently being finalised following consultation, focuses on how to strengthen economic performance in regions, cities and localities throughout the country, as well as tackling persistent pockets of deprivation. The sub-national review is based on the principles of managing policy at the right spatial Level, ensuring clarity of objectives, and enabling places to reach their potential. In line with these principles, its final report outlined the Government’s plans to refocus both powers and responsibilities below the national Level to support its objectives to encourage economic growth and tackle deprivation at every Level, by: • empowering all local authorities to promote economic development and neighbourhood renewal; • supporting local authorities to work together at the sub-regional Level; • strengthening the regional tier; and • reforming central government’s relations with regions and localities. The review argues that the key challenge for government is to ensure that all regions and localities have the tools and incentives to improve their economic performance and reduce spatial disparities. To meet this challenge, the role of local authorities in economic development and neighbourhood renewal needs to be strengthened further, with more devolution to this Level and with other tiers of government providing support to enable local authorities to fulfil this role. 14
  15. 15. The review outlines the Government's plans to refocus both powers and responsibilities to support its objectives to encourage economic growth and tackle deprivation at every Level, by: • empowering all local authorities to promote economic development and neighbourhood renewal, with greater flexibility, stronger partnership working and cooperation from other agencies, and better incentives for achieving economic growth and for ensuring disadvantaged areas benefit from and contribute to economic development; • a differential approach that supports local authorities in all areas to work together more effectively where they so wish, for example through pooling resources, responsibilities and targets at the sub-regional Level, and supporting the development of robust decision-making at this Level; • streamlining the regional tier outside London, based on more effective and accountable RDAs which would be responsible, working closely with local authorities, for preparing a single strategy for the region. RDAs will also provide support to local authorities and sub-regions in delivery of sustainable economic development, with stronger performance management; and • sharpening focus of central government departments through clearer objectives and responsibilities to provide more effective support and better coordination for economic development and neighbourhood renewal at all spatial Levels. 15
  16. 16. 2 The Demand for Skills Skills remain at the centre of the economic and social policy agenda and an integral part of national, regional and sub-regional strategies to develop the economy and tackle disadvantage and exclusion. This chapter considers the regional labour market and the factors that will influence the demand for skills in the West Midlands. The region’s economic performance and future prospects will be examined along with employers and individuals investment in skills. Labour market participation, the changing regional demography and barriers to engagement in employment and learning will also be a key focus in order to identify implications for future education, training and skills delivery. This analysis draws together evidence from the latest research studies and data available in order to form a strategic overview. A comprehensive review of skills and labour market issues is available within the West Midlands Skills Assessment1 produced by the West Midlands Regional Observatory, an update of which is due to be published in November. The Skills Assessment also provides sub-regional area profiles for the LSC Area offices: Birmingham and Solihull, Coventry and Warwickshire, Herefordshire and Worcestershire and Shropshire, Staffordshire and The Black Country. 2.1 Regional Economy The performance of the West Midlands economy has historically lagged behind many other regions. Analysis within the West Midlands Economic Strategy2, suggests there is a £10 billion ‘output gap’ in the region (compared to what Gross Value Added (GVA)3 would be in the region if it produced wealth at the current national average per head of population) The latest data on GVA per head, GVA per employee, employment rates and earnings shows that the region continues to lag behind the national average. While the number of people in employment in the region increased by 3% between 2001 and 2006 this was the third slowest growth in England. A worsening economic climate, moreover, means that improvements over the next few years are likely to continue to be challenging. A recent regional publication4 noted that the twin impacts of tighter credit conditions and increases in global commodity prices mean we can expect difficult times for the UK economy in the coming months. This will affect each region in different ways in line with their differing economies. The West Midlands and other regional economies will need to prepare themselves for a more challenging economic climate. With national commentators and the government acknowledging that the country is now entering a recession, there will undoubtedly be an impact on the West Midlands economy and this will have specific implications for education and training. In particular, it will be important that employers continue to invest in training and offer Apprenticeships and are supported to do so through the tougher economic times. Over the last 5 years or so there has been a significant shift in the balance of employment from manufacturing to services in the West Midlands. There has been significant new job creation in private sector services such as business and 1 West Midlands Skills Assessment, WMRO, November 2007 (update published November 2008) 2 Connecting to success West Midlands Economic Strategy 3 GVA measures the contribution to the economy of each individual producer, industry or sector in the United Kingdom 4 The West Midlands Economy – changing economic circumstances. AWM, HM treasury, BERR 16
  17. 17. professional services, retail and hotels and catering and in public sector services such as health and social care, education and public administration. However, this has been offset by the shedding of jobs in sectors that have historically dominated the regional economy such as engineering (and in motor vehicles and mechanical and electrical engineering in particular) and in other manufacturing industries such as ceramics, clothing and textiles. The shift in the balance of demand for labour from manufacturing to services is set to continue over the coming decade. As mentioned the current economic downturn, the unprecedented turbulence in global financial markets and looming recession have created an uncertain picture for the economy over the next few years. Looking over the longer term, economic forecasts5 show employment Levels in the region are likely to grow over the next decade. Just over 100,000 new jobs in region are forecast by 2017, along with more than a million due to ‘replacement demand’ created by retirements, job moves and other ‘turnover’ effects. Chart A: Employment Change 2007 to 2017 by Occupation Managers and Senior Officials Professional occupations Associate Professional and Technical Administrative and Secretarial Skilled Trades Occupations Personal Service Occupations Sales and Customer Service Occupations Machine and Transport Operatives Net New Jobs Replacement Demands Elementary Occupations -50 0 50 100 150 200 250 Employment Change (000s) Source: Working Future III In terms of the net new jobs forecast to be created between 2007 and 2017 more than half are expected to be in higher skilled managerial, professional, associate professional and technical occupations, whilst a net decline is forecast in operative and unskilled ‘elementary’ jobs as well as some skilled trade occupations and administrative and secretarial jobs. When factors of replacement demand are taken into consideration however, it is clear that there will be demand for labour at every occupational Level. 5 Working Futures III, IER 17
  18. 18. At a sectoral Level, the focus for employment growth is expected to be in business and professional services, health and social care, wholesale and retail distribution and hotels and catering. Further job shedding meanwhile, is expected in engineering, other manufacturing, and agriculture, but again with replacement demand ensuring a requirement for labour in those sectors over the next decade or so. 2.2 Overall Skills Performance It is notable that, despite the relatively modest improvement in the region’s economic performance in recent years the Regional Skills Partnership Skills Performance Index, which is a summary measure based on a range of indicators of employers’ and individuals’ investment in skills, has shown a strong upward trend closing the gap with the national average as follows: • In 2003, there was a 6 percentage point gap between skills performance in the West Midlands and England. • By 2005, this gap had narrowed to 4 percentage points and closed further to less than 1 percentage point in 2007. • While the performance of the West Midlands was the worst in England in 2005, by 2007 the region had moved up to 6th in the regional performance table. Chart B: Skills Performance Index Overall Skills Performance Index: Regional Comparison 2007 England Average London South East South West North East North West West Midlands East Yorkshire & Humber East Midlands 30 40 50 60 70 Overall Skills Index Source: WMRO West Midlands Regional Observatory 2008 The rise has been mostly driven by demand side improvements, with more employers investing in training and fewer feeling that their staff had skill gaps. At the same time increasing numbers of individuals are taking the initiative and acquiring new skills and qualifications and there has been a sharp fall in the incidence of skill shortages. 18
  19. 19. 2.3 Qualification Attainment Young People Section 3.1 provides detailed insight into the attainment of young people in the region. In terms of those achieving a Level 2 by the age qualification 19, the West Midlands has improved by five percentage points since 2004/05 to stand at 72% in 2006/07, which is below the national average of 74%. The proportion of those achieving a Level 3 or above has also increased from 43% to 46% in 2006/07, but also remains below the national average of 48%. Adults The proportion of adults acquiring qualifications is also improving; however performance in the West Midlands continues to compare relatively poorly with other regions. According to the Labour Force Survey (LFS) 2007 quarter 4, the region still had the highest proportion of those with no qualifications in the country, but was ranked 8th out of the 9 regions for those with a Level 2 and above, 7th for those with a Level 3 and above and 6th for those with a Level 4 and above. At a local authority Level, low Levels of qualification attainment tend to be concentrated in some of the region’s urban centres (23% in Stoke-on-Trent had no formal qualifications in 2007 and the figure was 25% in Walsall, 26% in Sandwell and some 30% in Wolverhampton). Table 1: Working Age (19-59/64) Qualification Levels (%) No Level 4+ Level 3+ Level 2+ Qualifications Birmingham and Solihull 27% 46% 64% 18% Birmingham 27% 44% 63% 19% Solihull 32% 53% 69% 13% Coventry and Warwickshire 31% 52% 72% 12% Coventry 26% 47% 65% 16% Warwickshire 33% 54% 76% 9% Hereford. and Worcs. 30% 50% 71% 12% Herefordshire 30% 51% 70% 13% Worcestershire 30% 50% 71% 11% Shropshire 30% 49% 71% 12% Shropshire 35% 52% 72% 11% Telford And Wrekin 24% 44% 69% 12% Staffordshire 25% 43% 64% 17% Staffordshire 28% 45% 66% 15% Stoke-On-Trent 17% 35% 58% 23% The Black Country 19% 35% 57% 24% Dudley 22% 42% 65% 17% Sandwell 15% 29% 52% 26% Walsall 18% 36% 56% 25% Wolverhampton 20% 34% 54% 30% West Midlands 26% 45% 65% 17% England 30% 49% 69% 12% Source: ONS, Annual Population Survey 2007 Qualification Levels tend to be lower for certain groups, among older people (24% for the over 50s have no qualification) and minority ethnic communities (25% for Asian and 29% for ‘other’ minority groups have no qualifications). 19
  20. 20. It is clear that qualifications Levels have an impact on an individual’s labour market participation and opportunities; the employment rate for those with no qualifications is 47% in the West Midlands compared to regional average of 73%. Qualification Levels vary by sector, other manufacturing, wholesale and retail and transport have the highest proportions without a Level 2 within their workforce. In terms of the share of those in work without a Level 2, 17% work within wholesale and retail with business and professional services, engineering, other manufacturing and transport, each accounting for 11% of those without a Level 2 or above qualification. Chart C: Qualification Levels of the workforce by sector – those without a Level 2 other Manufacturing Wholesale and Retail Transport Agriculture etc Miscellaneous services Engineering Hotels and restaurants Construction Business and professional services Education Electricty, gas and water Health and social work % share of the whole workforce in the West Midlands without a level 2 or above Public administration % without level 2 or above in the sector ICT and Telecommunications 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Source: ONS, LFS Oct-Dec 2007 Improving qualification Levels remains a key challenge highlighted in the Regional Skills Action Plan. Research undertaken6 to understand the challenges of meeting the Leitch ambitions within the region reveals that nearly 2,000 more young people need to achieve 5 or more GCSEs at A*-C each year and more than 100,000 working age adults with no qualifications need to be supported in participating in education and training in order to close the gap with the national average. 6 Leitch Research - Meeting the Leitch targets, WMRO, 2008 20
  21. 21. 2.4 Employer Skills Issues The National Employer Skills Survey 2007 was commissioned by the Learning and Skills Council (LSC) in partnership with the Department for Innovation, Universities and Skills (DIUS) and the Sector Skills Development Agency (SSDA), to provide detailed information on the incidence, extent and nature of skills problems facing employers in England. It also explores current employer engagement activities and expenditure in relation to training. The survey involved over 79,000 telephone interviews with employers, undertaken from April to July 2007, with just over 8,000 conducted in the West Midlands. This section provides a summary of some of the key findings from NESS for the region. Vacancies, Recruitment and Skills Shortages Recruitment difficulties and skills related difficulties continue to affect a small, but persistent minority of employers. In 2007, 6% of employers in the West Midlands had hard-to-fill vacancies and 3% of employers attributed recruitment problems, to applicants lacking the skills sought. Skills shortage vacancies are notably above average in agriculture, engineering and manufacturing, construction and ICT. Skill shortages among applicants are also more prevalent in some occupations than others; in particular they are above average in skilled trades, personal service positions and professional occupations . Chart D: Skills shortages by sector in the West Midlands The proportion of vacancies which are unprompted skills shortage vacancies West Midlands Average Agriculture etc. Engineering Other manufacturing Electricity, gas and water Construction Wholesale and retail Hotels and restaurants Transport Business and professional services ICT and telecoms Public administration Education Health and social work Miscellaneous services 0% 5% 10% 15% 20% 25% 30% 35% Source: NESS 2007 21
  22. 22. Skills Gaps Overall, fewer employers in the West Midlands describe any of their staff as lacking proficiency in 2007 (5%) than did so in 2003. In 2003, almost a quarter of employers (24 %) had some staff that were not fully proficient. In 2007 this had fallen to 14%. Skills gaps as a proportion of all staff employed are higher in engineering, manufacturing, wholesale and retail and hotels and restaurants. Chart E: Skills gaps by sector in the West Midlands The proportion of staff not fully proficient West Midlands Average Agriculture etc. Engineering Other manufacturing Electricity, gas and water Construction Wholesale and retail Hotels and restaurants Transport Business and professional services ICT and telecoms Public administration Education Health and social work Miscellaneous services 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Source: NESS 2007 As in previous years, lack of experience of staff being recently recruited remains by far the most commonly cited cause of skill gaps – with 68% being attributed to this cause. The second most common cause of skill gaps in the West Midlands, is staff lacking motivation (28%). Failure to train and develop staff, the inability of workforce to keep up with change, high staff turnover and recruitment problems were the next four most common causes of skill gaps. Training and Workforce Development Just under two-thirds (65%) of West Midlands employers had arranged or funded any training or development for any of their workforce in the previous 12 months, an increase of 5% since 2005. Despite this increase, the proportion of employers providing training remains below the national average. Employers in the West Midlands spent £3.7 billion on training in the 12 months prior to being surveyed, in comparison to £2.8 billion in 2005. The West Midlands accounts for just over 9% of national training expenditure, which shows only a slight increase on the NESS 2005 figure. The average annual employer investment in training is equivalent to £1,575 per employee in the workforce (up from £1,224 in 2005) and £2,450 per person trained (up from £2,215 in 2005). 22
  23. 23. The likelihood of training varied very widely by sector. Nine out of every ten employers in education provided training (92%). The figure is also high for public administration (87%), health and social work (85%) and electricity, gas and water (84%). Conversely, just over half of employers (52%) in agriculture provided training, with the figure also low for other manufacturing (58%) and construction (56%). Apprenticeships Overall 12% of employers in the region had staff on apprenticeships within the last 12 months, inline with the national average according to NESS 07. Employers most likely to offer training via Apprenticeship Frameworks were in education, engineering and construction. Table x.x highlights some of the reasons why employers in the West Midlands offer or do not offer apprenticeships. Table 2: Reasons for and against offering apprenticeships Reasons why employers offer apprenticeships Reasons for not offering apprenticeships We can train them in our way of doing things All staff fully trained (21%) (33%) Not relevant / applicable to our business Training the workforce of the future (27%) (12%) We find it difficult to recruit staff with the skills Our business is too small (10%) we need (17%) We don’t (the job doesn’t) require staff to be It’s the way I trained / got an opportunity highly skilled (9%) (12%) We prefer to recruit fully-trained / fully- Don’t know / no particular reasons (9%) qualified recruits (7%) Helpful in recruiting staff / makes us more We don’t take on young people (6%) attractive to potential recruits (8%) No apprenticeships available for our industry Need young workers in an ageing workforce / sector / specialism (4%) (7%) Not worth my time for the money we get It’s the best way to learn (5%) (4%) To give young people a start (4%) No vacancies / not taking on new staff (3%) Gives us free / cheap trial of staff (3%) Don’t know enough about them / what we’d It is mutually beneficial to both us and the have to do (3%) apprentice (3%) We prefer to train in-house (3%) I get funding if I offer them (2%) Financial constraints / training is too expensive (3%) Lack of resources / facilities (2%) No young people have applied (2%) Source: NESS 2007 23
  24. 24. 2.5 Demographic Changes and the Supply of Skills It will be important for employers, skills providers and other regional partners to respond to the significant changes in the region’s demographic profile that are taking place, which are having a significant impact on the available supply of labour and skills. The region’s working age population is ageing, especially in rural areas. Meanwhile, in many of the region’s urban areas the population is becoming younger and more ethnically diverse. Chart F: Net change in the working age population of the West Midlands between 2006 and 2031 80 70 60 50 40 thousands 30 20 10 0 -10 -20 -30 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 ONS 2006 Mid-year population estimates As a result the profile of the workforce in key sectors of the regional economy varies significantly by age and ethnicity, with significant implications for the likely future supply of labour and skills: • Both the hotels and catering and wholesale and retail sectors have a predominantly young workforce in 2006 (Labour Force Survey). As in many parts of the region the population is ageing it will be important for employers to widen their recruitment to include older people. While many retire early a significant number have done so involuntarily and represent a valuable, hitherto under-valued source of labour and skills. • Conversely a number of sectors, notably education, public administration, health and social work and engineering have an ageing workforce with a significant percentage of staff aged 45+. Many are set to retire in the next few years, taking their skills and experience with them and appropriate recruitment, training and succession planning policies will be vital. • While the hotels and catering, transport, health and social work sectors employ a particularly significant percentage of people from minority ethnic groups the percentage is much lower in sectors such as education and construction. Changing demographics, particularly in urban areas, mean that employers will need to increasingly target them in their recruitment if they are to meet their future employment needs. 24
  25. 25. Older Workers Acknowledging this changing demographic profile, the LSC in the West Midlands commissioned research to better understand labour market and training experiences of older workers. Key findings include: • Older workers expressed a variety of incentives and motivations to employment and an even wider variety of barriers to employment or career development displaying the heterogeneity of this group. • The main motivation underpinning respondents’ requirement for work was the need for money or financial security. However, a number of other motivations for work were expressed by respondents including: boredom; socialising; a sense of purpose; progression; suitable hours; stress reduction (for some less demanding jobs). • Many of the older worker respondents, both employed and unemployed, were doubtful as to the efficacy of anti-age discrimination policies and the law relating to recruitment. • Many of the advantages of employing older workers listed by employers matched those mentioned by older workers themselves. Advantages of older workers perceived by employers included: personal qualities, such as loyalty, experience and reliability; existing skills including communication and time management skills; and practical advantages such as retention, less training, fewer family and childcare commitments. • In terms of practice related to anti-age discrimination legislation and policies, just over a quarter of employers said that the legislation had not made an impact ‘on the ground’. In some cases, this was because they believed they already had good practice in place, in others they were rather vague about the implications of the anti-age discrimination law. • Insofar as the current research has located a hidden or latent pool of skills among older workers, beyond the unemployed, there are many who consider voluntary work post-retirement. However, luring this cohort back into the paid workforce presents conundra: first it may render the Voluntary sector short of skills and labour; second, this group may have chosen voluntary work over paid work so may not present themselves available for paid work. • A variety of motivations for training were put forward by older worker respondents. Perceived barriers to training and learning including: employer attitudes, cost, time and transport (in rural areas). Barriers to training older workers mentioned by employers were similar: older workers’ attitudes, time and cost. • It is one of the main findings of this research, that there was low awareness and little or no experience of careers information, advice and guidance (IAG) for adults across all groups of older workers. • While awareness and experience of IAG was low, members of several groups expressed a need for the services that IAG can provide, including advice and support with interview technique, help with CVs and careers guidance. • A variety of sources of IAG were suggested by respondents. learndirect was mentioned by only one respondent in this context, and nextstep by no-one. The Job Centre was mentioned by several respondents across different groups, both those who were working and workless. However, perceptions of Job Centres were generally negative, especially by older workers who were unemployed. 25
  26. 26. Migrant Workers The growth in the size of the region’s minority ethnic communities has been given further impetus by the significant influx of migrant workers into the region in recent years, principally from Poland and other eastern European countries and from India, the Philippines, China, South Africa and Zimbabwe7. The increase in migrant workers numbers have been stark in rural areas, particularly areas in the south of the region such as Herefordshire and Stratford. Migrant workers tend to be employed in sectors where labour demand is buoyant, notably agriculture, hotels and restaurants, manufacturing generally (and food processing industries in particular), transport and health services. Common occupations are nurses and other healthcare related occupations, chefs and lower skilled occupations such as process operatives in factories, farm workers, warehouse operatives and packers. A significant proportion of migrants taking jobs in the UK substantially below their skills and qualification Levels. Poor English skills and problems with getting qualification recognised in the UK were the main reasons cited for this. Whilst the latest data shows the West Midlands continues to be a key centre for European migration in terms of National Insurance Registrations, there is little data on the number of migrants who have left the UK to return to work in their origin country. National research published by IPPR8 included a survey of Polish migrants who had returned to Poland after a spell in the UK. Key findings mentioned that although around 1 million A8 migrant workers have arrived in the UK since 2004, significantly, it estimated that around half of these have already left the UK and that there were signs that A8 migration to the UK had begun to slow. 7 The Economic Impact of Migrant Workers on the West Midlands, IER 2007 8 Institute for Public Policy Research (IPPR) – Floodgates or Turnstiles? Post-EU Enlargement Migration Flows to (and from) the UK, April 2008 26
  27. 27. 2.6 Trends in Labour Market Participation This section seeks to give an overview of the key patterns in labour market participation within the West Midlands region, both in terms of the geographic distribution of labour market participation and marginalisation as well as how certain groups are affected. The way in which learning can have an impact on job seekers allowance claimants is also examined. 2.6.1 Deprivation The map below shows that there is a distinct pattern in the concentrations of deprivation in West Midlands. Large parts of local authority districts, particularly in the urban centres, fall within the 10% most deprived nationally. It is also worth noting the pockets of deprivation within the Shire counties. Map 1 Indices of Multiple Deprivation (IMD) 2007 The Indices of Deprivation looks at a range of measures including education and skills indicators. Areas of deprivation remain a challenge for Integrated Employment and Skills activity. Marginalisation from the labour market is often interwoven with far ranging issues of multi-deprivation. 27
  28. 28. 2.6.2 Worklessness The impact of the current economic downturn is starting to be shown in official statistics. Using the seasonally adjusted job seeker allowance claimant rate, the West Midlands has seen a rise from 2.9% in January 2008 to 3.3% in September 2008, mirroring the national rise from 2.1% to 2.5% over the same period. Chart G: Proportion of resident working age population claiming Job Seekers Allowance, West Midlands and England 4.5 Englands 4.0 West Midlands 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Source: ONS, Seasonally Adjusted Claimant Count (September 1998 to September 2008) The region’s employment rate fell by almost a full percentage point from 73.7% in 2002 to 72.9% in 2007. By contrast the rate for England as a whole at 74.3% has remained fairly flat over this period and in some regions there has been a rise. Table 3 Working age Population (19-59/64) Employment Status ILO Total working In employment unemployed* Inactive age population Birmingham 66% 6% 28% 596,080 Solihull 76% 3% 21% 118,625 Dudley 75% 3% 22% 183,756 Sandwell 67% 5% 28% 167,270 Walsall 71% 6% 23% 146,648 Wolverhampton 67% 6% 28% 140,371 Coventry 74% 4% 22% 189,978 Warwickshire 79% 3% 17% 316,139 Herefordshire 78% 2% 20% 101,073 Worcestershire 78% 3% 19% 333,348 Shropshire 77% 2% 21% 165,898 Telford and Wrekin 73% 4% 23% 99,060 Staffordshire 77% 3% 20% 498,600 Stoke-on-Trent 70% 4% 26% 145,934 West Midlands 73% 4% 23% 3,202,780 Source: APS 2007 *ILO (International Labour Organisation) definition of unemployment 28
  29. 29. It is particularly notable that employment rates are low in Birmingham, Sandwell and Wolverhampton. This suggests that a significant proportion of local people are highly marginalised in the labour market. Indeed in all of these areas many wards are among the most deprived 10% nationally. Employment rates are also lower among older people (a rate of 66% for the over 50s compares with 80% for 30-49 year olds) and people from minority ethnic communities (the rate is just 45% for the Pakistani and Bangladeshi community, 52% for other ethnic communities and 56% for Black African and Black other communities. The economically inactive group will cover a range of individuals including carers and full time students. A growing proportion of the group are those in receipt of ill health and income related benefits. In February 2008 there were just over 51,000 people in the region claiming Incapacity Benefit (IB) or Disability Living Allowance (DLA), this equates to 1.6% of the resident working age population which is slightly above the national average of 1.3%. The graph below shows that the receipt of these benefits is particularly high for older age groups. Chart H: Benefit Claimants (IB and DLA) by age, West Midlands 9,000 Male Female 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 aged under 25 aged 25-34 aged 35-44 aged 45-54 aged 55-59 aged 60-64 Source: ONS, DWP benefit claimants, February 2008 29
  30. 30. 2.6.3 Learning and Employability The LSC seeks to understand the effect that completing an LSC funded qualification has on an individual’s employment prospects and hence the return on investment for the economy, as well as effects upon ‘softer’ skills and outcomes. To this end the main aim of some research completed this year, was to understand what links and impact there may be on the employability of individuals living in the West Midlands City Region having undertaken an FE course. This research focused on learners who were not in employment at the start of the course and specifically those claiming income-related benefits and Jobseeker’s Allowance. Encouragingly the key findings in the West Midlands City Region showed evidence of the positive contribution learning can have on labour market opportunities: • There was a marked drop in the proportion of learners who were receiving workless benefits after their course; while 90% were in receipt of benefits before the course, only 49% were claiming after it had ended. • Slightly more learners, 41% in the West Midlands City Region, moved off benefits after learning compared to 38 % nationally. Furthermore, a higher proportion of learners in the West Midlands City Region moved from benefits and into work after the end of their course than those in the national survey. • The proportion of learners who moved into work after completing their course was the same as in the national survey • A higher proportion of learners in the West Midlands City Region felt learning had improved their job outcome and enabled them to enter a job with more responsibilities and to gain a better paid job than in the national survey. 2.6.4 Low Level skills As mentioned in section 2.3 qualification Levels in the region as a whole are lower than national averages. Attainment of a Level 2 qualification is increasingly viewed as a required Level for basic employability. Attainment of Level 2 qualifications is particularly low in urban centers, particularly the City Region. These low Levels of participation in employment and learning by some groups and communities in the region reflect a range of interconnected issues and barriers. Research conducted by the West Midlands Regional Observatory (WMRO) in collaboration with Jobcentre Plus focusing on the young unemployed, unemployed and low paid adults, specific minority ethnic groups such as Pakistanis, Bangladeshis and Black Caribbean, older people, people with a disability, migrants and refugees, explores these and identifies practical action that could be taken to address them, for example: • There is a need for improved access to information, advice and guidance – many of those consulted had no idea where to go for help and relied principally on friends, family and the internet. • There is a need to more effectively link learning to employment opportunities – which was identified by many as a key ‘trigger’ to increased participation. • The third sector has a key role to play in providing a link for people with a mistrust of institutions or poor experiences of learning and work and in breaking down barriers through the provision of flexible, low cost, local and culturally-sensitive learning. 30
  31. 31. 2.6.5 Graduate Retention and Higher Level Skills Across the region 26% of the working population have a Level 4 qualification or above, this is below the England average of 30%. The West Midlands has an under- developed private sector ‘knowledge economy’ and, although the situation is improving year on year, the region still performs poorly in terms of the recruitment and deployment of highly skilled ‘knowledge workers’. The low Level of demand for higher Level skills has a significant impact on graduate retention. A significant proportion leave the region to secure their first job, notably those with a desire to work in better paid, higher skilled and higher value added sectors of the economy. Nevertheless there may be additional potential demand for graduate and higher Level skills in the region with survey evidence suggesting that significant numbers of businesses are of the view that graduate and other higher Level skills could be critical to future business success. There remains a perception among many, however, that some graduates lack both the industry-specific and softer ‘employability’ skills they require. If efforts to unlock the potential demand for higher Level skills are successful it will be important to ensure that sufficient graduates are retained and attracted to the region to meet it. To this end it will be important to promote a positive image of the region as a place to live and work. Currently graduates’ perceptions of the West Midlands as a place to live and work are highly polarised, however, with those who have elected to remain here after completing their studies very positive views but those that have left to work elsewhere much more negative. It may be, however, that these perceptions are becoming increasingly outdated as initiatives to regenerate the region begin to have an impact. Indeed a high proportion of those that return now have very positive perceptions of the region. 2.7 Sector Analysis 2.7.2 UK Vocational Qualifications Reform programme (UKVQRP) The UK VQRP is a programme of work in England, Wales and Northern Ireland that is intended to reform adult vocational qualifications across the UK. The key objectives of the programme are to: 1. Reform and rationalise sector qualifications so that they reflect employer and learner needs, providing recognised and valued Levels of skills both across sectors. 2. Develop a unit-based qualification framework which is underpinned by credits, that allow credit accumulation and transfer. This framework is known as the Qualification and Credit Framework (QCF) and the Qualifications and Curriculum Authority (QCA) is leading on this work in partnership with regulators in Wales and Northern Ireland. 3. Establish in England, Wales and Northern Ireland planning, funding and delivery arrangements to support delivery. 2.7.3 Sector Qualification Strategies Vital to the success of the UKVQRP will be accurate information about sector specific skills needs and the availability of appropriate qualifications for learners. It will be the role of the Sector Skills Councils to provide this intelligence and to develop Sector Qualification Strategies for their industrial footprint. Sector Qualifications Strategies (SQS) outline the current and future learning and qualifications needs of employers in 31
  32. 32. sectors. The Skills for Business network is responsible for developing SQSs as part of the Sector Skills Agreements (SSAs) process. Through SSAs, Sector Skills Councils (SSCs) identify the skills needs of sectors, analyse the current provision and agree interventions with key partners to improve the match between education and training supply and employment needs. The SQSs will be used by the qualifications regulatory authorities of the four home nations and SSCs to influence awarding body provision. The aim of each SQS is to: • Identify key drivers for sector development in relation to qualifications and other learning provision; • Evaluate how well existing qualifications and other learning provision meets sector needs (current and future); • Make proposals for any changes required, including a plan for development and implementation; • Bring coherence and shared direction to ongoing development work; • Provide a sound basis for future development and decision-making in each broad sector; 2.7.4 Sector Demand (Sector Intelligence Sheets) As part of our approach to the Strategic Analysis in the West Midlands, the regional Skills Team, in conjunction with the Policy and Planning team carried out a full analysis of our key sectors in the region to identify sector demand. A summary of the findings from the sector analysis will be shown in Annex A in the form of Sector Intelligence Sheets Appendix 1 – Business and Professional Services Appendix 2 – Construction Appendix 3 – Creative and Media Appendix 4 – Health, Care and Children’s Workforce Appendix 5 – ICT and Telecommunications Appendix 6 – Justice Appendix 7 – Land Based Appendix 8 – Lifelong Learning Appendix 9 – Manufacturing Appendix 10 – Retail Appendix 11 – Tourism and Leisure Appendix 12 – Transport 2.8 Implications for Education, Training and Skills Delivery • Whilst the region and the country is facing a challenging economic climate over the next few years, there will be a continued shift towards demand for higher Level skills as the structure of the regional economy changes. Replacement demands are significant across all occupational areas, but in terms of total requirement for labour (employment growth + replacement) by 2017 the top three occupational areas (managers, professionals and associate professionals/technical) show the highest demand Levels. 32
  33. 33. • Further investment in skills by employers is required, especially in sectors such as agriculture, engineering, other manufacturing and construction, wholesale and retail, hotels and catering and health and social care where skill gaps and shortages remain a significant problem. • If employers are to meet their labour and skill needs in the future they also need to widen their recruitment to include groups accounting for a growing share of the region’s working age population such as older people and people from minority ethnic groups. • Building on activity already taking place, more action is needed to unlock the potential demand for higher Level skills to boost business growth and competitiveness • Significant progress has been made in raising the qualification attainment Levels amongst the working age population, with increasing proportions with a Level 2 and Level 3 qualification. However, while accounting for a growing share of the region’s working age population the regions disadvantaged groups and communities perform poorly relative to regional and national trends in terms of participation in education and training, qualification attainment and accessing employment. • There is a need to focus attention on those groups marginalised from the labour market through activities such as Integrated Employment and Skills. Otherwise there is a danger they may lag further behind in the future, with those who are already relatively well qualified continuing to be the most likely to invest in their skills and qualification Levels. 33

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