By Graeme Wilkinson, Convenor, Ulster Society Public Sector Sub-Committee
In March 2022, the Minister for the Economy published a new Skills Strategy for Northern Ireland, ‘Skills for a 10x Economy’. Throughout the extensive research and stakeholder engagement process that underpinned the development of the strategy, and ever since, a consistent message has been delivered by business leaders in Northern Ireland: access to talent and skills is the number one issue impacting our economic performance.
The Skills Strategy covers a broad range of areas where transformation is required however I would like to highlight what I believe is a fundamental challenge facing our economy: addressing Northern Ireland’s ‘low-skills equilibrium’. As set out in ‘Skills for a 10x Economy’ a low-skills equilibrium is characterised by a low level of skills in the population and a corresponding demand for low-skilled workers who receive low pay. This provides little incentive for workers to invest in their own skills and many businesses accepting the constraint that this puts on their growth potential. It is also linked to the key economic challenges we face: low wages, low productivity and low levels of in-work progression.
A strong demand for graduates is evident within the economy and, whilst there are some challenges related to anticipated supply, the key issue at this level is to improve the overall alignment of qualifications to labour market need and to address the issue of underutilisation (the effective utilisation of graduate skills). The low-skills equilibrium is more evident below degree level.
Data gathered on job advertisements placed in 2022 showed that, where qualification requirements were specified, approximately 45% were aimed at individuals with high level qualifications (degree level or above), approximately 40% were aimed at individuals with low level qualifications (GCSE or below) with just 15% aimed at individuals with mid-level qualifications. This problem is known as ‘the missing middle’ and means that there are very few opportunities for individuals to progress in the labour market without attaining degree level qualifications. It also means that businesses are overlooking the potential benefits provided by higher education, and professional and technical education, below degree level.
The NI Skills Barometer forecasts anticipated skills demand over the next decade. It highlights that mid-level qualifications will be the most significant area of undersupply under a high economic growth scenario. This suggests that employers have identified the need for higher level qualifications to unlock growth but have not yet addressed it through their recruitment practices.
With regards to the overarching concern on access to talent and skills, it is important to acknowledge that labour supply in Northern Ireland is constrained with the latest NISRA statistics showing the unemployment rate at 2.8%. Changing demographics, changes to migration policy and low unemployment rates mean there will be no significant addition to labour supply over the course of the next decade.
Therefore, we need to focus on improving the efficiency of our skills system to ensure outcomes better reflect emerging labour market need and support our overall progress towards the objectives of our economic vision by supporting innovation, inclusivity and sustainability. In government, our primary focus is to work with stakeholders to develop the strategic skills framework which provides enhanced efficiency on the supply side. The low skills equilibrium is a supply and a demand problem and it is employers who hold the key to unlocking demand.
I am keen to continue the conversation with businesses across Northern Ireland on how we deliver a step change in the demand for skills and qualifications. Collaboration will be central to successful change, supply and demand must move, as much as possible, in tandem to deliver improved efficiency. We have set out in ‘Skills for a 10x Economy’ the new initiatives which will be added to our existing mid-level education offer, including a particular focus on upskilling and reskilling the workforce through an increasing focus on adult learning, an area where Northern Ireland performs poorly compared to other OECD countries.
In conclusion, there is no quick fix to the labour supply challenge. By working collaboratively, I believe our efforts to address this challenge can provide a catalyst to change how our labour market functions. Change which supports improving innovation performance, increased productivity and better jobs for more people across Northern Ireland.
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