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The great skills debate

5th of June 2012 Article by Andrew Large

Andrew Large, executive vice-president for the World Federation of Building Service Contractors (WFBSC) and also director general for the Cleaning and Support Services Association (CSSA) in the UK, looks at how freedom of movement for workers across the EU affects the national skills situation.

In late May I attended a meeting at the Institute of Public Policy Research. The subject of the meeting was how the UK can address its skills gap, especially in vocational skills for business. The meeting was attended by a wide variety of people, from business to government to political parties and training pressure groups, all united in their concern about the current situation and all feeling that "something must be done".

The elephant in the room in the discussion was the effect of globalisation on the market for skills in any given country. Put simply, UK customers do not need UK skills, provided that they can satisfy their requirements from overseas. We don't need UK skills to access quality products because we can import them. We don't need to train our workers because with freedom of movement of labour we can bring them in from the EU and we don't need to have a skills base in the UK because in many (but not all) cases we can offshore the manufacturing or service provision.

In other words, the freedom of movement of people, good and services that is a fundamental part of the 21st century global economy also means that there is no compelling reason why things should happen here.

Protectionism is a dirty word, just as 'picking winners' is a tarnished phrase, both damaged by echoes of the 1970s. But if Britain is to succeed in world markets, we need to ensure not just that we are a competitive place to do business, but also that we have some of the best players. Otherwise, where will the good skilled jobs come from? Setting the macro-economic framework is not enough, because that does not ensure that the skills base is built in the UK. Rather, we need to ask how to improve the demand not just for the output of skill, but the output of UK based skills.

There are no easy answers here. The EU based freedoms cannot be wished away in favour of national preference (and nor should they be, for free trade helps economies grow). It cannot however be sustainable for the UK to have over 2.5 million unemployed, to be importing labour from other EU countries and to have a skills gap at the same time. Something has to give.

There are two pointers here for possible action. The first is the use of Government procurement. Government should be using the "most economically advantageous tender" provisions of the Public Procurement Directive to ensure that contracts are given to providers that commit to building UK skills. Not only will this bring benefits for the quality of outsourced public services, it will also improve the UK skills base and drive wider future competitiveness.

The second is that business needs to rediscover geography and culture as a key to competitiveness. Demand for UK skills (as opposed to skills in general) will only occur if there is something distinctive about those skills and what they can do. Some UK businesses are already doing this, making play that their call centres are British, and that this makes communication easier. For others, the UK edge might be a close knowledge of the needs of British customers, or an ability to supply products and services just in time.

One final thing, the EU tends to dominate our thinking, because it is the largest and nearest market, and because we are joined to it by treaty. And yet the growing markets of the world are well away from Europe, in Latin America, Asia and elsewhere. These are countries where the view of British skills and expertise is still being formed. It is time that they were given the most positive and upbeat message possible.