Skills alone are not enough

12th December 2008 at 00:00
Colleges could help businesses by promoting better use of staff and technology to close the productivity gap

Governments of all political hues have long believed in the mantra that boosting skills would increase economic productivity. But a paper from a panel of Scottish business, education and government figures is the latest to challenge the theory.

The Goodison Group said Scotland was the only UK country to have more people with high skills than no skills, yet its productivity was only in the middle of the UK range.

The report reflects the findings of seminars held by the group during the year and will be presented at a Scottish Parliament reception on Monday. It notes that skills contributed only 25 per cent to productivity levels: the remainder was attributed to leadership and management of the workforce, the transport infrastructure, the design of working premises and effective use of machinery and technology.

Brian Stevens, a founder of the group and chairman of lifelong learning consultancy FEdS, said colleges could provide more consultancy services to help businesses work out how to make better use of staff and technology. They could also train staff in better management techniques.

"Colleges are very good at the learning and skills side, but it would be helpful if lecturers saw where their work fitted into productivity. They can do other things, like advising on the proper use of equipment and technology," Mr Stevens said. "Some colleges are developing consultancies, and they have a fantastic opportunity to provide them for business."

Neil Cuthbert, the public affairs manager for the Association of Scotland's Colleges, said: "Generally speaking, colleges try to have good links with local employers and make sure their programmes reflect the local economy. It is not just about being industry-specific, but about equipping people to adapt to the future."

Several reports have made a strong link between better skills and greater productivity. The 2006 Leitch review of skills, for example, was commissioned by the UK Government to find the optimal skills mix to increase productivity. Skills Development Scotland and the Scottish Funding Council's skills committee have also put "skills utilisation" at the top of their agendas.

However, a report discussed in October by the Scottish Government's Council of Economic Advisers found that, while skills were important, firms also needed to change the way they managed staff and used technology to overcome Scotland's productivity gap. It also said poor infrastructure could hold back productivity.

The UK Commission on Employment and Skills is researching the relationship between skills and productivity. It has finished a literature review and will produce case studies and policy recommendations.

Lesley Giles, the commission's deputy director of research and policy, said: "Each of the UK administrations would like to raise productivity and tackle skills, but raising skills levels is not enough on its own. Further work is needed on how employers use those skills in the workplace."

She said colleges could help staff develop skills in response to technological change or restructuring.

Frances Ruane, director of the Economic and Social Research Institute in Dublin, who wrote the report for the Scottish Government's Council of Economic Advisers, believes factors such as management and deployment of technology are as important as a highly skilled workforce in boosting productivity.

With Scotland having a highly skilled population, it was more of a concern that its productivity was not similarly high, Professor Ruane said. One reason could be that some people educated in Scotland might be leaving to work outside the country, making it harder for those who stayed to find a job at a suitable level in a small nation.

Scottish business and society needed to make it easy for people to return to Scotland later in their careers, she believed. "It is a normal part of globalisation that people move around, but the question is whether you have a magnet that draws them back," she said.

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