Insights
Skills are an important driver of local productivity. Skills contribute in three ways:
· Skilled workers can produce more goods or services than unskilled workers.
· Skilled workers can produce higher-value goods and services.
· Management and leadership skills can improve the organisation of inputs and increase productivity.
Differences in the share of skilled workers are a major driver of disparities in productivity and output (GVA) between local areas. For example, research undertaken as part of Economy 2030 found that increasing the graduate share of Manchester from 37 to 56 percent would reduce the productivity gap with London from 28 to 20 percent. Increasing the graduate share alongside an increase in capital intensity (the amount of capital per worker) would require a lower increase in the graduate share, as capital and skills investment are complementary.
Understanding local skills performance
Given the importance of skills to productivity and output, improving skills is often a local policy priority. Analysing skills data is critical to make good policy decisions. Supporting this, the Office for National Statistics (ONS) and the UK and devolved governments and their agencies publish a wide range of data on skills. These cover diverse topics including employment, qualification levels, and participation in and outcomes of post-16 education and training. There are also many commercial providers of data and many national and regional organisations (such as ONS Local, Skills England, and North East Evidence Hub) have developed portals where pre-analysed data is presented in a user friendly manner.
This abundance of data can be overwhelming, especially when organisational capacity is limited. Having a framework for understanding performance can help. This involves understanding important economic concepts such as demand and supply and how they apply to skills. For example, when demand for a particular skillset increases, it can sometimes take time for skills supply to respond and understanding the reasons for this can help policymakers respond. Having a framework of this type can also help in deciding what to analyse. As with all local growth policy areas, analysing data in different ways, for example, looking at both the current position and change over time, can provide additional insights.
Resources for understanding local skills performance
What Works Growth will shortly be publishing a ‘how to guide’ to help policymakers understand their local skills performance. It will be the first part of a series, with each publication providing an overview of key economic concepts and guidance on data and analysis for a different topic.
We’ll also be hosting two ‘lunch and learn’ webinars on this topic. The first webinar will be on Monday 8 December (1pm to 2pm) and will provide an overview on how to understand local area skills performance, including key concepts to frame thinking and datasets to explore. The second webinar will be on Monday 15 December (1pm to 2pm) and will look at sectoral skills in more detail.
