A significant undersupply in skills

Urgent and significant improvement is required if Northern Ireland is to ensure it has the skills needed to achieve its economic ambitions, a report by the Northern Ireland Audit Office (NIAO) has asserted.

The report entitled Developing the skills for Northern Ireland’s future, published in September 2024, shows that support for skills and learning is the largest area of spending for the Department for Economy (DfE), with approximately £470 million spent in 2023/24, funding a range of initiatives and programmes. Since 2019, the DfE has spent over £2.3 billion on various education and career programmes, but figures in the report show that spending for some initiatives has receded in recent years, with the overall funding having decreased by 7 per cent.

Between 2019 and 2020, over £145 million was spent by the DfE on the Higher Education Division (HE). The spending for HE reached a peak of over £157 million but has dropped to under £144 million, a record low in the last five years. Moreover, spending in apprenticeships has also seen a cut. Between 2019 to 2020, apprenticeships received over £25.5 million, receiving a peak spending figure of over £38 million between 2021 and 2022. Like HE, the spending dipped for apprenticeships, which was allocated just under £35 billion 2023/24 financial year.

The reduction in funding in the last three years has already seen a considerable impact on the workforce. The 2022 Employer Skills Survey found that of an estimated 39,500 job vacancies, 35 per cent were attributable to a lack of skills, experience or qualifications amongst applicants. Nearly all employers (96 per cent) reported that these skills-shortage vacancies were having a detrimental effect on their business performance, and a significant proportion of employers (over 40 per cent) considered that the effects of skills-shortage vacancies were causing delays in developing new products or services, a loss of business to competitors, or withdrawals from offering certain products or services altogether.

The DfE has set out a vision with its Skills Strategy for Northern Ireland: Skills for a 10X Economy. This skills strategy identifies three new goals which include:

1 Increasing the proportion of Northern Ireland higher education graduates with degrees in narrow STEM subjects to 27 per cent by 2030 (from a baseline of 24 per cent). Narrow STEM subject degrees included physical and biological sciences, mathematical and computer science, engineering and technology.

2 Increasing the proportion of the working age population with Level 2 and above qualifications to between 85 and 90 per cent by 2030 (from a baseline of 76.3 per cent).

3 Increasing the proportion of the working age population with Level 3 and above qualifications to between 70 and 75 per cent by 2030 (from a baseline of 56 per cent).

The skills strategy aims to drive economic growth, and to establish a skills framework that addresses the key challenges which have constrained Northern Ireland’s economic and social development such as:

• the prevalence of individuals with low, or no qualifications;

• limited opportunities for high paying jobs and pathways for career progression; and

• a ‘skills deficit’ and comparatively poor productivity performance.

However, there have been criticisms levelled at the DfE that while the skills strategy has individually positive outcomes and evaluations, the latest monitoring data show a lack of progress towards achieving the strategic goals of the Department’s Skill Strategy:

• The most recent data show the proportion of the working age people with qualifications of at least Level 2 or Level 3 has decreased since the prior year.

• There was no progress against the strategic goal to increase the proportion of individuals graduating with degrees in narrow STEM subjects.

• The adult participation rate in education or training has decreased.

Moreover, the Institute of Directors recently reported that its members continue to be “frustrated by the weak and disjointed skills and education system that hampers plans for business growth”.

The majority of stakeholders that engaged with NIAO during the review did not agree that there is clarity on the roles and responsibilities across government for developing skills in Northern Ireland, and most disagreed that there is a coherent approach to the policies, initiatives, and interventions for developing skills to address identified skills need.

The report states that the “DfE must review, streamline and clarify the governance and oversight arrangements for skills in Northern Ireland and ensure that the skills system can be more easily navigated by stakeholders”.

Furthermore, since 2015, the Ulster University Economic Policy Centre (UUEPC) has prepared the Skills Barometer under the direction of the DfE. The Skills Barometer, published biennially, forecasts labour market demand for skills and skills supply, and combines them to identify projected skills imbalances in areas of undersupply and oversupply by qualification level. As well as modelling qualification-level supply and demand, the Skills Barometer also considers the field of study and industry sector needs. The 2019 iteration of the Skills Barometer was a primary evidence base used in the development of the Skills Strategy.

However, the most recent iteration the Skills Barometer, published in March 2022, forecasts that between 2020 to 2030, there will be annual undersupply of new workers with qualifications at Level 3, Level 4-5 and level 6 and above, and average annual oversupply of new workers with qualifications at levels 2 and below.

The 2021 Skills Barometer also forecasted undersupply in 2020 to 2030 across most subject areas at degree level (Level 6 and above) with undersupply most prominent in the STEM subjects and undersupply across all subject areas at Level 4-5.

Comptroller and Auditor General Dorinnia Carville, who authored the report, states: “Skills shortages are having a detrimental impact on business and economic growth in Northern Ireland.

“Despite the range of support provided by the Department, little demonstrable progress has been made. This will only make it more challenging for the Department to achieve the ambitions set out in its Skills Strategy.”

Carville calls on the DfE to provide “clarity” on how they will deliver on the Skills Strategy and emphasises the need for “demonstratable success” in delivering the strategy at the five-year review point.