Implementing a Skills Strategy

Inevitable increases in the unemployment rate, detrimental health impacts and a reduction in demand for goods and services caused by the Covid-19 pandemic will be major factors in shaping a new Skills Strategy for Northern Ireland.

The Department for the Economy is in the process of developing a new Skills Strategy for Northern Ireland, underpinned by the pledge agreed to in the New Decade, New Approach document that the Executive will invest strategically in ensuring that Northern Ireland has the right mix of skills for a thriving economy.

“A resilient and responsive skills system has the potential to have a significant role to play in Northern Ireland’s economic recovery,” stated a recent extensive report produced by the Organisation for Economic Co-operation and Development (OECD) which is set to inform the Department’s delivery of a future Skills Strategy.

Acknowledged by the OECD is that the impact of the pandemic, while still unmeasurable, will likely “reverse” much of the progress which has been made in the past two decades with regards to economic output, education, jobs, health and accessibility to services.

Challenges for Northern Ireland in relation to skills and their impact on economic recovery predate, and indeed, extend beyond the pandemic impact. The region continues to experience high levels of economic inactivity, some 17 per cent above the UK average and despite progress, the economy is still shaped by a small number of large, low value-added sectors and this is evident across industries where sectoral productivity is lower than the UK average in 16 out of 20 sectors.

The OECD highlights that recognised skills imbalances in Northern Ireland’s labour market, where skill levels of adults in Northern Ireland are below those of many other OECD countries, are “rooted in poor governance arrangements across policy areas and levels of government”.

These challenges have already been identified as in need of solution, even prior to the pandemic outbreak, as Northern Ireland sought to map out a plan for economic growth amidst the recognised challenges of digitalisation, technological change, an ageing population, climate change and, more recently, Brexit.

It’s estimated that automation could potentially generate up to 70,000 jobs in Northern Ireland by 2030, which would ultimately boost productivity, however, it’s also been recognised that digitalisation will change the nature of many jobs and eradicate the need for human input in others, potentially reshaping the labour market. Northern Ireland is the UK region with the highest share of jobs threatened in this regard.

Similarly, Northern Ireland’s ageing population, with the share of people aged 65 and above expected to increase from 17 per cent in 2020 to 21 per cent by 2030, coupled with a projected largest percentage decrease in children across the UK to 2043, has the potential to lead to labour shortages and ultimately a negative impact on economic growth.

Aims to address the climate crisis are also expected to have a transformative impact on the labour market. While new ‘green jobs’ will be created, the likelihood is that they will replace or substitute existing jobs.

Significantly, Northern Ireland’s dependence on external investment and attraction of foreign direct investment (FDI) will be disrupted if trading barriers are erected, either with EU countries or the rest of the UK, as a result of Brexit, with many businesses feeling the impact. Additionally, local skill shortages in Northern Ireland have traditionally been met by inward migration. There has been a noticeable decrease in the numbers since the Brexit referendum outcome and it’s understood that this will be exacerbated following the UK’s exit from the EU and could impact on business investment and subsequently cause economic disruption.

The OECD notes that Northern Ireland has previously implemented a range of strategies and reforms to create a skills architecture capable of addressing some of these challenges, most notably, the Success through Skills – Transforming Futures skills strategy launched in 2011 and runs until 2020, as well as a subsequent series of policies aimed at improving specific areas of Northern Ireland’s skills system, such as the Northern Ireland Strategy for Further Education launched in 2016, skills prioritisation in the draft Programme for Government and within the two recently announced City Deals.

These strategies have enabled “significant progress” in strengthening the skills system, as well as the economic and social performance, in recent years. However, the importance of an effective new Skills Strategy for Northern Ireland has been highlighted by the assessment within the report that: “As a result of the impact of the Covid-19 pandemic especially, people will increasingly need to upgrade their skills to perform new tasks in their existing jobs, or acquire new skills for new jobs, as well as to adapt to new modes of behaviour, consumption and work.”

The context for these changes in the labour market is an economic shock worse than the 2008 financial crash. Sharp contractions in output, household spending, corporate investment and international trade will have implications for GDP growth and reductions to travel, migration and trade will accelerate the identified trends such as digitalisation.

“The resulting changes in behaviour and consumption, in turn, have the potential to impact where jobs of the future lie, and by the extension, the skills requirements to undertake these jobs. In this context, a resilient and responsive skills system will have a significant role to play in Northern Ireland’s economic recovery,” the OECD states.

Turning to the recommendations that will form a basis from which Northern Ireland’s future Skills Strategy is developed, the OECD highlights four priority areas for improving Northern Ireland’s skills performance.

As a result of the impact of the Covid-19 pandemic especially, people will increasingly need to upgrade their skills to perform new tasks in their existing jobs, or acquire new skills for new jobs, as well as to adapt to new modes of behaviour, consumption and work.

The first recommendation is the need to reduce the skills imbalances that exist in Northern Ireland, which are recognised causes of increased labour costs, low productivity and the slower adoption of new technologies. Solutions, the OECD suggest, are the enhancement of provisions for career guidance, the reduction of economic inactivity and the improvement of labour mobility. Specifically, the OECD suggests the introduction of reforms of funding models to relate grant funding to graduate employment outcomes. It also highlights the need for a regional approach to attracting skilled migrants.

The second recommendation is for the creation of a “culture of lifelong learning”, which it states is crucial to ensure individuals participate in adult learning after leaving the compulsory education system. This, it says, will increase the motivation of adults to learn and remove barriers to access adult learning opportunities for individuals and employers. It recommends that Northern Ireland publish a “single, comprehensive strategy setting out a holistic vision for adult learning across different cohorts of learners”. Also, the establishment of a ring-fenced skills fund to subsidise the provision of training opportunities and apprenticeships, while developing a common online learning platform to blend approaches to further education.

The recommendations do not simply focus on people but also on places. The third instruction encompasses the transformation of workplaces to make better use of skills, recognising the ability of conditions to directly support skills to aid in raising productivity and innovation for businesses, as well as increase wages and job satisfaction for employees. The OECD states that Northern Ireland should “strengthen management and leadership capabilities; develop engaging and empowering workplaces; and
strengthen support structures for businesses”.

It suggests the development of a new strategy for management and leadership capability and the introduction of new, and expansion of existing, management and leadership programmes for micro and small businesses. Additionally, it suggests the improvement of information on business support programmes for growth and innovation, including raising the profile of nibusinessinfo.co.uk and launching diagnostic tools.

Finally, the OECD recommends a strengthening of the governance of skills policies, recognising that the success of skills policies typically depend on a wide range of actors. The solution, it suggests, is the introduction of sustainable funding arrangements and commitment to an overarching skills strategy and the improvement of employer engagement in the governance of skills policies.

The main recommendations, in this regard, are for an ensured commitment from the Northern Ireland Executive to a cross-departmental skills strategy and the introduction of a central oversight body to increase co-ordination in skills policy. Additionally, a central skills needs advisory body should be implemented to advise government on skills policy, as a result of high-level employer engagement bodies.

Minister for the Economy, Diane Dodds has highlighted a “highly effective” Skills Strategy as a priority upon taking up the portfolio and outlined plans to bring forward “a holistic skills strategy for the next decade”, however, she has also highlighted the importance of a sustainable and long-term investment package to establishing a world class skills system.