Daily Coronavirus Webinar: Reskilling for the recovery: preparing business for the future

Overview:

Today marked the CBI's 50th daily coronavirus webinar. We used this auspicious moment to think about something future-facing: reskilling the workforce post-Covid. To grapple with this topic, we were joined by Tera Allas CBE, Director of Research and Economics at McKinsey, Simon Tindall, Head of New Business Development at the Open University and Josh Hardie, CBI Deputy Director-General.

Here are the five key takeaways from the session:

• Detail is needed on the 14-day quarantine measures
• We can’t let unemployment entrench inequality
• How should we approach adult skills?
• Who should pay for skills training?
• Skills and the regional “levelling up” agenda.

Detail is needed on the 14-day quarantine measures

The Home Secretary made an important announcement yesterday about the introduction of a 14-day quarantine for travellers to the UK. Businesses respect that if this measure is needed to protect the health of UK citizens then it is necessary, explained Josh. However, he noted that “there is a lot of concern.” The measures will have a “sharp economic impact” on some sectors, he said, citing aviation, tourism and manufacturing in particular.

Although there are some “limited” exemptions for workers in agriculture, medicine, freight and essential technical jobs, the wording on the exemptions for technical workers is quite unclear. Technical workers will be permitted to travel more freely if they are conducting “essential” or “emergency” work. Josh said there needs to be greater clarity on what that means in practice.

Innovation in this space would likewise be welcome, said Josh. “Travel corridors” or “air bridges” between countries with lower infection rates have been floated as ideas. To make this work, there needs to be “international consensus and consistency,” he said.

We can’t let unemployment entrench inequality

Unemployment is likely to be “one of the key characteristics” of the recession we are facing, said Josh. There are fewer jobs available already: entry-level jobs in particular are declining. This will have a big impact on the young.

Young people, especially young women, are highly represented in the sectors that have been worst hit by Covid-19: hospitality and tourism, said Tera Allas. That demographic will suffer more acutely from job losses. “It’s very important that the job creation schemes and fiscal stimulus that we put in place is creating jobs for women as well as men,” she said.

In the UK, there has been a long-term underinvestment in human capital, said Tera. The Covid crisis represents a “huge opportunity to change that,” she said. As we emerge from this crisis, many people are discussing investment in jobs in green infrastructure. Construction jobs are typically held by men. But we also need to invest in jobs like teaching, care work and nursing (typically held by women) as these roles are ones that will suit our society going forward, she explained. They are roles that rely on human interaction and “social emotional skills” that cannot be automated and they will serve our ageing population too. But we need to value this work more both in society and economically. “It’s time we started paying for skills that are uniquely human,” Tera said.

How should we approach adult skills?

The government is beginning to think about jobs and skills post-Covid. The Prime Minister recently spoke about guaranteed apprenticeships for the young, for example. The CBI is in conversation with the TUC, ACAS, the Federation for Small Business and the Department for Business Energy and Industrial Strategy to work out an approach to job creation and reskilling. Josh shared some thoughts:

1. We need to protect the jobs we have now. The government has done “critical work” in this regard with the furlough scheme and business loan schemes.
2. We need to create as many jobs as we can. That will mean “big infrastructure projects” with a green agenda. But that also needs to be “as inclusive as possible.”
3. How do you deal with the unemployed and reskill them? Using existing structures such as further education colleges, job centres and higher education institutions will be “faster and more intuitive.” We need to think about skills matching locally so that the labour market is “more fluid.” If there are not jobs available, then how do we retrain people?

One of the major stumbling blocks for employers is the perceived cost of training their employees, but Simon Tindall from the Open University has seen a slight shift in attitudes. “What you are seeing are more enlightened employers now really embracing skills programmes,” he said.

There is a “win-win” from investment in skills, said Tera. “Individuals benefit, employers benefit, government benefits,” she said. A new approach to skills requires us to look at the benefits as well as the costs, she stressed.

Who should pay for skills training?

There will be a temptation for businesses to slash their learning and development budgets as we enter a recession. But Tera emphasised that “everybody has responsibility” for skills training. “It does need to be a coalition” between government and business, she said.

Some areas of skills training naturally feel like they fall under the remit of employers, said Josh. For training within work, for example, “that feels like an employer's contribution,” he said. But we need to have a discussion about who pays for training for the unemployed or for those between jobs.

Tera understands the reluctance by business to invest in skills. “Many businesses feel fearful about investing in it because it’s intangible. It’s less easy to measure what the benefits are,” she said. The government can play a role in financing skills training for business rather than funding it. If government provides money that businesses can pay back, that might help them to get over the “hurdle of initially having to put down their own cash.”

Skills and the regional “levelling up” agenda

Josh emphasised the role of skills development to the government’s manifesto pledge to push forward a regional “levelling up” agenda. Differences in skill levels are one of the drivers of inequality between regions, he explained. Local enterprise partnerships (LEPs) and Metro Mayors are playing a role in devolving thinking about skills to better match training to the business needs of each region. However, he added a note of caution: not all areas have these structures in place and they risk being left behind.

Simon made the important point that regional skills training projects can end up duplicating efforts made elsewhere. He pointed out that national bodies like the Open University can provide a standardised national framework for skills training but that needs to be backed up by local support structures to help individuals.

Key questions we answered:

1. Josh, can you give us some background and context around the scale of the reskilling challenge, in light of the crisis?

• Even before this crisis, we knew the UK faced a massive reskilling challenge.
• Before the pandemic, the CBI – together with McKinsey – did research into the scale of the skills gaps likely to emerge across the coming decade. That work estimated that by 2030, 90% of the workforce would need to be retrained or upskilled – at a cost of around £130bn over 10 years. But that estimate was before Coronavirus struck.
• This crisis has exacerbated the challenge – and we’re now in a very different labour market than we were before:
  • There’s not just a skills mismatch, we now also have the challenge of not having enough jobs
  • Labour Market figures in May showed sharp falls in both vacancies and hours worked, as well as record increases in claims for benefits
  • Companies of all sizes and sectors are thinking about who they can afford to keep on, and the scale of the restructuring needed.
• We’ve already seen firms in the hardest hit sectors announce redundancies, and we’ve also heard warnings from Andy Haldane (Chief Economist at the Bank of England), Chancellor Rishi Sunak, and former Chancellor Lord Darling about the risk of a recession and mass unemployment, and the permanent scarring that can bring.
• It’s critical to keep people engaged – as it can be highly damaging if significant numbers are out of the labour market for 6+ months.
• The challenge is a big one – but if we get our solutions right, this could also be huge source of competitive advantage as the global economy recovers.

2. What ideas does the CBI – and business – have for tackling the reskilling challenge, and how do you think the education/skills sector may need to evolve in response?

• The CBI has always been clear that health will remain the priority for the foreseeable future. But we believe that shouldn’t stop us working together as a country to secure our ambition of building back better.
• This needs a strong partnership to work, and the CBI is collaborating with the government, businesses, unions, and other stakeholders to build more detail around what a possible recovery plan for the UK could be.
• We know universities and colleges, especially, are facing huge funding constraints – with the potential for student numbers to decline this September, and the need for changes in how teaching and courses are delivered.
• In response, online and smaller ‘bitesize’ training is becoming a much bigger part of the education and training landscape for both providers and businesses:
  • Online learning: The crisis has caused many firms to provide online learning to employees, resulting in a massive increase in demand for skills platforms and employee engagement. We expect this trend to continue.
  • Bitesize training: Research from Mind Gym suggests modular learning delivers almost twice the ROI of a traditional approach. This offers tailored, blended, on-the-job, bitesize and impact-measured training.
• Finally, the government also launched a Skills Toolkit, gathering courses on numeracy and digital skills from a range of external providers.

3. Tera, you recently questioned why we do not invest in human capital – i.e. teachers, nurses, care workers etc. more. Could you elaborate on that?

• I think it's well known that we have under-invested in human capital for decades.
• We are going to be needing a fiscal stimulus package and a recovery package. So let's use that to address the adult skills gap that we already have, and which is likely to get worse.
• We do see young women particularly represented in the sectors that might take longer to recover, like hospitality or travel.
• It’s very important that whatever stimulus we put in place creates jobs for women as well as men. The job market is still very gendered and something like 85% of those who work in construction are men. Similarly, a lot of teachers, nurses and so on are women.
• We need to take a step back from just thinking about the economy and think about what we want for society in the long run. With long-term trends such as an ageing society and automation, you realise that what we're going to need humans to be doing more of the very human tasks of interacting with other people, emphasising social emotional skills and the kinds of physical, unpredictable tasks that nurses and care workers have to deal with.
• And so, I feel that it's about time we started paying for those skills that are uniquely human.

4. Tera, what do you think we need to do to get better at this?

• I believe that management and leadership skills are a huge ‘unlock’. If you have good managers and leaders, they will actually invest in their people.
• People are the most important asset, and when businesses do invest in their people, they perform better.
• Part of the solution is thinking about how we, at scale, improve management and leadership skills in UK businesses. Adult learning is where we need to get to.
• I think we can look at some other countries for inspiration, where partnership between employers, skills providers, governments and individuals make it a routine to be training people, driven by business needs.
• But that will inevitably mean that a person will gain skills that will be useful for them in other businesses or in other jobs as well in the future.

5. Simon, what was the Open University doing around adult learning and skills before the crisis? How have those trends changed since the pandemic hit?

• People often define what we do as an organisation to be quite narrow and see us just as academic formal education. But what we also have as part of our set up is a social remit – through the provision of educational resources, many of which cover basic, core skills.
• OpenLearn is the key website. We typically get around 8m visitors per year and offer a whole range of courses. We have found since lockdown began that demand on OpenLearn has trebled. And we've also seen just over a million new course enrolments for free courses.
• What you are seeing is the more enlightened employers now really embracing skills programmes, either through internal training, or through things like apprenticeships.

6. Tera, is there evidence that having good digital skills improves a country’s resilience?

• Our research found that many people were able to move to working from home in the UK.
• I think countries where the population is highly digitally literate seem to be more resilient.
• What's interesting about the UK is that we actually don't have a big gender divide in terms of digital skills, but there's an enormous gap between people who have high levels of education and people who don't.