Miscellany
12 March 2007
By Tom MacInnes and Peter Kenway
The report of Lord Leitch’s inquiry into skills, published in December, did not pull its punches: “the UK”, it said, “needs a dramatic step change in its skills performance if it is to improve growth, productivity and social justice in a rapidly changing global economy”. Based upon an analysis of the mix of jobs that the UK was predicted to need if it was to stay to stay competitive, the report spelled out the implications via a series of targets for 2020 relating to skills at different levels, from basic numeracy and literacy, to the number of university graduates. It also set out a series of intermediate targets, some for as early as 2006, marking the start of the path to 2020.
Marking the path, though, is not the same thing as following it. Using labour force data, we look more closely at the skills paths that the UK has actually been following in order to measure quite how big a ‘step change’ is really required.
Our conclusion is that that change varies greatly depending on the level of qualification. At the higher (university degree) level 4, a continuation of current trends may be enough for the UK as a whole – although there are large regional differences. By contrast, at the lower level 2, even the most optimistic interpretation of current trends will only take the UK halfway to the target. Nothing short of a complete break with the past will do, not only among young adults but among adults of every age up to retirement.
The Leitch report (Prosperity for all in the global economy – world class skills) sets four groups of targets for raising the level of adult skills in the UK by 2020. They were:
For basic functional numeracy and literacy: 95% of adults, up from 85 and 79% respectively in 2005.
At level 2 (e.g. 5 GCSEs at grade A to C but also various vocational qualifications): 90% of adults, up from 69% in 2005.
At level 3: 1.9 million additional level 3 attainments over the period as well as an extra 0.5 million apprentices each year.
At level 4 (e.g. both university degrees as well as some professional qualifications e.g. in teaching and nursing): 40%, up from 29% in 2005.
Our assessment here focuses on levels 2 and 4. That is not because level 3 is unimportant but because level 2 (which Leitch sees as a near universal requirement) and level 4 can be seen as marking two ends of the skills spectrum. The data we are using is from the Labour Force Survey.
Starting with Leitch’s figures for 2005 (69% to level 2 or above and 29% to level 4 or above), we assess what these proportions will be in 2020 if current skills trends continue.
These projections combine three effects:
The generational effect. As younger adults are usually better qualified on average than older ones, the passage of time on its own increases the overall level of qualification of the workforce.
Improved school/college outcomes. In future, more people may leave school or college will qualifications than do now. Such future improvements contrast with the generational effect which reflects past improvements in these outcomes.
Qualifications gained in adulthood. Some people gain their qualifications long after their formal school careers are over, in their 20s, 30s and beyond.
Since the proportion of people qualified to at least level 2 does not really settle down until about the age of 20, our analysis of level 2 is for 20 to 64 for men and 20 to 59 for women.
There are indeed more qualified 20 year-olds than 64/59 year-olds. But the difference is far bigger for women than for men. So in 2005:
Among men, 73% of 20 year-olds were at level 2 or above compared with 59% of 64 year-olds.
76% of 20 year-old women were at level 2 or above, compared with 40% of 59 year-old women.
If the qualification rates for 20 year–olds remain at these levels, the generational effect would mean 73% of the workforce qualified to level 2 or above in 2020, a rise of some 4% on 2005.
Note that women’s lead over men at age 20 is a recent phenomenon, women having overtaken men only in the last few years. Maintained to 2020, the overall proportions of women and men aged 20 to 59/64 qualified to level 2 would by then be virtually equal.
Although qualification rates at age 20 could rise in future, there is nothing in the Labour Force Survey data to suggest that the rate is on a rising trend. Rather, the trend is flat, the rate in the latest year being the same as it was in the last two years of the 1990s.
This absence of trend is both disturbing and odd given the rise over the period in the proportion of 16 year-olds gaining 5 ‘good’ GCSEs (itself a level 2 qualification) has been going up steadily year by year. A possible explanation for this anomaly is that GCSE results are administrative data whereas the Labour Force Survey is survey data. New, administrative data from the Department for Education and Skills for 19- and 20-year-olds does paint a slightly more optimistic picture at those ages too, with annual rises of around 2%. But this data is still in its infancy (just three years of results at 19 and two at 20) so it is too early to draw conclusions.
Why this is happening and what can be done about it are critical issues if the level of qualification in the UK are to be raised in the very long term. But even if the qualification rate at 20 were to start rising from now on, its effect in 2020 would not be that great.
For example, if the proportion with level 2 at age 20 rises at 1½% a year (in line with the GCSE rate over recent years) from now on, the overall proportion qualified to level 2 in 2020 would be another 4% higher, at about 77%.
The clear implication of the analysis – as Leitch stresses - is that reaching the 2020 target depends mainly on how many people older than 20 acquire level 2 qualifications.
The data since 1997 shows there is a small but discernible proportion of people who do acquire level 2 in their 20s and beyond. And men and women are different:
Among men without level 2, some 1½% of those in their 20s, 1% of those in their 30s and a ½% of those in their 40s acquire level 2 each year.
Among women, the comparable figures are some 2%, 3% and 1% per annum respectively.
Bearing in mind that these are annual figures, their effects should not be underestimated. For example, they imply that some 10% of women acquire a level 2 qualification during their 30s.
If the current rates of acquiring level 2 after the age of 20 continue to apply, the overall proportion qualified to level 2 in 2020 would be 3% higher, that is, 76% with the generational effect only, or 80% if the rate at 20 starts rising too.
Figure 1 sums up the position. On current trends, the overall rate of level 2 qualification is projected to rise to only 76% by 2020, 14% short of the target. That is less progress than has been made over the past decade reflecting the fact that a big part of the generational effect has already taken place.
Even if the age 20 rate starts to improve – an entirely hypothetical step change in its own right – the UK will still be at least 10% short of the target. And more than three quarters of that gap is occupied by people who are already in the workforce now.
Exactly the same analysis can be applied to level 4 qualifications, which include degrees and various professional qualifications. The 2020 target is 40%. Our analysis starts at age 25 (this being the age at which the proportion with level 4 settles down).
It is immediately apparent that the arithmetic for level 4 is much more promising than it was for level 2. So:
The proportion qualified to level 4 at age 25 (34% for men and 38% for women) is already close to the target 40%.
The rates at 25 are much higher than the rates for people about to retire (20%) so there is a strong generational effect still to come.
Although the evidence is not decisive, it is certainly arguable that the rates at 25 are on a rising trend.
There is a small but significant proportion of people acquiring level 4 after the age of 25.
The effect of these factors is to increase the level 4 qualification rate (30% for the age groups in this analysis) as follows:
The generational effect adds 4% to the proportion qualified by 2020.
If the current rates at which people acquire level 4 after age 25 continues, then the overall proportion qualified by 2020 would be a further 4% higher.
A rate of increase of less than 1% a year in the proportion acquiring level 4 by age 25 is all that it would take to reach the 2020 target.
In summary, as long as current trends continue, the 2020 level 4 target is eminently achievable. In all of this, women are slightly ahead of men, typically by 3 or 4%.
All the analysis so far has been for the UK as a whole. The central conclusion is that, whereas a continuation of recent trends may be sufficient to reach the level 4 target, a major change is required if there is to be any chance of reaching the level 2 target.
There is, however, one respect in which the situation with level 4 is arguably much worse than it is with level 2. That is the degree of geographical inequality, in other words the extent to which the gap between current performance and 2020 targets varies between regions and sub-regions.
Figure 2 shows the gap, for levels 2 and 4, between the 2005 figure and the 2020 target, for Scotland, Wales and English regions or groups of regions.
The point here is this. At level 2, the variation between the gaps is small compared with the gap that even the best of them (Scotland) faces in reaching the 2020 target. By contrast, at level 4, the variation between the gaps is large compared with the gap for the best region (London). This suggests that policies for level 4 may need much more regional tailoring than policies for level 2.
If policies for level 2 need such geographic treatment, that is likely to be at the sub-regional level. There are, for example, plenty of local authority areas where the proportion with level 2 in 2005 was below 60% while there are a rather smaller number where it was above 80%.
Leitch’s challenge is formidable – but it is by no means uniform, either across the country or at different levels of qualification.
