Human capital and skills are important for improving the UK’s labour market and economic performance. This note assesses how the skills needed in the UK labour market have changed over past decades, and how well placed our system of training – and particularly on-the-job training – is to help us adapt to these changes.
Some of the most fundamental changes in the nature of work has been an increase in the need for social and abstract skills in the workplace, while the employment shares of occupations that are intensive in routine and manual skills have fallen. At the same time, the amount of training done by workers is in decline, with the proportion of workers who have received work-related training falling from 29% in 2002 to 24% in 2020. These low rates of training among the least educated are troubling, given international evidence showing that there are higher returns to adult education for these individuals.
In a world of stagnant productivity growth and with an increasing need for wages to keep pace with prices, the improving the UK’s system of training and skills provision could have an enormously beneficial impact. Fortunately, there is a wealth of international evidence that can be drawn upon to design a system that would make post-school training provision work for more of the UK’s labour force. Phase 2 of the Economy 2030 project will advance policy recommendations in this field that can ultimately contribute to higher and more inclusive economic growth for the UK.
- Over the past 25 years, the need for social skills and abstract skills in the workplace has increased at the same time as the employment shares of occupations that are intensive in routine and manual skills have fallen.
- Wages have grown particularly strongly for jobs that require a significant amount of abstract reasoning: occupations that use abstract skills intensively (i.e. at the 90th percentile of abstract-skill-intensity across all occupations) have seen average wage growth of 30 per cent since 1994, compared with wage growth of below 15 per cent for occupations that involve below-median levels of abstract skills.
- These shifts are relatively good news for workers with high levels of education and those in high-paying occupations, as they are most likely to utilise social and abstract skills while in the workplace.
- Despite these fundamental shifts in the skills needed to thrive in the workplace, training is in decline: the proportion of workers who report that they have received work-related training in the past 3 months has fallen from 29 per cent in 2002 to 24 per cent in 2020, and has fallen the most for workers aged under 25.
- What training does take place is acting to increase, not reduce, inequalities. The most-educated workers train more, with an average of over 40 per cent reporting having received some form of training in the previous quarter, twice as high a rate as those with below secondary level education. Among adults who are out-of-work, training rates are very low: only 13 per cent received any training (in a 12-month period), less than half the rate at which employees are trained.
- The UK has seen falling rates of job mobility in recent decades, with much of the changing patterns of occupational structure driven by entry and exit of workers as opposed to employed workers transitioning from declining to expanding sectors. In a world of stagnant productivity growth and with an increasing need for wages to keep pace with prices, the improving the UK’s system of training and skills provision could have an enormously beneficial impact. Future work in the Economy 2030 project will return to this theme.
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