Debate Magazine

The Regional Skills Gap

Posted on the 18 May 2018 by Markwadsworth @Mark_Wadsworth

Something else that has been bothering me for a while is the notion of the 'regional skills gap', as mentioned for example here.
Productivity and Skills for West Midlands Combined Authority (WMCA) region are one of the biggest challenges for the regional economy. GVA per head in the WMCA is currently at £19,423, nearly £3,500 [less than the UK average] for each of the 4 million WMCA residents leading to a £14bn output gap compared to the national average.
WMCA report that the components of the output gap highlight issues across all the productivity drivers with insufficient skills, too few in employment and the quality of the indigenous WMCA business base.
* Skills: % of number individuals with qualifications at NVQ4+: in the West Midlands Region is 27.6% against a national picture of 34.9%
* Employment: employment rate in the West Midlands Region is 67.2% against a national picture of 71.5%...
It is essential that Education and Business work together, not just through the Corporate Responsibility Agenda and supporting students develop the essential work ready skills but also to:
* Shape academic programmes and content to reflect the needs of regional sectors
*Identify the key growth areas across the region to ensure that training and development reflects the local economy

It's a bit like the notion that you can get house prices down in the South East by building more homes - it only makes sense if you ignore the fact that people can migrate freely within the UK.
If you assume that people growing up in the West Midlands intend to stay there, then sure, train them in things which will get them a job locally. But they won't.
It's a circular problem.
1. Those with the initiative to undertake education and training want to do whatever will earn them the most money, which is unfortunately not the productive sector but the non-productive sector, finance, insurance, real estate, legal and accounting (i.e. little old me).
2. The best paying jobs are in London, which is why, apparently, nearly half of recent graduates from UK universities move to London.
3. So the reason why relatively few people in the West Midlands have NVQ4+ qualifications is not because there's anything wrong with their education system, but because many of those with NVQ4+ qualifications bugger off elsewhere.
4. The less ambitious/less qualified remain in the West Midlands, inevitably, productivity and output declines, exacerbating the effect; businesses do worse, meaning fewer well paying jobs, meaning people are more likely to bugger off.
5. If the West Midlands offers more education and training, that makes it even easier for people to bugger off.
As an aside, Flipchart Rick did a post a while back called "Why a richer Africa means more migrants" explaining that this is effect is observable on an international level.
To paraphrase, few people from really underdeveloped countries emigrate because nobody wants them. Developing countries try to lift themselves with their own boot straps and invest what little surplus they have into improving their education systems - but that makes it easier for their people to emigrate (Filipino nurses, for example) instead of staying and helping grow the economy. So for some decades, this is a net loss to the country. It is not until the economy has developed to the level where there is less incentive for people to move abroad that their economies really benefit; but you can't grow an economy until the better-educated people stay there etc etc in a vicious circle.


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