Download Section 2 - Northern Ireland Commission for Catholic Education

John Compton
PricewaterhouseCoopers
The UK skills dilemma…
“…we cannot continue in the modern world with a situation
where so many people [in the UK] have got no
qualifications, because we know they will soon become
unemployable".
Gordon Brown. January 2007
“… there will be only approximately 600,000 unskilled jobs in
Britain by 2020 compared with 3.6 million today.”
Hansard 22 March 2007
“…of the 13.5 million [UK] jobs expected to be filled by 2012,
50% - or 6.8 million will be in occupations most likely to
demand graduates.”
Institute for Employment Research
and the Irish conundrum…
“…the volume and quality of new business is as strong as it
has been at any stage in recent years … [but] we have to
strongly encourage a drive toward further education to the
fourth level for masters degree and PhD graduates to
remain competitive.”
Sean Dorgan Chief Executive, IDA Ireland.. February 2006
Section 1:
Education and economic
development
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Ireland – A Global Economy
 Economy grew by an average of 7.9% between 1995-2005
 Growth is forecast to remain around 4%
 Attracted more Foreign Direct Investment (FDI) than any
other EU member state
 Amongst world’s top-3 countries for:




Technical sales as % of GDP
High tech production and exports
Investment by pharma/life science global leaders
New patents/inventions by RoI-domiciled companies
Ireland – The Educational Linkages
 Amongst world’s highest level (55%) of 17-19 year-olds in
further education
 Amongst world’s top-3 countries for:
- Labour productivity
- Growth in labour productivity
- Investment in education, training and innovation
 In 2003 public and private sectors spent €1.6bn on
workforce training - 50% of all workers got formal training
 One-third of all workers and 40% of 25-34 year-olds hold a
formal 3rd level qualification or better
Globalisation dictates the business location
agenda
 Global economic domination is shifting from the developed
to the developing economies
 Treasury estimates that by 2025, 5m US & UK jobs will be
outsourced and 50% of world exports will come from
developing nations
 Emerging economies are inefficient in energy use,
unregulated and awash with cheap labour
 UK industry is highly regulated and with a rising tax burden
 Private sector profit contribution and business investment
as a % of GDP have fallen steadily since 1997
Globalisation – education will determine what
remains
 Top 20 global products represent 24% of world exports -
developing countries increased share by 300% since 1980
 Computer and electronics hardware - largest share of global
trade but the greatest growth is in the developing regions
 Only specialist products - pharma/medical devices /complex
electronics and services are growing and remain in developed
countries due to design/innovation linked to university/skills
 Education will determine the ability of developed regions to
drive global service industries – the ‘knowledge economy'
Long Term Forecasts 2013-17 (Average annual growth)
US
8
Western Europe
Asia
Eastern Europe
7
6
5
4
3
2
1
Po
la
nd
Tu
rk
ey
us
si
a
R
Ja
pa
n
In
di
a
hi
na
er
m
G
C
an
y
K
U
Fr
an
ce
S
0
U
Annual GDP Growth (%)
9
Section 2:
The Northern Ireland
economy
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High level data suggests above trend performance
 GDP growth (2%-3%) equalled or outperformed the UK
average for the past three years
 Manufacturing output outperformed UK average since late
1990s, with proportionally fewer job-losses than the UK
 Employment at record high – 800,000 workers in employment
 Unemployment at a 26 year low (currently 3.7% compared to
the UK 5.4% and EU 7.0%)
 Inward migration will continue - addressing skill shortages and
hard to fill vacancies
Significant demographic & educational advantages
 Amongst youngest EU populations – well-educated workforce
 100% broadband - schools on Internet 3 years before US
 2 universities, 7 campuses, 6 further education colleges with
231 centres - 46,000 students in education - 32% graduates
obtain postgrad qualifications- 12% more than the UK average
 Proportionately more IT graduates than any US college -the
University of Ulster’s business department is largest in Europe
 Low operating costs - lowest wages amongst 12 UK regions
Overdependence on the public sector
 NI public sector equates to 65% of GDP, compared to UK’s
42% and RoI’s 27%
 Public sector, retail and hospitality account for 64% of all jobs
 NI public sector employs 1 in 3 of all workers and 60% of all
females in employment
 A further third of the workforce relies on the public sector
Underdeveloped private sector
 89 per cent of local firms employ fewer than 10 people
 Only 65 companies employ more than 500 workers
 10 companies account for 50% of all NI exports
 NI has second-lowest level of business formation of the 12 UK
regions
 NI has second-lowest level of business growth in the UK
Skills – under-achievement and lack of opportunity
 Youth & long-term unemployment well above rest of UK
 1 in 4 adults has low level of document and prose literacy
 1 in 3 workers fails to meet level 2 of the National
Qualifications Framework (NQF) -25% with no qualifications
 Fewer adults participate in learning in NI (30%) than any other
UK region (UK average =39%)
 75% of NI graduates studying outside NI do not return
Low levels of labour market participation
 Over 530,000 people (41% of working-age population) not
economically active
 Worrying underlying trends: Since 1978:
- Unemployment fell by 24,100 - Employees in employment rose by 171,690 - Incapacity benefit claimants rose by 67,753 -
45%
33%
156%
 Over the past three decades, for every person coming into
employment, three new incapacity claimants emerged
 These correlate with high levels of deprivation, especially
in urban areas
A distinct East-West divide
 Over the past decade, the West’s working-age population grew by
13% as compared to 3% in Metro
 6 of 8 West’s LCDs have employment below the NI average
 Only 32% of NI’s VAT-registered firms in the West - 49% are in
agriculture, 60% have no employees and 65% have annual turnover
of less than £100k
 Almost 50% of 16-74 population in the West have no formal
educational qualifications, compared to 39% in the East
West comprises: L’Derry, Strabane, Limavady, Fermanagh, Omagh Cookstown, Magherafelt and Dungannon
Belfast Metro comprises: Belfast, Castlereagh, N Down, Ardds, Lisburn Newtownabbey
Work-readiness skills must improve
 Hard to fill vacancies (not vocational skills shortages), are
increased through lack of work-readiness skills …literacy,
numeracy, team working and communications skills
 64% of Northern Ireland companies experienced hard to fill
vacancies in 2004/05
 65% report hard to fill vacancies in skilled labour and almost
40% could not fill managerial/supervisory posts
 These have not declined since 2000
The Subvention - paying our way
 Annual NI subvention exceeds £6.4bn per annum
 Equivalent to £3,700 per capita, annually
 NI households contribute an average of 40% the tax paid by
households in England/Wales
 ‘Normalisation’ intended to level tax take and use additional
tax/savings to fund ISNI with Reinvestment & Reform Initiative
(RRI) formula to fix borrowings
 To cut the subvention, the Executive must grow the economy - or
tax it.
Employment growth
200
Private Services
180
Public Services
1990=100
160
Other
Manufacturing
140
120
100
80
60
40
1990
1992
1994
1996
1998
2000
2002
2004
2006
Public expenditure per head higher than elsewhere
UK=100
129
130
118
120
111
110
100
97
90
Source: HMT
England
Wales
Scotland
N. Ireland
NI’s public expenditure growth will slow
Historic
Forecast
Real growth %
10.0
8.0
6.0
4.0
2.0
0.0
2005-06
2006-07
2007-08
Source: Priorities and Budgets 2006-2008
2008-09
2009-10
2010-11
Declining public expenditure will be a problem
 Private sector too small to take up the slack of falling public
expenditure increases
 Global uncertainty may impact on inward investment and
business confidence
 The Programme for Government (PfG) is ambitious, the
Executive has no tax-raising powers, and delivering the PfG
requires time to develop the private sector, modernise
government and invest in infrastructure
 Transforming the economy will take 10-2 years
Section 3:
Implications for
education
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PricewaterhouseCoopers LLP
NI cannot compete on cost alone
 Innovation enables businesses to compete effectively in an
increasingly competitive global environment
- Better innovation and R&D performance will move the NI
economy up the value chain
 Enterprise is a critical ingredient of a flexible, modern
economy
- Fear of failure and lack of skills are barriers to new
business set-up
 Modern infrastructure essential for economic growth
- The £18bn Investment Strategy for Northern Ireland (ISNI)
addresses the infrastructure deficit
Implications for the Education System
 The system should produce people with the qualifications and
skills to meet the demands of the future economy
 Future availability of skills will be the critical success factor for
businesses
 Emphasis on value-added and innovation in the knowledge
economy requires focus on technology, tertiary skills, a reform
of vocational qualifications and their supporting infrastructure
 Improved school-leaver performance essential to reduce the
high proportion of people with limited or no qualifications
Political agenda for education
 Political stability to stimulate returners & entrepreneurism
 Community commitment to lifelong learning
 Challenging literacy and numeracy disadvantage at primary level
 Emphasis on enterprise, business and vocational issues in the
curriculum
 Preoccupation on process masks focus on delivery and outputs
 Improved levels of practical careers advice and incentives for
companies initiating skills training
Issues for primary schools
 Falling birth-rates and declining pupil numbers - down 10-13%
by 2015
 Sustainability of urban and rural schools and adequately rural-
proofing education policy
 Getting by-in from communities, parents, private sector and govt
to specific, educational and social outputs
 Adequately funding primary education to deliver a consistently
high quality of literacy, numeracy & socially-developed children
while aggressively addressing deprivation and social exclusion
Time is limited
 Educationally-challenged post-primary pupils are potentially lost
adolescents who may opt-out of education, society and work
 A new agenda for skills and a culture of lifelong learning will help
create and implement a new, outward-looking business model
 Limited opportunity to contribute to this agenda of radical change
that will impact on economic regeneration and social inclusion
 Failing the education and could have a fatal impact on a new
generation of Northern Ireland workers
Thank You
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