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
Slide 3
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
Slide 4
4 Section 1: Education and economic development
PricewaterhouseCoopers LLP
Slide 5
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 worlds 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
Slide 6
Ireland The Educational Linkages Amongst worlds highest level
(55%) of 17-19 year-olds in further education Amongst worlds 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
Slide 7
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
Slide 8
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'
Slide 9
Long Term Forecasts 2013-17 (Average annual growth)
Slide 10
10 Section 2: The Northern Ireland economy
PricewaterhouseCoopers LLP
Slide 11
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
Slide 12
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 Ulsters business department is largest
in Europe Low operating costs - lowest wages amongst 12 UK
regions
Slide 13
NI public sector equates to 65% of GDP, compared to UKs 42% and
RoIs 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 Overdependence on the public sector
Slide 14
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
Slide 15
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 Skills
under-achievement and lack of opportunity
Slide 16
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 - 45%
-Employees in employment rose by 171,690 - 33% -Incapacity benefit
claimants rose by 67,753 - 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
Slide 17
Over the past decade, the Wests working-age population grew by
13% as compared to 3% in Metro 6 of 8 Wests LCDs have employment
below the NI average Only 32% of NIs 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: LDerry, Strabane, Limavady, Fermanagh,
Omagh Cookstown, Magherafelt and Dungannon Belfast Metro comprises:
Belfast, Castlereagh, N Down, Ardds, Lisburn Newtownabbey A
distinct East-West divide
Slide 18
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
Slide 19
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. The Subvention - paying our way
Slide 20
Employment growth
Slide 21
Public expenditure per head higher than elsewhere England Wales
Scotland N. Ireland Source: HMT UK=100
Slide 22
NIs public expenditure growth will slow Source: Priorities and
Budgets 2006-2008 0.0 2.0 4.0 6.0 8.0 10.0
2005-062006-072007-082008-092009-102010-11 Real growth % Historic
Forecast
Slide 23
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 Declining public expenditure will be a
problem
Slide 24
24 Section 3: Implications for education PricewaterhouseCoopers
LLP
Slide 25
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
Slide 26
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
Slide 27
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
Slide 28
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
Slide 29
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
Slide 30
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