Whichever party takes office after the election will be faced with a range of pressing issues. However, policies relating to employment and skills will be among the most important.
The Institute of Employment Studies has identified six issues that will need immediate attention.
Preventing long-term unemployment
Previous recessions left a legacy of long-term unemployment and, in many communities, worklessness affecting families across several generations. It is crucial to avoid this. Many employers hoarded labour during the recession and will be able to respond to the upturn with little need to turn to the labour market.
Public policy needs to ensure that:
people do not become locked into long-term unemployment and inactivity, by maintaining incentives for the newly unemployed to secure a return to work.
local pockets of entrenched unemployment are targeted, which may require intervention on the demand side (through job creation programmes or subsidies for employers).
Reducing youth unemployment
There is evidence that the proportion of 16- to 18-year-olds not in employment, education or training (NEET) is starting to stabilise. Meanwhile, the number of young people aged 19 to 24 who are NEETs continues to rise as competition for jobs intensifies.
Policy has to reduce the flow of young people disengaging from the education and training system or the labour market. That means offering effective vocational training from the age of 14 that is qualitatively different from traditional academic education.
To be effective, it must get employers involved in delivering the training to a much greater extent than previously.
Paying for higher education
Demand for higher education is rising due to the recession, and is outstripping the country’s ability to pay. The supply of graduates exceeds demand, and the wage premium is starting to diminish and become more varied.
The independent review of higher education finance, reporting after the election, will have to reconcile the increasing financial pressures on the university sector, with the financial concerns of potential students and the value placed on higher education by employers.
The limited amount of state investment is therefore likely to be better spent on the less well-qualified, where there are significant skills deficits and people are trapped in a low wage/low skill equilibrium.
Tackling demographic ageing
As the age at which young people leave full-time education or training increases, so working lifetimes need to be extended to contain the rising burden placed on taxpayers, and ensure there are enough people to meet future demand for workers.
Legislation or other mechanisms are needed to encourage employers to train older people.
Further and higher education funding needs to change, and flexible part-time provision increase, to allow and encourage older people to acquire new skills.
Pensions and taxation arrangements need to become more flexible to accommodate people drawing income from multiple sources.
Improving health at work
Keeping people who fall ill in employment requires a co-ordinated response across a range of agencies including:
encouragement for employers, for example through tax breaks, to offer occupational health services to reduce long-term absence
a primary healthcare service that is geared up to help people back to work.
a secondary health service that is more responsive to the needs of working people – eg, waiting times need to be reduced.
Skills for the future
There is likely to be a rising demand for technicians in IT, manufacturing, maintenance services, and health services across a range of sectors. High levels of customer service skills are likely to attract a growing premium in the labour market, as employers seek competitive advantage.
There will be a continuing demand for personal service occupations – in particular, care assistants. Potential employees at all ages and training providers alike, need access to effective information, advice and guidance to ensure supply is available to meet these and other emerging areas of demand.
Nigel Meager, director, Institute for Employment Studies