Want to boost productivity, Chancellor? Hire an apprentice

18 March 2016 -

With UK productivity at its lowest levels since records began, are Degree Apprenticeships the silver bullet George Osborne needs to re-energise the economy?

Matt Scott

British productivity is in the doldrums.

The gap in productivity between UK Plc and other world economic powers is at its worst level since modern records began, with British output per hour worked 18 percentage points below the average for the six other members of the G7.

And with nearly a third (31%) of workers employed in a job that doesn’t match their level of education, the mismatch between workers’ education and current job is at the heart of the problem.

Figures released this week by the Office for National Statistics (ONS) showed that for October to December 2015, 16% of workers in the UK are overeducated for their role and 15% are undereducated.

This will make for worrying reading for Chancellor George Osborne after a Budget that did little to increase confidence in a floundering economy.

A worrying development

And the situation is getting worse; undereducation has increased by 0.3 percentage points in the last year.

Meanwhile, the proportion of people overeducated for their role has climbed by 0.8 percentage points over the last 12 months, and is 1.4 percentage points higher than the 14.7% reported for October to December 2010 (see below).

 

Labour market expert John Philpott told The Guardian that this trend towards increased overeducation was a worrying development.

“It’s clear from these estimates that the UK is underusing a lot of talent, with women and people in part-time jobs in particular employed in occupations for which they are overeducated,” said Philpott, director of consultancy firm The Jobs Economist.

“While such a waste of available skill was understandable during the recession the generally upward trend toward increased overeducation since 2012 is worrying.”

One solution? Degree Apprenticeships

So with so many employees working in roles not suited to their abilities, what can be done to re-structure the workforce and give the UK a much needed productivity boost?

One labour market intervention that should be put up for consideration are the recently launched Degree Apprenticeships, which combine a world-class university education with on-the-job training at a leading company and a guaranteed job upon graduating.

Apprentices enrolling on these schemes are provided with training that is tailored specifically to fulfilling the requirements needed to do their job in a professional and effective way – ensuring they are perfectly matched for the role they take on at graduation.

CMI’s own Chartered Manager Degree Apprenticeship was launched in November 2015 and has the added benefit of delivering Chartered Manager status to all successful apprentices.

CMI director of strategy Petra Wilton said such schemes could be the missing link in solving the problem with productivity in the UK.

“Improving management has long been the missing piece in solving the UK’s productivity puzzle,” she said. “The government’s support for developing higher-level management and leadership skills is welcome news. CMI research has shown that the UK lags behind its European competitors in terms of investment in management development.

“There are too many accidental managers, particularly working in SMEs. There is an urgent need to professionalise management. The government’s backing for this new management degree-level apprenticeship will help train a new generation of managers and leaders who will be essential for energising UK Plc.”

Practical and applicable

The practical work-based training of a Degree Apprenticeship not only gets apprentices into the workforce quicker, it also means that they are fully prepared for the world of work as soon as they graduate.

This means there is no dip in performance during the transition from higher education to employment.

For those working in a management position this is especially important, and the UK is certain to benefit from an increase in managerial performance if business takes up the mantle and invests in a new generation of professionally trained managers.

“Our research shows that those who do develop their managers see up to 23% improvements in organisational performance,” Wilton said. “Chartered Managers on average add more that £391,000 of value to their employers.

“Employers must now take advantage of programmes like the Chartered Manager Degree Apprenticeship to grow their own talent if the UK is ever to rise from the bottom of the G7 rankings on productivity.”

Find out more about the Chartered Manager Degree Apprenticeship here: www.managers.org.uk/degreeapprenticeship