As part of our Skills and UK Knowledge Economy Special Project, Katerina Rϋdiger from the Work Foundation discusses UK's lack of ability in attracting the best global talent vis a vis other countries and suggests ways of addressing the issue.
Last month’s saw the launch of the first stage of the new, point-based system for migrants outside the EU. This was meant to mark a turning point in the UK’s migration policy, signalling that the government is serious about attracting migrants with the right skills to boost the UK’s economy.
Indeed, the new system is designed to fill existing skills gaps in the labour market by attracting workers from specific occupational groups while at the same time offering enough flexibility to respond to changing economic conditions.
That we need to tap into the global supply of highly skilled labour to respond to the human capital needs the UK’s emerging knowledge economy is by no means a new insight and the government has been grappling with this issue for the last decade.
The expansion of knowledge-based industries has raised the general demand for knowledge workers across a range of sectors and occupations.
For example the demand for human resources in science and technology has never been higher: employment in science and technology grew twice as fast as overall employment between 1995 and 2004.
There is also a shift in the occupational composition of employment in some industries, such as manufacturing, as international competition and advances in technology forces those sectors to restructure to become more knowledge intensive and move up the value chain. The result of this change is that the demand for knowledge workers is not only higher but also more broadly based; highly skilled workers are now required throughout a broad range of industries. Indeed, employment in knowledge industries for the EU 15 has grown by 24 per cent over the period from 1995 to 2004, compared to a total growth in employment of only 1.1 per cent.
But technological change and innovation are not only leading to a quantitative change in demand for knowledge workers in the UK labour market, they also trigger a profound structural shift in demand which is of qualitative nature. So while the knowledge economy certainly requires more graduates in science, technology, engineering and maths, the shift in demand is fare more complex and involves a broader range of skills throughout the knowledge work force. Employers increasingly highlight the importance of work place competencies and soft skills that are complementary to academic or technical skills
At the same time as demand for skilled labour increases, there has been a relative decline in skilled labour supply in the UK. This is due to a combination of reasons such as demographic changes, a lack of students, notably women, going into in research and science-based subjects and their career choices upon graduation as well as a lack of mobility within Europe. In addition to that, employers also claim that there is a skills gap amongst the existing work force for certain occupations.
In light of this labour shortage the UK already benefits from the inflow of highly skilled workers and especially in the last decade it has shifted from a limited exchange of highly skilled migrants to an important net recipient for skills.
But the number of foreign knowledge workers is still very small in comparison to homegrown labour in knowledge-intensive science and technology occupations. In particular, compared to countries like the US, Canada, Australia and New Zealand, which have much higher levels of highly skilled migration, it becomes apparent that the UK is not yet tapping into the global supply of labour to an extent that it would enhance its competitiveness and support the transition to the knowledge economy.
By addressing these issues and replacing the existing complicated and not very transparent multiple work permit systems, the new point system, if applied successful, can indeed be seen as a step into the right direction.
But in order to further to support the UK’s transition to a knowledge economy we also need to:
Firstly, have a much better and more detailed picture of the demand for labour in the knowledge economy and what type of skills are needed. In order to deal successfully, not only with the quantitative, but also with the quality issue of highly skilled labour we need to have a good understanding of the labour market for knowledge workers.
Secondly, we need clear and comparable definitions for highly skilled migrants and more accurate data on existing migrant flows. Flows of migrants are notoriously difficult to asses; this is even more intensified for highly skilled migrants, because of the lack of firm definitions.
Thirdly, we need to improve the skills utilisation for existing migrants but also for the UK’s knowledge work force as a whole. Overall, highly skilled migrants have still face worse labour market outcomes than their native peers. Moreover, less than half of the UK’s knowledge workforce believes that their skills match the demands of their job, they report poor career prospects and monotonous tasks, indicating that employers might, despite complaining about skill shortages, not always make the most of their work force.
Finally, there is also the risk that highly skilled migration is used as a quick fix to fill specific gaps in the labour market and as an excuse to refrain from adapting and equipping education systems for the demands of the knowledge economy. The UK needs to both, further improve it’s capability to attract and retain knowledge workers, as well as to improve its education system.
For that we need a long-term strategy and a holistic, joint approach by government, universities and employers to equip workers with the right skills and to maintain and further improve the UK’s attractiveness as a place for research and development in the knowledge economy.
The Work Foundation will soon publish a research report on globalisation and employment in the knowledge economy. To find out more about the Work Foundation’s knowledge economy programme please go here
