UK Summary Report Sector Skills Assessment for Science ...

UK Summary Report

Sector Skills Assessment for Science, Engineering and Manufacturing Technologies December 2010

UK– Sector Skills Assessment December 2010

Contents Executive Summary...........................................................................1 1

Introduction and context.............................................................1

2

Sector profile ..............................................................................1

3

Workforce demographics.............................................................2 3.1 Working status............................................................................2 3.2 Gender ......................................................................................2 3.3 Age ...........................................................................................2 3.4 Disability....................................................................................2 3.5 Ethnicity ....................................................................................2 3.6 Occupation .................................................................................3

4

Employment trends .....................................................................3 4.1 Historical trends ..........................................................................3 4.2 Future projections .......................................................................3

5

Productivity and competitiveness ................................................4

6

Higher Education in the UK..........................................................5

7

International Higher Education ...................................................5

8

Skills issues ................................................................................6 8.1 Drivers of skills change ................................................................6 8.2 Future skills needs.......................................................................6 8.3 Skills gaps..................................................................................6

9

Activities addressing employer issues .........................................7

UK– Sector Skills Assessment December 2010

Executive Summary 1

Introduction and context

The purpose of this report is to set out a detailed skill needs and current provision analysis for Engineering and Science industries, building on work undertaken previously in the Sector Skills Agreements and subsequent assessments. Semta is responsible for the skills interests of employers in the Engineering and Science sectors. In practice this means a sectoral scope that can be summarised as covering: • • •

Mature engineering industries (Metals, Metal products, Mechanical equipment, Electrical equipment, Rubber tyres and parts of Other Transport Equipment). Leading-edge technology industries (Electronics, Marine, Aerospace and Other engineering activities). Science industries (R&D in natural sciences and engineering)

These three industry groupings within the Semta footprint broadly correspond, in terms of the technologies the sectors use, to three stages in the maturing of technologies. This characterisation allows the important differences between sectors of different degrees of maturity to be recognised. Although the traditional public view of many engineering manufacturing sectors may be one of a struggling industry only manufacturing traditional products, there is evidence to demonstrate that this is not the case. New process and material technologies, advanced manufacturing and efforts to make carbon reductions are being utilised by employers across many sectors to gain competitive advantage through new products, cost and energy savings and to improve and maintain a competitive edge in a challenging market. In the supply chain, traditional products, established technologies and manufacturing processes are still essential to the successful manufacture of final goods.

2

Sector profile

Based on the Annual Business Inquiry 2008, there are approximately 132,000 establishments in the Semta footprint in the UK, employing just over 1.7 million people. The Mature Engineering industries account for (47%) of employment in the Semta footprint, 815,600 employees, and of these, 143,400 are located in the West Midlands (18% of UK employment in these industries).

1

UK– Sector Skills Assessment December 2010

Leading-Edge Technology industries employ 47% (815,500) of the Semta footprint, the largest number being in South East England (15% of UK employment in these industries). The Science Industries employ 6% (109,300) of the total UK footprint employment, the largest number being in South East England, accounting for 28% of Science Industries employment. Compared to all sectors in the UK, the Semta footprint contains a higher proportion of micro-businesses, employing between 1-10 people (83% in Semta sectors compared to 85% in all sectors). The Mature Engineering Industries account for 39% of all the establishments in the Semta footprint, and the largest number of these is in the West Midlands. The Leading-Edge Technology Industries account for 58% of all the establishments and the largest number of these are found in South East England.

3

Workforce demographics

3.1

Working status

91% of Semta’s workforce in the UK is a company employee compared to 86% for all sectors in the UK. Only 9% of Semta’s workforce in the UK is self-employed compared to 14% for all sectors in the UK. 90% of Semta’s workforce in the UK is employed on a full-time basis compared to 73% for all sectors in the UK. 3.2

Gender

Only 21% of Semta’s workforce in the UK is female compared to 48% for all sectors in the UK. 3.3

Age

Only 9% of Semta’s workforce in the UK is aged 16-24 compared to 14% for all sectors in the UK. 14% of Semta’s workforce in the UK is aged 60 plus compared to 12% for all sectors in the UK. 3.4

Disability

12% of Semta’s workforce in the UK has some sort of disability compared to 14% for all sectors in the UK. 3.5

Ethnicity

Only 5% of Semta’s workforce in the UK is from an ethnic minority compared to 8% for all sectors in the UK. 2

UK– Sector Skills Assessment December 2010

3.6

Occupation

The largest occupational categories within Semta’s sectors in the UK are skilled trades/craft (21%), managers (20%) and professionals (20%). The proportion of employees in higher-skilled occupations such as managers, professionals and associate professional/technicians is higher for Semta’s sectors (52%) than all sectors in the UK (43%). It is estimated that just over half of the workforce in Semta’s sectors in the UK are employed in direct technical roles such as engineers, scientists and technologists. The main technical occupations within Semta’s sectors include production, works and maintenance managers, metal working production and maintenance fitters, mechanical engineers, welding trades and metal working machine operatives.

4

Employment trends

4.1

Historical trends

With the exception of the science industries there has been a net fall in the number of establishments over recent years. Over the period 1998-2007, there was a continuous reduction in employment levels in the mature engineering and leading-edge technology sectors and a more steady position within the science industries. Since 2000, employment in the science industries grew by 15%, the leading-edge technology sectors fell by 32% and the mature engineering sectors fell by 25% (similar to all UK Manufacturing). Given the broadly comparable output levels in 2000 and 2007 (slight fall in leading-edge technologies and growth in the science industries) much of the fall in employment can be recognised as productivity gain. 4.2

Future projections

Semta’s projections point to the need for about 354,000 employees within Semta’s sectors in the UK to replace employees retiring during 2010-2016. After taking into account the expected decrease of 122,000 jobs across Semta’s sectors over this time period, there will still be an overall net requirement for labour of about 232,000 jobs (around 32,000 per annum). There is expected to be a net requirement for 120,000 jobs across the mature engineering sector, 86,000 jobs across the leading-edge technology sectors and over 25,000 jobs for the science industries during 2010 to 2016.

3

UK– Sector Skills Assessment December 2010

The largest positive net requirements for labour are expected to be for managerial occupations (50,200 people), professionals (38,000 people) and process, plant and machine operatives (32,400 people). Focusing on technical roles, there is expected to be a net requirement across Semta’s sectors in the UK for nearly 114,000 engineers, scientists and technologists (over 16,000 per annum) during 2010-2016. The proportion of jobs in medium- to low-level skilled jobs, i.e. skilled trades /craft, operatives and elementary occupations, are all projected to decrease in terms of employment share during 2010 to 2016. Set against these changes, higher level management, professional and associate professional /technician occupations are likely to form a greater share of total employment in Semta’s sectors.

5

Productivity and competitiveness

Total turnover for the Semta sectors in the UK in 2008 was about £289 billion; 9% of the total turnover for all sectors of the economy. Between 2003-2008, output of the three industry groups has grown faster than UK Manufacturing as a whole. Average GVA per employee for the Semta sectors was £55,000 in 2008, significantly higher than the figure for all sectors of £35,500. Many companies are introducing lean manufacturing continuous improvement techniques in order to improve productivity and competitiveness. It will be important, for continuing improvements in productivity, that these techniques become further embedded across the industries within the Semta footprint. Semta’s sectors appear now to be showing encouraging export growth. Profitability has been greater in the Leading Edge Technology sector than in Mature Engineering, while profits in the Science Industries (R&D) swung massively over the period in question between more than 100% plus and minus. There have been serious falls in profitability in all sectors in 2009. Future success depends at least in part on the proportion of profits that are ‘ploughed back’ into Capital Investment. As far as the broad groupings are concerned, the fall in ‘plough-back’ is greatest of the last five years in the Mature Engineering Industries (some 40% from 2003 to 2008), while the falls in ‘plough-back’ in Leading-Edge Technology industries has been comparable (at around 25% over the five years) to the average for UK manufacturing as a whole. In principle these trends raise questions about the adequacy of re-investment of profits for the future benefit of the business, which may well be addressed in response to the economic downturn.

4

UK– Sector Skills Assessment December 2010

Probably the most strategic element of capital investment is R&D expenditure. Up to 2007 growth in R&D Expenditure was encouraging in Semta’s sector groups, albeit erratic in the Leading-Edge Technologies industries. R&D Expenditure growth in the UK Mature Engineering industries has grown faster, in fact at the same rate as UK manufacturing as a whole (some 25% over the five years to 2007). R&D expenditure in the Science Industries (Research and Experimental Development in Science and Engineering) fell away after 2002 and only began to revive in 2006. International comparisons, while needing caution in interpretation, suggest that productivity in Semta’s sectors, while lagging behind those in competitor countries in the 1990s, has generally been rising steadily, in most cases faster than in the other countries. In terms of comparisons of average skills levels, the UK’s position in Semta’s sectors is not lagging excessively in terms of HE skills, but remains lower than competitor countries in intermediate skills.

6

Higher Education in the UK

Although graduates from a range of HE courses are recruited by Semta’s larger employers, the main interest is naturally in the supply of graduates from those courses deemed to be of particular relevance to the Sectors – essentially related to areas of technology that are core to the business. The fraction of graduates from the relevant courses being recruited by Semta employers is comparatively low (less than a third for the broader analysis and less than 15% - and often considerably lower - for the narrow analysis) there is no shortage of numbers of graduates from relevant courses. Like all recruitment, what is being sought from applicants is much more than just a particular sort of technical knowledge, or even a particular qualification (academic or otherwise). The ‘other things’ being sought very often lead employers to pay comparatively little attention to the specific university course, since the other things may often be found (perhaps are even more likely to be found) in graduates from other disciplines, even subjects well beyond science and technology. Many other sectors value the attributes of science and engineering graduates, not least for their numeracy and problem solving abilities.

7

International Higher Education

In broad terms, the growth in Tertiary Education volumes and flows within OECD countries is evident. To the extent that these data are significant, the United Kingdom Student volumes and Graduate flows in subjects relevant to Semta’s employers do not seem to be a particular problem. In any case, as is known, the comparatively low fractions of graduates from relevant courses who enter employment within Semta’s sectors is likely to be the dominant issue, and does not suggest any serious shortages of relevant graduate supply.

5

UK– Sector Skills Assessment December 2010

8

Skills issues

8.1

Drivers of skills change

The main drivers of skills change over the next two years were identified by employers in all of Semta’s sector groups as follows: • • • • •

The introduction of new technologies or equipment. New legislative or regulatory requirements. Development of new products and services. Introduction of new working practices. Increased competitive pressure.

Large and medium-sized employers were most likely to expect a change in their skills needs from the key drivers identified. 8.2

Future skills needs

The changing qualifications profile of Semta’s workforce is evidence of the increasing demand for higher-level skills. From 2000-2009 the overall proportion of Semta’s workforce in England with NVQ Level 4 plus qualifications increased from 29% to 36%. For Semta’s sectors in the UK there is expected to be a net requirement for over 136,000 people with intermediate and higher level qualifications (NVQ Level 3 plus or equivalent) over the period 2010 to 2016. Around a quarter of establishments in Semta’s sectors in the UK have skills gaps, a higher figure than for all sectors in the UK. The mature engineering sectors and science industries were most likely to have skills gaps. 8.3

Skills gaps

The incidence of skills gaps increases significantly by size of establishment. Semta’s sectors were most likely to report skills gaps for skilled trades/craft and management occupations. The main skills cited as lacking in employees were technical, practical or job specific skills. The other main skills gaps highlighted were problem solving, team working, oral communications and management skills. The main impact of skills gaps were increased workload for other staff, increased operating costs, difficulties meeting quality standards and difficulties introducing new working practices.

6

UK– Sector Skills Assessment December 2010

9

Activities addressing employer issues

There are 12 key issues identified from this and previous Sector Skills Assessments and based on previous feedback from employers and stakeholders. These are the issues that the key activities and actions undertaken by Semta group across the UK and in the devolved Nations have been developed to address. Issues related to a skilled workforce 1.

Improving management and leadership skills.

2.

Lean manufacturing and BIT activities.

3.

Hard-to-fill vacancies and skill shortage issues.

4.

Skill needs and future skill needs for emerging technologies and advanced manufacturing (low carbon, renewable energy supply chain, composites, printed electronics etc).

5.

Shortage of technicians and future requirement for technician level staff.

6.

Retirement and ageing of the qualified/skilled workforce. skills issues relating to an ageing workforce.

7.

Encouraging more of those aged 16-24 into engineering, science and manufacturing.

8.

Upskilling the existing workforce/recognition of employer demand led training programmes.

9.

Gender imbalance/widening participation.

10.

Improving the image of engineering and science to encourage entrants.

11.

Supply and provision of IAG (information advice and guidance) to encourage and inform new entrants and progress those already in employment.

12.

Supply of STEM skills, school subject choice and FE/HE choices that influence the supply and suitability of new entrants to enter the science and engineering sectors.

Tackle

7

UK– Sector Skills Assessment December 2010

For further information please contact Semta Customer Services: T: 0845 643 9001 E: [email protected] W: www.semta.org.uk W: www.nsa-m.co.uk