Skills & Future of UK Sci, Eng & Manuf

Skills and the future of UK Science, Engineering and Manufacturing Technologies
The 2010 realities, expected developments and key priorities
A Summary Sector Skills Assessment for Semtas sectors December 2009
Foreword
Semta is the licensed Sector Skills Council for businesses in the UK engaged in Science, Engineering and Manufacturing Technologies: it supports them in achieving global competitiveness through investment in skills. Every business depends on the skills of its workforce to drive productivity, sustainability, growth and success, be it national or global. Semta works with the companies in its sector to understand their skills needs and help ensure they are delivered. Semta is led by employers in each of the sectors it works with. We are working with companies of all sizes, helping employers to develop staff to ensure their business is well placed to beat the recession and secure a sound recovery. Our aim is to raise the skills levels and competitiveness of the sectors and ensure each area has the right people with the right skills at the right time. Research with our employers has determined our key actions and shaped our business plan. The priorities set out in our strategic plan for 2008 2011 are to:
Semta is attuned to its responsibility including advanced manufacturing, green and emerging industries, and is actively bringing together other key Sector Skills Councils and skills agencies to contribute to strategic and practical solutions for business. While Semta is rightly action-focused, it is crucial that our action be both well informed and well-targeted by a proper understanding of how labour markets work. Skills policy is all about how to effectively provide a foundation for powerful market forces in a cohesive direction. In particular, to make a real and practical difference, action needs to intelligently respond to the realities of how employers in our sectors recruit the key skills that will help UK science and engineering businesses compete successfully on the global stage and then continue to invest in their staff to raise skill levels ready for ever tougher world class performance. That is where Semtas research team comes in. In response to the leadership of the UK Commission for Employment and Skills, Semtas research work continues to raise its game, building on a strong reputation for thorough, sound and innovative insights in the wide range of realities of this complex field. This summary, Semtas contribution to the UK Commissions National Strategic Skills Audit, is an excellent example of what can be achieved, and I commend it to you.
improve the match between skills supply and demand to suit the local economy; up-skill those with no qualifications; improve management and leadership skills; and tackle issues relating to an ageing workforce.
So Semta is working strategically, not only to raise the skills of the current workforce to cope with the recession and take advantage in the upturn, it is also supporting initiatives to improve the talent pipeline of new entrants to these sectors. We are committed to building a stronger and more prosperous economy and to supporting the new, active industrial policy laid out in the Department for Business, Innovation and Skills New Industry, New Jobs white paper.
Sir Alan Jones Chairman, Semta
Foreword Contents
1 2 3 4 5 6 7 8 9
Semta and the Skills in its Sectors: our approach to a Summary Sector Skills Assessment What drives Demand for Skills? What is the Current Demand for Skills? What is the Current Supply of Skills? What is the Evidence of Current Mismatch? What will be the Future Demand for Skills? What will be the Future Supply of Skills? Can Supply meet Demand? Semtas response: Priorities for Action
1 9 13 15 19 23 25 27 29
Abbreviations References Annexes
33 35 41
Annex A: Annex B: Annex C:
The realities of Semtas sectors Structure of the current workforce in Semtas sectors Skill Shortages
1 Semta and the Skills in its Sectors: our approach to a Summary Sector Skills Assessment
Science, engineering and manufacturing are strategic UK industries. Semtas remit is large and important, summarised in headlines as follows: Some 75,000 companies and a workforce of some 2 million 1 make up our footprint; UK engineering and science turnover was 257 billion in 2007; British engineering exports amounted to over 130 billion in 2006: 40% of total UK exports of goods and services; and The UK is Europes top location for investment in pharmaceutical and biotechnology research and development. Semta is charged by government to assess and tackle skills problems within Science, Engineering and Manufacturing Technologies 2 . In practice this means a sectoral scope covering: Aerospace Engineering; Automotive Engineering (including Rubber Tyre manufacture and repair); Bioscience; Electrical Engineering; Electronics; Marine Engineering; Mechanical Engineering; and Metals (including Metal Products and Wholesale Metals and Scrap). The key geographical characteristics of these sectors are shown in Annex A. The sectors all have certain skill needs in common, but detailed analysis over recent years has confirmed that each also has certain of its own specific skills requirements and priorities. An assessment of the skills position in Semtas footprint would therefore require, for each dimension, eight separate sets of analysis in order to be fully valid and comprehensive. This detail will be presented in the forthcoming full report of the Semta Sector Skills Assessment. However, the requirement for this summary is to present full coverage of the skills position of Semtas sectoral scope within a much shorter document. This summary will therefore focus on a broader-brush description, and will, among other things, provide perspectives on indicators for three categories of science and engineering employers. These three classes of activity within Semtas sectors, broadly corresponding to three stages in the maturing of technologies, are: Science industries (Bioscience sectors 3 ) Leading edge technology industries (Electronics, Automotive, Aerospace and Marine) Mature engineering industries (Metals, Metal Products, Electrical Equipment and Mechanical Equipment). This characterisation allows the important differences between sectors of different degrees of maturity to be recognised. The approach picks up on the High-, Medium- and Low- Technology classifications recognised in the OECD categories 4 of manufacturing, differentiated by thresholds of the ratio of Research and Development (R&D) Expenditure to Sales (the distinctions between
1 2
Labour Force Survey (LFS) estimates, including self-employed as well as employed status contributors see http://www.semta.org.uk/ 3 covers Research and Development (R&D) activity within Pharmaceuticals (SIC 24.4), with manufacturing handled by Cogent - see http://www.cogent-ssc.com/), Manufacturing of medical devices, and Science and Engineering R&D) 4 see Hatzichronoglou (1997)
the three categories are in fact made on a measure of profit plough-back, using (for UK sectors, rather than the OECD average) the ratio of R&D expenditure to operating surplus 5 . The sectors, and SIC categories, allocated to each industry group are shown in Annex A. It is important to note that maturity of a technology cannot be an excuse for complacency: even businesses with decades of successful international business in an established technology can be enhanced through deployment of innovation to strengthen their competitive position. To ensure survival and prosperity in the global marketplace, all enterprises should seek improvement in many ways, including productivity-enhancing incentives and business process improvement (e.g. Lean Manufacturing) as well as technological innovation, which relies on advanced technical skills. It is also important to recognise that many Semta sectors have strong value-chain relationships, where suppliers need to innovate to improve product and cost effectiveness to their customers. Leadingedge technology companies rely on companies in mature engineering industries as input to their supply chain. The geographical structure of Semtas sectors, showing the intensity of activity in the three industry groups across the United Kingdom, is shown in Table 1. Table 1: Distribution of activity in the three industry groups between the home nations
Science Industries England Scotland Wales N. Ireland UK
Source: ABI 2007 Workplaces 5,220 490 240 100 6,050 Employment 165,300 18,400 7,400 3,900 195,000
Leading-Edge Technology
Workplaces 12,620 780 630 250 14,280 Employment 375,200 34,900 30,900 14,000 455,000
Mature Engineering
Workplaces 47,840 3,250 2,230 1,410 54,730 Employment 707,200 56,800 49,100 21,100 834,200
Annex A shows more detail about the geographical distribution of Semtas sectors, including amount of activity in the three industry groups in the English regions, as well as the scale of activity for each of Semtas eight main sectors, across the home nations and English regions. As indicated the Semta sectors are massive contributors to the UK economy. Figure 1 shows the development over recent years of turnover in the three industry groups, with (1/10th of) the corresponding levels for All UK Manufacturing shown for comparison.
profit-related indicators are generally not so comparable internationally
Figure 1: Contributions to the UK Economy over recent years from the UK Science, Leading-edge technology, and Mature engineering industries, by comparison with All UK Manufacturing (scaled).
Billions
140
120
Mature Engineering Industries
100 LeadingEdge Technology Industries 80
60
AllUK Manufacturing/ 10
40 Science Industries (Bioscience)
20
0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
In summary, Mature Engineering industries continue to contribute the largest output; Output of all three industry groups has been growing since 2004, following the dip in the early years of the century arising from the impact on engineering of the dot.com bubble burst; Bioscience, though smaller in scale, has been growing steadily and strongly in the last 10 years; and Over the last five years, output from all Semtas industry groupings has been growing faster than UK Manufacturing as a whole.
The most significant element of these industries performance, from a skills perspective, is the productivity of their workforces. Figure 2 shows recent trends in the raw labour productivity for each (Approximate Gross Value Added per employee average over the year), with All UK Manufacturing by comparison.
Figure 2: Growth in raw labour productivity in the UK Science, Leading-edge technology, and Mature engineering industries, by comparison with All UK Manufacturing.
GVAperemployee 80,000 ScienceIndustries (Bioscience) 70,000 LeadingEdge Technology Industries AllUK Manufacturing 50,000 MatureEngineering Industries 40,000
60,000
30,000
20,000
10,000
0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: ABI
In summary, Productivity in the Science industries is the highest of the three groups, which arises partly because the added value in any one year has benefited from particularly high R&D in earlier years, sometimes many earlier years; the productivity increase between 2002 and 2007 amounts to 53%. Raw Labour Productivity in the Leading edge technology industries is next highest, though its growth over the last five years for which data is available is not as high as in the Science industries (38%), while Productivity in the UK Mature Engineering industries is lowest of the three (and below UK Manufacturing as a whole), though with a higher growth from 2002 to 2007 than achieved by Leading-edge Technologies industries, at 44.3%. Annex A shows recent trends for the three industry groups in relation to a number of other important indicators, including Export performance; Profitability, Capital investment, and R&D expenditure.
The Workforce in Semtas sectors: key realities for sound analysis Reality 1: the importance of occupations Skills policy in the UK recognises the importance of the Sectoral dimension. However, most skillsets and labour market trading are, with the exception of the lowest skill levels, occupational. The actual structure and scale of the workforce covered by Semta can be seen in Table 2, which shows the estimated numbers of people employed in the different sectoral and occupational groups. Table 2: the structure of the workforce
Semtas sectors (e.g. Aerospace Engineering Manufacture, Bioscience, Metal Products manufacture) Science and Engineering occupations (e.g. Biologists, Mechanical Engineers, Lab Technicians, Electrical and Electronic Technicians, Metal Fitters, etc.) All other occupations (e.g. Accountants, HR professionals, IT practitioners, Admin staff, cleaners, etc.) Total all occupations All other sectors (Banking, Local Government, Transport, Software companies, Healthcare, Catering, Hospitality) Total All Sectors = Whole economy
913,000
2,580,000
3,493,000
1,056,000
24,804,000
25,860,000
1,969,000
27,384,000
29,353,000
Source: employment estimates from Experian analysis of ONS Labour Force Survey (LFS) data 2008
The matrix shows the different sectors represented by the columns, while the occupations, and their skill-sets (and the labour markets in which these skills are traded), are represented within the rows. Annex B shows in more detail the matrix structure of the workforce for which Semta has responsibility, and the size of each element of the workforce. This representation also shows that, while key occupations, and their skill-sets, are of core importance to Semta, people in these occupations also work in other industries, sometimes in significant numbers. Thus, for example, while most Mechanical Engineers work in companies within Semtas sectors, there are also significant numbers working within other sectors in this case including the construction and building services industries, oil and gas, and passenger transport. This reality has recently led the UK Commission for Employment and Skills (UKCES) to attribute greater importance to occupations, and to introduce the allocation of responsibility for occupations, as well as for sectors, to specific Sector Skills Councils. The main implication of the fact that most of the key technical occupations on which Semtas sectors extend across other sectors is that employers in Science, Engineering and Manufacturing technology sectors have to compete with employers in those other sectors to attract the best talent. Reality 2: Mismatches of supply and demand for skills are essentially an issue of quality (not numbers). As long as there remain unemployed people who genuinely want to work (and that is likely to be the case in all economies), then there can always be applicants for a job vacancy. The issue is the degree of match between the capabilities of candidates and the requirements of the job. Rarely in a buoyant economy is there a perfect candidate. Thus the challenge is assessing the gap between the apparent capabilities of actual candidates and what is required for the role.
The issue for the recruiting employer is effectively assessing the limits to the size of that skill shortfall gap, given the various constraints under which businesses operate. Real employer recruitment decisions can often be of the type: Given the fact that we have to have someone to start next month if we are to deliver on that important contract, we can probably live with these (apparent) limitations of this candidates abilities It is therefore not meaningful, although superficially appealing, to talk about a specific quantitative shortfall. Reality 3: the limitations of the linear assumption about workforce entry. The need for a focus on occupations is even greater when assessing the relationship between employer demand and educational provision. Learning provision, at whatever level and in whatever context, involves acquisition of knowledge, and to some degree, the accompanying skills. Where this knowledge is technical it relates mostly to occupational expertise (albeit in some cases, groups of occupations), but rarely to sectors. In particular, in education (as opposed to training), knowledge and learning provision is generally structured around subjects. With Semtas scope, there is a natural focus on Science, Technology, Engineering and Mathematics (STEM) subjects and skills. Figure 3 (adopted by the former Department for Innovation, Universities and Skills for their 2008 consultation on demand for STEM skills DIUS, 2009) shows the various possibilities for labour market entrants with STEM-related qualifications. Figure 3: work opportunity choices for those with different qualifications
Employers in STEM skill Core Sectors
(e.g. aerospace manufacturers) occupations using STEM skills (directly) occupations not using STEM skills
Those with STEM Qualifications
Employers in STEM skill User sectors

(e.g. airlines)
occupations using STEM skills (directly) occupations not using STEM skills
Those with other Qualifications
Employers who do not use STEM skills

(e.g. social work)
occoccupations upationsnot usinot using ngSTEM STEM skills skills
The wide range of work possibilities that exist, for each individual with STEM knowledge and skills to offer, must be recognised for a sound understanding of the realities of technical labour markets. The linear model for professional formation and labour market entrants i.e. that those who have 6
studied electrical engineering go straight into electrical engineering work, and those with accountancy degrees go and work as accountants is now recognised to be an unrealistic view of the world. While the scale of flows over recent years of engineering graduates into financial services has generally been exaggerated, it is the case that the fraction of engineering graduates going into firms in sectors corresponding to the precise engineering discipline they have studied is comparatively low in most cases. The same applies to Science, where over recent years less than one-third of those graduating from any core biological sciences courses 6 entered work in Bioscience, and only one-tenth of mechanical engineering graduates went into the mechanical equipment sector. While this is true at all levels of initial workforce entrants (school leavers, college students and Apprentices), it is most strongly evident (and statistically evidenced) in relation to the first destinations of graduates. Perhaps the most important conclusion from this reality is that recruiting employers in Semtas sectors are in sometimes fierce competition with a number of other employers for the talent of those with good STEM knowledge and skills. As a result, in most cases where employers are not finding it easy to recruit e.g. new graduates of the required calibre with relevant science or engineering degrees, this problem is very unlikely to be resolved by attempts to increase the number of people on these (degree) courses: the answer is more likely to lie in the need to increase the attractiveness of work in that sector/occupation.
Reality 4: workforce entrants from the formal education system are not employers only source of skills supply. Figure 4 shows that employers recruit new staff both from those entering work for the first time, and those with experience, and sometimes with relevant qualifications, who move between employment of different kinds, as well as on re-entering the labour market after career breaks for whatever reason. Figure 4: The dynamics of workforce flows 7
Other Work (other sectors and/or occupations) Initial Workforce Entry Higher Education Apprenticeships Further Education + other VET School Leavers
Inter-employer moves in same sector and occupation
Cease Work
Suspend Work Family-raising, re-training etc.
i.e. Broadly-based Bioscience programmes, Biology, Botany, Zoology, Genetics, Microbiology, Molecular Physics, biophysics and biochemistry, and other courses in Biosciences. 7 adapted from ITNTO/AISS, 1999
Much debate in skills policy focuses on initial entrants, and on full-time education arrangements. This is clearly important, not least since these are the main flows of new talent into labour markets, and the value of the knowledge and skills possessed by those leaving full-time education is important for the economy. However, it is essential to be aware that, as well as those leaving full time education, new skills supply also arises from those completing Vocational Education and Training (VET), and from those whose skill levels have been raised through workplace and work based learning provided either directly or indirectly - by employers themselves. This confirms the need for skills policy to extend beyond attention to current full-time education systems, arrangements, and funding, and consider also factors that could encourage and support skillsacquisition in these different contexts.
What Drives Demand for Skills?
It is important with all enterprise support policy, including skills, to recognise that macro-economic perspectives are often not how issues are seen at the company level. At the macro level, the main drivers are reasonably well recognised, i.e.:
Globalisation Economic growth Technology development Demographics Multi-level governance and regulation Environmental change Changing identities and values Consumer demand
At the level of the business, drivers are manifest in relation to market developments (often influenced by the above factors), and skills needs generally arise in response to business drivers. Semta has been leading a major skills initiative with employers in its sectors, within the framework of the Sector Compact. This is a 100 million government commitment to investing in improving workforce skills in the science, engineering and manufacturing technologies sectors 8 . Semta is working with companies to identify how skills investment can improve their business, set measurable targets and evaluate the impact of training. This investment helps employees towards a number of different qualifications and training routes including National Vocational Qualification (NVQ) Levels 2, 3 and 4, Apprenticeships, Management & Leadership and Business Improvement Techniques. Table 3 summarises the initial survey of companies involved in Semtas Sector Compact. In total, 539 companies completed a Business to Skills diagnostic, stating the following drivers as most important to their business. Table 3: Business drivers ranked in a survey of Sector Compact companies
Business Driver Quality, Cost & Delivery (QCD) Age Profile Ways of working/Processes Economic Conditions Local/Global Competitive Pressures Markets Technology Waste Management/Reduction Safety, Security and Environment Legislative
* (Employers were able to cite more than one Business Driver)
Number of mentions* 169 131 122 72 68 65 51 33 30 23
169 employers mentioned Quality, Cost & Delivery (QCD 9 ) as a business driver, and this probably reflects the importance of lean manufacturing to the employers in Semtas sectors.
8 9
see http://www.semta.org.uk/employers/funding_for_skills_training/sector_compact.aspx business performance measure see DTI (2005)
Expected Future Demand drivers in a global context Success in Science, Engineering and Manufacturing Technologies will depend in the coming years on a range of skills relating to science, technology and engineering. Investment in ensuring the right people with the right skills at the right time will be critical to productivity, competitiveness and innovation. The main drivers for skills change in the manufacturing environment as noted by the European Commission (see Manufuture a vision for 2020) are: Increasingly competitive global economic climate In future, manufacturing companies will be more dependent on flexibility and speed, as well as on localised production. Manufacturing is also likely to become more service-orientated due to increased customer demand. This will have consequences for the organisation of production, supply-chain management and customer relations. Furthermore, there is a continuous increase in foreign direct investment in manufacturing outside Europe. Asia and China in particular are becoming an increasing force in the global marketplace. Despite the inevitable exodus of less-skilled production jobs to lower-wage countries, countries like China will generate huge demand for imports and their lagging technical competence will take some time to redress. India also envisages the prospect of seizing a substantial share of global contract manufacturing business. Rapid advances in science and technology This will include the fields of nanotechnology, materials science, electronics, mechatronics, ICT and biotechnology. The development of new production processes based on research outcomes, and the integration of hitherto separate technologies exploiting the converging nature of scientific and technological developments, may radically change both the scope and scale of manufacturing. Environmental challenges and sustainability requirements The manufacturing sector will also have to comply with stricter environmental regulation in future, which should further stimulate the adoption of energy- and resource-saving technologies. Socio-demographic aspects Manufacturing in 2015 to 2020 will be called upon to provide solutions meeting new societal needs and the demands of an increasingly ageing society, having an impact on mobility, size of the labour force, and on customer requirements. At the level of the labour supply, manufacturing and research sectors will be confronted by the retirement of the large numbers of older workers currently in the workforce, while innovation might require completely new sets of skills, the availability of which, in both manufacturing and research, could become a critical factor. The regulatory environment, standards and IPR Stricter environmental and safety regulation will no doubt lead to changes in manufacturing. The intellectual property rights (IPR) system might have to respond to changes in an innovation process that is increasingly based on knowledge sharing and networking. The adoption of new technologies in manufacturing will also depend on the availability of industrial standards and testing procedures. Values and public acceptance of new technology There is a need to take ethical concerns into account when science and new technology are being adopted and exploited. At the same time, it should be noted that this could lead to Europe falling behind in some areas of technology.
10
In the Semta Labour Market Survey 2007, UK Engineering employers were asked to identify reasons for skills changes over the last 2-3 years and why skills would change over the next 2-3 years. The key drivers of skills change include, in order of importance: The introduction of new technologies or equipment. Development of new products and services. New legislative or regulatory requirements. Introduction of new working practices.
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What is the Current Demand for Skills?
The technical skills required in the Science, Engineering and Manufacturing Technologies industries are based on a set of underlying scientific principles (the underpinning knowledge for each occupational role), plus the expertise of applying these to a multiplicity of real world problems (the application skills), tempered with the understanding of what works cost-effectively that comes from experience with a wide range of practical situations and constraints (providing the overall competence of an experienced employee). The realities of demand for additional skills resource can probably best be estimated by the evidence of relevant employers recruitment activity. Table 4 shows, for 2007, the amount of recruitment carried out (all occupations) by Engineering employers, and the split between different types of recruit. Table 4: Recent recruitment evidence from Engineering employers
Percentage of Engineering establishments that have recruited in the last 12 months Percentage of establishments recruiting by type of employee:
Recent Graduates
Workers aged over 45
Young people (16-24) inc. trainees
Other
Metals Mechanical Equipment Electrical Equipment Electronics Automotive Marine Aerospace Other Transport Equipment Engineering (UK)
29% 27% 30% 29% 38% 26% 34% 33% 29%
6% 10% 11% 20% 9% 20% 11% 11% 10%
34% 38% 29% 35% 40% 28% 43% 25% 34%
45% 53% 48% 45% 48% 64% 37% 64% 48%
31% 24% 32% 29% 30% 14% 36% 24% 29%
Source: Semta Labour Market Survey (LMS), 2007 (base = 2,567) Weighted data
This confirms that recruitment by Engineering employers extends across a wide range of supply channels, well beyond the new graduate market, and emphasises the importance of a supply of adequate applicants both of experienced workers and those who complete Vocational Education and Training (VET) courses. While it is important to remember that new graduates are not the beall-and-end-all of recruitment, the need to strengthen innovation in response to increasing global competition, and the fact that science- engineering and manufacturing technologies will increasingly be a central part of the knowledge economy do emphasise the strategic nature of this element. It may be less a question of numbers than of quality. The picture for Bioscience employers in 2009 can be summarised as follows: 48% had recruited in the past 12 months Of those that recruited, 11% recruited school leavers, 10% recruited apprentices, 44% recruited people with a bachelors degree, 28% recruited people with a Masters degree and 33% recruited people with a PhD. Overall, as shown in the decline of employment levels (Annex A Figure A-2), Semtas sectors, with the exception of Bioscience, have limited expansion growth in their workforces. However, the age profiles of this workforce (with greater representation of older workers), demonstrates that there continues to be considerable need for more workers each year in terms of replacement demand.
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It is also essential to recognise, when skills demand is being considered, that demand is heavily influenced by employers product/service market strategy. It is not always the case that higher product/service (quality) specification requires higher level skills for effective delivery, and there are questions about the prevailing assumption of relentless rise in employer demand for more and higher skills. Significant change in demand patterns would be dependent on shifts in businesses market positioning and work organisation.
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What is the Current Supply of Skills?
As indicated in Section 1, skills supply consists, for employers, of three main components: 1) The skills of current staff, which will continue to represent the majority of the human resources and talent that an employer can deploy in the coming months and years; 2) The additional skills of current staff that can be achieved by investment by the employer (and sometimes by an individual staff member) which can be viewed as the employer tackling its own skill gaps 10 ; 3) The additional skills of new recruits, from one or more of three sources: a) Recruitment of experienced people, generally moving from other employers; b) Recruitment of less experienced workers, but who bring certain specific skills and competence, on completion of relevant vocational education and training; and c) Recruitment of generally inexperienced workers, from those completing full-time general education (school, college or university and with general qualifications at differing levels e.g. from HE graduates, postgraduates and post-doctorates). Public policy generally assumes that components 1 and 2 are essentially the responsibility of employers themselves, and not of the state. In particular, the need to retain as much of its valued existing skills base as possible relies on a companys leadership and management capabilities the achievement of an overall working environment that makes good people want to stay. However, learning providers whose core income arises from public funding will often have a role to play in the upgrading of employers skill-sets, i.e. in addressing skills gaps inadequate competence within the current workforce. In particular, where a company is working to extend its capabilities for innovation (for example through appropriate and cost-effective use of new technologies and materials), the leading-edge knowledge available in some universities would be expected to represent an important asset. The Global Context Many of the larger companies within Semtas sectors are already major global players, while other smaller ones have ambitions to achieve this position. It is therefore essential when assessing skills demand and supply for UK science, engineering and manufacturing technologies enterprises, to think beyond the UKs national boundaries. It is also necessary to recognise that competition is global, not just in relation to winning new customers and new business (competition for sales), but also to winning world-class skills and talent (competition for skills). The international dimension of skills supply is important, partly because it represents a growing element of competition for UK businesses for talent, but also because, as well as being a threat, it opens up opportunities for UK businesses, and because it takes skills policy beyond the traditional assumptions of a focus on UK learning provision. In principle, the European Union (in fact the European Economic Area (EEA) and Switzerland) represents a single labour market. While there are clearly various practical challenges to workforce mobility around Europe (for example language
it should be noted that significant skill shortages experienced at recruitment will lead to increases in skill gaps, where employers recruit in spite of definite deficiencies in all candidates as a result the new recruit adds a further element of skills gap to the employers existing position.
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and pension transfer issues), in principle there are no legal barriers to recruitment by UK firms of talented staff from other European countries. It is likely, not least with the help of measures to improve the transparency of qualifications from other member states (through the European Qualifications Framework (EQF) and other initiatives), that such recruitment will grow. The situation beyond the EEA is importantly different, in that recruitment from, for example, Commonwealth countries requires gaining approvals for work permits and immigration. There are various elements of UK managed migration policy. While the debate continues about levels of migration flows, there is little disagreement that: admission through overseas recruitment can be justified where it really is almost impossible to recruit adequate levels of certain skills from the resident UK labour market, and such admission is understood to be a temporary measure, to be accompanied by action to accelerate increased supply of such skills in the UK labour market.
The two most relevant routes of the UKs new Points Based System (PBS): PBS Tier 1 (for highly-skilled migrants specified by high-level qualifications), and PBS Tier 2, where approval for admission depends on either an occupation being on the UK Border Agencys official shortage list, or the employer having conducted an unsuccessful Resident Labour Market Test (a genuine attempt to recruit from the resident labour market that has evidently produced no acceptable applicants).
Immigration is understandably a very hot political topic, but a small number of employers in Semtas sectors continue to recruit certain skill-sets from overseas when UK supply is inadequate. As indicated, employers in Semtas sectors need effective human resources in a wide range of functions, but the core skills that will determine the value a company can add in its core business are the technical skills related to science, engineering and technology. It is this that is therefore the major focus of an analysis of skills supply. Of the 17% of UK engineering companies with skills gaps, 70% had technical skills gaps (Semta Engineering LMS 2007).
i Retaining existing staff Perhaps the most obvious point about assuring the supply of the skills a company already has at its disposal is the need to retain valuable knowledge and skills of the existing workforce. While this may seem obvious, the sound leadership and management required for strategic workforce planning is not always present. ii Skill-raising of existing staff The increased focus on higher level skills to enable companies within Semtas sectors to move up the value chain can be evidenced by the changing qualifications profile of the workforce. Table 5 shows that over a ten year period (1999 to 2008) the overall proportion of the workforce with S/NVQ Level 4+ qualifications increased from 24% to 31% (+7%).
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Table 5: The changing qualifications profile of Semtas workforce, 1999 compared to 2008
Total Semta Qualifications level S/NVQ Level 4+ S/NVQ Level 3 S/NVQ Level 2 or below No qualifications
Source: LFS 1999, 2008
1999 24% 33% 30% 13% 100%
2008 31% 30% 30% 9% 100%
Annex B Table A5 highlights the change in qualifications profile for Semtas key industry groups. In terms of training activity for Semtas sectors, 67% of establishments trained their employees and of these 25% trained 90%+ of the workforce. However, 22% of establishments trained less than 25% of the workforce (NESS 2007). Table 6 shows that 1.85 billion was invested in training in Semtas sectors in 2007 and that there is an increasing use of off-the-job training for the workforce. To reduce overheads, employers are cutting back on in-house training facilities but there is also an issue about lack of internal capability and expertise to train others within the workforce. Table 6: Total training expenditure: on and off-the-job training
Total Off-the-job On-the-job % of training costs for offthe-job training 31% 44%
Semta 2005 Semta 2007
1,790m 1,853m
559m 823m
1,231m 1,030m
Source: NESS 2007 (LSC 2008)
To ensure an adequate supply of skilled people throughout the workforce, Semtas engineering employers use a number of training provision routes, particularly: in-house training, commercial training providers, equipment supplier/ vendor training, FE, employer associations/professional bodies and HE (Semta LMS 2007).
iii Recruitment of new staff
Experienced workers:
An ageing workforce (9% of the current workforce is aged 60 plus (LFS 2008)) will mean that significant numbers of skilled individuals will be leaving the industry in the near future, leading to further hard-to-fill vacancies and skills gaps as employers compete for the best talent.
Apprentices:
Only 11% of companies in UK Engineering provide apprenticeships: 57% of large sites, 39% of medium-sized sites, 25% of small sites and only 4% of micro sites (Semta LMS 2007). A general lack of applicants will compound future demographic problems and have an effect on numbers of new entrants via the apprenticeship route.
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New graduates:
In 2008/09, entries to GCE A level courses in mathematics, further mathematics, chemistry and physics increased significantly. In HE, first degree entrants showed encouraging rises in science courses with notable increases in physics, maths and engineering subjects. 11 However, 17% of Semta employers felt graduates were poorly prepared for work (NESS 2007), mainly in terms of practical skills. Process Excellence and Project Management are particular skills gaps among engineering graduates that need addressing. As an alternative to graduates, some employers are now focusing on technicians via the Higher Apprenticeship in Engineering.
Those completing VET courses:
In 2007, there were 71,775 engineering S/NVQ registrations (a 40% increase on 2003) and 48,511 certifications (a 33% increase on 2003). In terms of the supply of technicians to the sector, the trend in HND achievement shows a substantial decline which has not been compensated by growth in Foundation Degree achievements. 12
(Secondary) School-Leavers:
There has been an upward trend in the numbers doing GCSE physics, mathematics and single science and a decrease in numbers doing GCSE Double Science and Design and Technology. 13 The Diploma in Engineering was introduced in September 2008. Available at three levels (1, 2 and 3), 2,800 learners took up a place, making it one of the most popular Diplomas to be delivered. 14
However, this positive news must be must be taken in the context that 33% of Semta employers felt that 16 year old school leavers were poorly prepared for work (NESS 2007).
11 12
DBIS (2009e) HESA (2007) 13 JCQ, 2009 14 Science and Innovation Investment Framework - 2004:2014 Annual Report 2009, BIS
18
What is the Evidence of Current Mismatch?
There are a number of key elements that make up the international competitiveness of an enterprise and a sector, and HMG (now the Department for Business Innovation and Skills) monitors the performance of UK Business in five key Productivity and Competitiveness Indicators (DBERR, 2008): Investment Innovation Skills Enterprise, and Competition The indicator in relation to Skills that has received the most attention is labour productivity. While there are many pitfalls to making valid international comparison of productivity, it is accepted that, in spite of very considerable growth in work commitment over recent years, and corresponding growth in productivity, there remains a real productivity issue in UK manufacturing by comparison with competitor economies (Engineering Employers Federation (EEF), 2002, 2005 and Sector Skills Development Agency (SSDA), 2005, 2007).
It is true that productivity and competitiveness depend on more than skills, and that labour productivity in Semtas sectors has, as shown in Figure 2, grown encouragingly over recent years. However, it is essential to bear in mind when considering skills issues that labour markets are, in economic terms, secondary or derived - markets, arising only in response to the needs of players in primary (goods and services) markets. It is therefore important to remember when considering mismatches in labour markets that it is the implications of such market imperfections on the overall enterprise, innovation, investment and productivity of enterprises that are what really matters. Two elements of mismatch between labour supply & demand are generally considered in skills policy: evidence of skill shortages these lead to problems when employers try to recruit people (in the UK labour market) with particular skill-sets, and evidence of skill gaps where not all employees are felt to have the full set of skills/competences necessary to carry out their work to the standards expected.
As indicated above, the tackling of skill gaps is generally understood to be the task of each employer, though there might be a possible role for the state if adequate learning provision were not available for the employer to invest in. This would involve a case being made for there being a market failure. At the higher knowledge and skills levels often necessary for innovation, learning provision from Higher Education Institutions (HEIs) might well be necessary. University structures and funding mechanisms do not generally make it very easy for HEIs to deliver the targeted bite-sized learning provision that businesses generally need. The Governments overall strategy (DBIS, 2009b) is to encourage and support this more flexible type of provision. Semta will continue to monitor, through its employers, the quality and effectiveness of such focused provision. Skill shortages have long been the focus of interest in labour market and skills policy research, but their presence is often claimed and rarely proved. Annex C summarises current understanding of attempts to assess serious skills shortages, and explains the important recent work on occupational skill shortages carried out by the Migration Advisory Committee (see, for example, MAC, 2009). The current evidence of supply and demand mismatch of skills relevant to Semtas employers thus arises from two sources: Source 1) Evidence from Semtas own primary research (Labour Market Surveys LMSs - of relevant employers) that covers occupations (or skill-sets that relate to occupations), and Source 2) Evidence from the MAC work of occupations that have been deemed to be in serious shortage.
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1) Semtas most recent evidence on hard-to-fill vacancies and skills gaps experienced by its employers: Shortages in Bioscience (Bioscience LMS 2009):
19% of establishments had hard-to-fill vacancies over the last 12 months 15% of establishments reported skills gaps over the last 12 months 11% of establishments had hard-to-fill vacancies over the last 12 months 17% of establishments reported skills gaps over the last 12 months
Shortages in Engineering (Semta LMS 2007):
Table 7: Shortages in Engineering sectors

% establishments reporting hard-to-fill vacancies over the last 12 months % establishments reporting skill gaps over the last 12 months
Metals Mechanical Equipment Electrical Equipment Electronics Automotive Marine Aerospace Other Transport Equipment Engineering (UK)
Source: Semta LMS 2007
10% 11% 9% 10% 12% 21% 15% 11% 11%
17% 18% 16% 16% 22% 30% 11% 24% 17%
It is estimated that 6% of Semtas workforce had skills gaps (NESS 2007). Analysis of data from Semtas LMS 2007 highlighted varying degrees of strategic manpower planning capability. Establishments with the most poorly developed HR capabilities and commitment had the following criteria: Employment stable or decreased over last 12 months Not recruited over the last 12 months Do not expect skills needs to change over the next 2-3 years No training undertaken over the last 12 months or does not know Do not identify any workforce skills gaps or does not know
Overall, 15% of UK Engineering companies (covering some 4% of total engineering employment) had poor strategic manpower planning capability. Most of these companies were either micro (<10 employees) or small (10-49 employees) businesses that tend to form the supply chain of larger companies. It was felt that these companies were most at risk in the current recession as they are least equipped to face future skills related challenges.
2) Occupations of importance to Semtas sectors currently deemed by the MAC to be in shortage:
The latest shortage occupation list recommended by the Migration Advisory Committee (October, 2009) includes the majority of Professional Engineering- (e.g. Mechanical and Electrical Engineers), and Technician- (e.g. science and engineering technicians) occupations. While in many cases the list indicates that the shortage is occurring in the Energy and Utilities sectors, as explained in Section 1, because occupational labour markets are broadly unaffected by sectoral boundaries, this both indicates more general challenges with such occupations and re-emphasises the competition for businesses in Semtas sectors for the best talent. 20
Mismatch can also arise in relation to under-utilisation of employee skills. Close examination of skills utilisation within Semtas sectors confirms that there is a significant element of using people for tasks that do not make use of their knowledge and skills. While this can happen in the early years of careers, there remain concerns in a number of Semtas sectors (in particular Bioscience) that graduates are being used too often in roles in which good technician or apprentice could probably be more effective and/or cost-effective. As recognised in the new Government skills strategy Skills for Growth, this strengthens the case for accelerating the supply of technicians through step increases in apprenticeship programmes. Finally, it is important, as well as examining shortages in the current labour market (as shown by recent labour market evidence) it is necessary to think ahead about likely needs in coming years. This is addressed in more detail in Section 8, but it is worth noting that Government has recently committed to a strategic programme in support of likely growth sectors (see DBIS 2009b). With reduced uncertainty arising from a clear industrial policy commitment, it is possible to assess, and then tackle, the expected shortages. These areas are addressed in the SSC Cluster reports produced at the same time as this Summary, and the main Science and Technology Cluster areas are shown in Section 9. The technology areas of most direct relevance to Semtas sectors are also most relevant to Advanced Manufacturing, in particular: new technologies in aerospace plastic electronics technology silicon electronics composite materials industrial biotechnology nanotechnology.
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What will be the Future Demand for Skills?
Assessing future supply and demand for skills is both very complex and inherently risky. Many factors play a role in the way technologies are deployed and how businesses and markets develop. A recent major study of foresight scenarios for IT skills for the European Commission (CEPIS, 2007), identified 90 change drivers that could influence their demand and supply, and it was recognised that more drivers would probably emerge, were there to be another project workshop The Institute for Employment Research (IER) at the University of Warwick has produced, over recent years, ten-year look-aheads (using a single most probable - scenario) for the UK economy, with employment level breakdowns by both sectors and occupations. The most recent, for 2007 to 2017 (UKCES, 2008), is currently being revised to take into account the impact of the major economic downturn since the 2007 forecasts were run, amply proving the risks involved in forecasting. Semta has commissioned the IER to refine its models in relation to Semtas sectors, and new projections will be available soon. In broad terms, overall employment levels are expected to continue to fall in the coming years for Engineering Manufacture, while levels are expected to rise slowly but steadily in the Bioscience sectors. In spite of the fact that expansion demand will be negative, recruitment requirements in the coming years will continue to hold up, because of the significant amount of replacement demand. This arises particularly from the substantial attrition expected in the coming years from the retirement of the vast majority of the post-war baby-boom cohort. The projected net new requirement shown in Table 8 is based on projections produced for Semta in 2007, with some corrections for the recent downturn in employment, not anticipated in 2007. Table 8 Estimates of future new requirement in the next 5 years and the implications for annual new demand
UK Engineering Sector Metals Mechanical Equipment Electrical Equipment Electronics Automotive Marine Aerospace Other Transport Equipment Engineering (UK) Projected new requirement 2010-2014 61,500 31,800 17,400 17,300 18,300 1,800 8,600 5,600 162,300 Projected requirement per annum 12,300 6,360 3,480 3,460 3,660 360 1,720 1,120 32,460
From Annex B, Table A-6, it can be seen that management, professional and technician occupations now make up 54% of Semtas workforce (41% ten years ago) and this shift can also be seen through Semtas key industry groups. 15 This move to higher level skills has helped to drive innovation and competitiveness of Semtas sectors. In terms of the future occupational profile, there is expected to be an even greater focus on higher level skills as a proportion of the total workforce, albeit not at the same growth rate of the last ten years.
15
LFS 1999, 2008, ONS
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It is important (see UKCES, 2008) to emphasise that the projections prepared by the IER are not the only possible future 16 . They represent a benchmark for debate and reflection. The detailed projections present a carefully considered view of what the future might look like, assuming that past patterns of behaviour and performance continue over the longer term. The forthcoming full Sector Skills Assessment will examine the factors around the more likely variations on the IER benchmark scenario.
16
various foresight scenarios and their implications are elaborated in Semtas Sector Skills Agreements see http://www.semta.org.uk/about_us/media_centre/sector_skills_agreements.aspx
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What will be the Future Supply of Skills?
i Retaining existing staff As the value of human resources in general, and of technical expertise in particular, to the future productivity and competitiveness of enterprises in Semtas sectors becomes more evident, it is expected that employer commitment to retention of the most valuable skill-sets and workers will rise. Over time, those enterprises that cannot keep their most valuable contributors will not thrive, and in some cases not survive.
ii Skill-raising of existing staff Commitment to companies investment in their human resources is likely to continue to grow, not least as experience is gained in securing the greatest return on training and related investment. iii Recruitment of new staff
Experienced workers: This is expected to continue, though employers efforts to increase retention could reduce the amount of churn/career development movement.
Apprentices: Current Government commitment to raising apprenticeship numbers should have a positive impact, with improvements in apprenticeship design accelerating the supply, and raising the value, of apprentices to employers. Growth in apprenticeship numbers in Science industries is to be anticipated, following significant investment in relevant vocational qualifications and apprenticeship frameworks.
New Graduates: The recovery of interest in STEM subjects evident from A level cohort sizes and Universities and Colleges Admissions Service (UCAS) trends should generally increase flows through relevant HE courses. Availability of graduates with relevant knowledge (and certain skills) at both first degree level and beyond is likely to increase, and remain sufficient not to be a constraint on recruitment. Growth in the proportion of those graduates particularly attractive because of their industrial experience will continue to depend on the investment that science and engineering employers make in offering work placements.
Those completing VET courses: There has been strong growth in the numbers taking vocational qualifications within Semtas engineering sectors. However, numbers have started to fall recently as employers have started to cut back on training. Numbers taking Business-Improvement Techniques (B-IT) S/NVQs are encouraging due to the need to create a culture of process excellence and lean manufacturing.
(Secondary) School-Leavers: In 2008/09, individual GCSE science entries show very noticeable increases. The UK Science and Society strategy has been launched with Expert Groups on Science Learning and Science for Careers set up to advise Government on strengthening science and mathematics education and improving science careers information, advice and guidance. 17
17
DBIS (2009e)
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Can Supply meet Demand?
As indicated in Section 1, we believe that the relevant question is in fact: can supply at an adequate quality level meet expected future demand? Semtas assessment in the light of the analysis for this Summary is that supply in the coming years could indeed meet likely demand, though maximising the quality of candidates and deployment of talent would need a number of current plans to be effectively implemented: 1) Employers to further develop the effectiveness of harnessing their teams skills-sets in support of greater productivity and competitiveness through a) Exploring the benefits of raising their demand for level and quality of talent in support of higher specification products and services; b) Working with employees to facilitate the raising of skills of real relevance to innovation and productivity, particularly technician level skills and fostering a culture of training and continuing professional development (CPD); c) Enabling the shift into higher value manufacturing will require increased ability to multi-skill or up-skill the existing workforce, particularly adults, to effectively utilise their skills. 2) Learning providers at all levels to strengthen their focus on delivering learning in support of employers need (in relation to learning content relevance, delivery and quality), drawing on the various quality-raising resources available, with a particular focus on the provision of training in process excellence and lean manufacturing. 3) Image and attractiveness of the sector will need to be improved to attract a greater share of a diminishing pool of potential new entrants, otherwise there will not be sufficient supply to cover future replacement demand due to retirement. The issues above are further explored in Section 9 as they overlap with the key sector priorities identified by Semta and its employers, via the Sector Strategy Groups (SSGs), as part of the Sector Skills Agreement process.
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Semtas response: Priorities for Action
This section summarises, in the light of the foregoing analysis, Semta current priorities, which will continue to be reviewed as both market and policy conditions evolve. The following common themes were highlighted across Semtas Engineering sectors from the Sector Skills Agreements:
Key Theme 1: Leadership and Management This is the most important of the four themes since if managers are not interested in up-skilling then the rest of the organisation will not do it. Specific Leadership and Management (L & M) training is considered to be the foundation of good management practice required for any company to build a more robust and competitive business. Only 49% of managers in Semtas engineering sectors are qualified to S/NVQ Level 4+ (this figure was 45% ten years ago). Key Theme 2: Process Improvement (Productivity and Competitiveness) Relatively few companies in Semtas sectors are using process improvement techniques, particularly SMEs. This has to change over the next five years. It is essential that many more companies in these strategic sectors are utilise accredited process improvement tools and techniques to compete in a global economy to survive, grow and sustain their position. Implementation of lean manufacturing processes will enable companies to create quality products, high productivity and excellent customer service. This will directly improve bottom line performance. Key Theme 3: Technical Workforce Development 70% of engineering establishments that reported skills gaps have technical skills gaps, mainly among their core technical workforce (professional engineers, technicians, craftspersons and operatives). The skills gaps in these technical roles have the most significant impact on the business (Semta LMS 2007). The main technical skills gaps included: CNC machine operations, tool making, Computer Aided Manufacture (CAM), tool setting, metal working, electrical skills, electronics skills, welding and general engineering skills. Key Theme 4: Strategic Workforce Planning In 2007, 52% of Semtas engineering employers felt that their employees would not need to acquire new skills or knowledge over the next 2-3 years, ranging from 26% of large establishments to 57% of micro establishments. This highlights the varying strategic workforce planning capability of engineering companies, particularly for SMEs. Poor strategic workforce planning capability links directly to the need for better management skills in this area, because skill requirements are certain to change in the future due to the innovative, complex and competitive nature of the sector. Only 11% of companies in the UK Engineering sectors provide apprenticeships. There is a need to increase the number and quality of apprenticeships (particularly at medium and small sites) to offset the skills lost through retirement and leavers, and new skills needed through changing technology. This will go some way to alleviate a future shortage of technical skills.
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The following themes were highlighted across Semtas Bioscience sectors from the Sector Skills Agreement:
Key Theme 1: Leadership and Entrepreneurship This is viewed as a significant area of opportunity and improvement for the sector, not only in the large companies, but also in the smaller biological labs where often technically competent and academically strong young entrepreneurs require improved support and business acumen/skills to grow and develop the business. It is important to encourage leadership at a regional/local level in partnership and through existing clusters and networks to develop a critical mass of influence.
Key Theme 2: Top Quality Workforce Closing the skills gap by increasing the supply of quality people. Identify core subjects and activities within the curriculum i.e. the STEM subjects and a focus on practical skills.
Key Theme 3: Image and Attractiveness To help the public at large have a better understanding of science generally (science literacy) and Bioscience as a consequence of improved general education and a more balanced representation of information in the public domain i.e. industry should take a more participative role in this area. Encourage young people to aspire to a career in science and engineering and increase the number of adults employed in other sectors to consider Bioscience as an attractive and rewarding sector when retraining and up-skilling as a consequence of redeployment and/or career advancement.
Key Theme 4: Networks and Clusters Networks and clusters are a critical enabler. Cluster development is central to the growth of bioscience and actively supported by the Government since the 1999 Sainsbury report (Biotechnology Clusters - Report of a team led by Lord Sainsbury, Minister for Science). Skills are an important component of successful clusters, along with proximity to suppliers and markets. Delivery of provision will be even more successful if pursued through the clusters and networks already developed.
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Figure 5: Summary of sector-specific priorities

Diagram illustrating the themes for priority action and relationship to the respective Sector Strategy Groups across Semtas footprint. Automotive Bioscience Electronics Metals, Mechanical Electrical Aerospace
Key:
Lead priority SSA theme
Leadership and Management + Entrepreneurship (BIO) Technical Workforce Development + Top Quality Workforce (Bio) Productivity and Competitiveness + Process Improvement (MME) Strategic Workforce Planning (WSP) (SWP) Apprenticeships (MME) Image and Attractiveness (BIO) Networks and Clusters (BIO)
Semtas response to New Industry, New Jobs (DBIS, 2009a): In response to the recession, Government industrial policy has focused on a more pro-active approach, with the publication, in April, 2009 of a white paper presenting proposals for initiatives in relation to a number of strategically significant areas of technology, which could play a role in the UKs future global competitiveness. These are: Low Carbon Industrial Strategy Ultra low carbon vehicles Digital Britain Life sciences and pharmaceuticals Advanced manufacturing: - new technologies in aerospace - plastic electronics technology - silicon electronics - composite materials - industrial biotechnology - nanotechnology
The SSC network is contributing to this new direction, and Semta is active in a number of SSC clusters examining the skill needs in the different areas. Semta is leading the Advanced Manufacturing cluster and playing a significant role in a number of the others.
Marine
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Abbreviations
ABI ASHE BERD B-IT BOP CAD CAM CBI CEPIS CNC CPD DBIS DLHE DIUS DTI EEA EEF EQF EU FE GCE GCSE GVA HE HEI HESA HMG HNC/HND HR HtFVs IER IES IPR IT ITCE JCQ L&M LFS LMI LMS LSC MAC MME MRO NESS NSAM NVQ OECD ONS PBS PhD QCD R&D (ONS) Annual Business Inquiry (ONS) Annual Survey of Hours and Earnings Business Enterprise Research and Development Business-Improvement Techniques Balance of Payments (basis for international trade statistics) Computer Aided Design Computer Aided Manufacture Confederation of British Industry Council of European Professional Informatics Societies Computer Numerical Control Continuing Professional Development Department for Business, Innovation and Skills Destinations of Leavers from Higher Education (HESA datasets) (former) Department for Industry, Universities and Skills (former) Department of Trade and Industry European Economic Area Engineering Employers Federation European Qualifications Framework European Union Further Education General Certificate of Education General Certificate of Secondary Education Gross Value Added Higher Education Higher Education Institution Higher Education Statistics Agency Her Majestys Government Higher National Certificate/Higher National Diploma Human Resources Hard-to-fill Vacancies Institute for Employment Research Institute for Employment Studies Intellectual Property Rights Information Technology IT, Communication and Electronics Joint Council for Qualifications Leadership and Management (ONS) Labour Force Survey Labour Market Intelligence Labour Market Survey Learning and Skills Council (England) Migration Advisory Committee Metals, Mechanical and Electrical engineering Maintenance and Repair Organisations (Aerospace industry) National Employer Skills Survey (for England) National Skills Academy for Manufacturing National Vocational Qualification Organisation for Economic Co-operation and Development Office for National Statistics Points Based System Doctorate of Philosophy Quality, Cost & Delivery Research and Development
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SIC SME S/NVQ SOC SSA SSC SSDA SSG SSVs STEM SVQ SWP UCAS UK UKCES USA VET WBL
Standard Industrial Classification Small/Medium-sized Enterprise Scottish/National Vocational Qualification Standard Occupational Classification Sector Skills Agreement Sector Skills Council (former) Sector Skills Development Agency Sector Strategy Group Skill-Shortage Vacancies Science, Technology, Engineering and Mathematics Scotttish Vocational Qualification Strategic Workforce Planning Universities and Colleges Admissions Service United Kingdom UK Commission for Employment and Skills United States of America Vocational Education and Training Work-based Learning
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References
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EEF (2005): Catching up with the Continent Final report on EU and UK manufacturing productivity; Engineering Employers Federation, June 2004 (see http://www.eef.org.uk/NR/rdonlyres/65DD8600E113-4DE1-BEF5-F8F609365950/1304/catchingup.pdf - accessed October 2009) European Commission (2004): Manufuture a vision for 2020: Assuring the future of manufacturing in Europe; Report of the High-Level group November 2004 (see http://www.manufuture.org/documents/manufuture_vision_en%5B1%5D.pdf accessed November 2009) Hatzichronoglou, T (1997): Revision of the High-Technology Sector and Product Classification , OECD Science, Technology and Industry Working Papers 1997/2 (see http://titania.sourceoecd.org/vl=6612954/cl=15/nw=1/rpsv/cgi-bin/wppdf?file=5lgsjhvj7nkj.pdf accessed November, 2009) HESA (2007): evidence from Higher Education Statistics Agency 2007 datasets ITNTO/AISS (1999): Skills 99 IT skills summary; Information Technology National Training Organisation/Alliance for Information Systems Skills, 1999 JCQ (2009): evidence from Joint Council for Qualifications 2009 datasets LFS (1999, 2009) ONS: evidence from the Labour Force Survey 1999 and 2008 datasets LSC (2008): National Employers Skills Survey 2007: Main Report; Learning and Skills Council, May, 2008 (see http://readingroom.lsc.gov.uk/lsc/National/nat-nessurvey2007mainreport-may08.pdf accessed October, 2009) MAC (2009): Skilled, Shortage, Sensible: Second review of the recommended shortage occupation lists for the UK and Scotland: Autumn 2009; Migration Advisory Committee, October 2009 (see http://www.ukba.homeoffice.gov.uk/sitecontent/documents/aboutus/workingwithus/mac/first-reviewlists1/0409/mac-2nd-review-09?view=Binary accessed November, 2009) ONS (2009): UK Business Enterprise Research and Development 2007; Office for National Statistics, 30 January 2009 (see http://www.statistics.gov.uk/pdfdir/berd0109.pdf - accessed November 2009) Semta (2007): Labour Market Survey for Engineering (unpublished contact Semta for details) Semta (2008): Sector Skills Agreement for Bioscience (see http://www.semta.org.uk/employers/science__bioscience/about_sector_skills_agreements/bioscience_s sa.aspx - accessed October, 2009) Semta (2008): Engineering Skills Balance Sheet; Semta/NSAM December 2008 (see http://www.semta.org.uk/public_bodies/research/engineering_balance_sheets.aspx - accessed November, 2009) Semta (2009): Labour Market Survey for Bioscience (unpublished contact Semta for details) SSDA (2005): Sectors Matter: An International Study of Sector Skills and Productivity, IES and SPRU, University of Sussex, for the Sector Skills Development Agency, SSDA Research Report RR14, October 2005 (see http://www.ukces.org.uk/upload/pdf/final-report-sectors-matter-r-050927.pdf accessed November, 2009) SSDA (2007): Cross-country analysis of productivity and skills at sector level, Sector Skills Development Agency, Research Report RR23, May 2007 (see http://www.ukces.org.uk/upload/pdf/rr23exec-sum_1.pdf - accessed November, 2009)
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UKCES (2008): Working Futures 2007 2017; (IER for) UK Commission for Employment and Skills, December, 2008 (see http://www.ukces.org.uk//upload/pdf/Working%20Futures%203%20FINAL%20090220.pdf - accessed October 2009) UKCES (2009a): Information to Intelligence: a Common LMI Framework for Sector Skills Councils, UK Commission for Employment and Skills, March, 2009 (see http://www.ukces.org.uk/upload/pdf/UKCES%20LMI%20Report%20A5%20With%20Links.pdf accessed October, 2009) UKCES (2009b): Towards Ambition 2020: skills, jobs, growth Expert Advice from the UK Commission for Employment and Skills, UKCES, October 2009 (see http://www.ukces.org.uk/upload/pdf/skills_jobs_growth_finalpdf_231009.pdf - accessed Nov, 2009) Wilson, R. (2009): The Demand for STEM Graduates: Some benchmark projections; Rob Wilson, Warwick Institute for Employment Research for the Council for Industry and Higher Education, January 2009 (see http://www.dius.gov.uk/consultations/~/media/publications/S/STEM_IER_Report_Web_version accessed November, 2009)
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Annexes
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Annex A The Realities of Semtas Sectors
Table A-1: Geographical Characteristics of the three industry groupings

Science Industries
540 18,100 180 6,600 440 11,200 380 7,000 380 8,600 510 15,300 1,210 50,000 770 17,100 820 31,400 5,220 165,300 490 18,400 240 7,400 100 3,900 6,050 194,900
Nation/ Region North West North East Yorkshire & The Humber West Midlands East Midlands South West South East London East of England England Scotland Wales N. Ireland UK
Sector
Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment
Leading-Edge Technology
1,370 55,600 360 17,500 960 23,500 1,450 59,100 1,100 39,100 1,490 58,100 2,790 64,700 1,240 14,300 1,880 43,200 12,620 375,200 780 34,900 630 30,900 250 14,000 14,290 455,000
Mature Engineering
5,930 89,600 1,890 45,400 5,540 95,700 8,570 143,400 4,930 77,600 4,710 71,900 7,310 86,700 3,330 27,300 5,630 69,700 47,840 707,200 3,250 56,800 2,230 49,100 1,410 21,100 54,710 834,100
Total Semta
7,840 163,300 2,430 69,500 6,930 130,500 10,400 209,500 6,410 125,300 6,710 145,200 11,310 201,400 5,330 58,700 8,330 144,300 65,680 1,247,700 4,520 110,000 3,100 87,300 1,750 39,000 75,050 1,484,000
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Table A-2: Distribution of intensity of activity for Semtas main Sectors around the United Kingdom
Science Industries Bioscience Leading-Edge Technology Automotive Electronics Aerospace Mature Engineering Mechanical
Nation/ Region
Sector Workplaces 540 18,100 180 6,600 440 11,200 380 7,000 380 8,600 510 15,300 1,210 50,000 770 17,100 820 31,400 5,220 165,300 490 18,400 240 7,400 100 3,900 800 10,300 210 2,800 540 7,500 730 13,100 600 9,300 790 17,600 1,810 36,700 1,000 7,100 1,200 22,100 7,670 126,500 480 19,700 320 8,300 110 5,000 370 18,100 100 12,100 310 12,900 560 39,500 340 13,300 280 11,300 410 12,500 160 5,800 380 13,300 2,910 138,700 120 3,600 190 12,100 110 3,400 120 4,900 40 1,100 80 600 110 900 100 1,600 310 11,500 400 4,900 50 100 200 1,400 1,410 26,900 140 6,000 80 600 20 300 80 22,300 <20 1,600 30 2,600 50 5,700 60 14,900 110 17,700 160 10,600 30 1,200 100 6,400 630 83,100 40 5,500 40 9,900 <20 5,400 3,700 44,300 1,180 22,700 3,580 57,900 5,850 86,300 2,930 37,700 2,870 31,400 4,310 33,000 2,030 12,700 3,350 28,100 29,800 354,100 2,000 28,500 1,450 30,000 900 8,800 1,540 31,200 500 15,800 1,440 26,200 2,030 41,200 1,410 25,400 1,250 26,200 1,900 34,900 740 8,500 1,510 31,100 12,310 240,500 930 19,900 530 10,500 400 7,000 620 11,900 190 6,400 440 10,500 610 11,200 510 10,500 530 11,700 1,010 17,700 480 4,600 710 10,100 5,100 94,600 280 6,400 200 7,800 100 3,900
North West
Employment Workplaces
North East Yorkshire & the Humber West Midlands East Midlands
Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces
South West
South East
London East of England
Employment Workplaces Employment Workplaces
England
Scotland
Wales
N. Ireland
Employment
Source: ABI 2007
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Electrical
Marine
Metals
The Realities of Semtas Sectors: the performance of key industry groups
The skills needs of employers in Semtas sectors arise from the realities of their context. This section seeks to summarise the main characteristics of the Science, Engineering and Manufacturing Technologies sectors in terms of the recent trends of key indicators of the three broad groupings introduced in Section 1, by comparison with All UK manufacturing. The Industry groupings are as follows: Table A-3: Industry Group allocations
Mature Engineering Industries SIC categories 27, 28, and 51.52 & 51.57 29 31 Sectors Basic Metals and Metal Products (inc. Wholesale Metals & Scrap) Mechanical Equipment Electrical Equipment
Leading-Edge Technology Industries 30, 32, 33 34 35.1 35.3 Electronics - excluding 33.1* Automotive Marine Aerospace Science Industries (Bioscience) 24.41 & 24.42 73.10 *33.1 Pharmaceuticals Science and Engineering R & D Manufacture of medical and surgical equipment and orthopaedic appliances
Residual sub-sectors (assumed to be Mature Engineering) 25.11/25.12 35 except 35.1 & 35.3 Rubber Tyres Other Transport Equipment
43
Recent Performance and Current Position of the Key Industry Groups The science, engineering and manufacturing technologies industries in the United Kingdom are generally in good shape. While there has been widespread concern for some time that manufacturing in the UK is increasingly under threat, and numbers in employment in manufacturing have fallen, in reality most enterprises have responded effectively to the changing market conditions. Figures A1 to A-6 show a number of key characteristics and recent performance of the three industry groups, by comparison with All UK manufacturing: the number of enterprises in which the workforce is employed; the total employment levels; the export performance; the estimated profitability; the fraction of profits ploughed back into capital expenditure; and the R&D expenditure.
A major indicator of a sectors scale is the number of enterprises, and how this has changed over time. Figure A-1 shows that, with the exception of the Science industries (in particular Bioscience), there has been a net fall in the number of enterprises over recent years. This is not necessarily a serious concern, as it will partly arise from consolidation, which can bring stronger, more competitive companies. Figure A-1: Numbers of employers in the UK Science, Leading edge technology, and Mature engineering industries, by comparison with All UK Manufacturing (scaled by 10)
70,000
60,000
50,000
M a ture Eng ine ering Indus trie s
40,000 A llU K M a nufa cturing / 10 30,000
20,000
Lea ding E dg e Technolog y Indus trie s
10,000 S cience Indus trie s (B ioscience) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: ONS Annual Business Inquiry (ABI)
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The comparatively very high numbers of companies in mature engineering confirm the prevalence of Small and Medium Enterprises (SMEs) in this business. From a skills point of view, a core indicator relates to the overall employment levels in sectors. Figure A-2 shows how these have developed over recent years for the three industry groups. As indicated in Section 1, figures from the ABI do not include self-employed workers in a sector, and are, as a result, lower sometimes significantly lower than the Labour Force Survey estimates. Figure A-2: Employment in the UK Science, Leading edge technology, and Mature engineering industries, by comparison with All UK Manufacturing (scaled by 10)
1,400,000
1,200,000
1,000,000
800,000
Mature Engineering Industries
600,000
LeadingEdge Technology Industries
400,000 AllUK Manufacturing/ 10 200,000 Science Industries (Bioscience) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source:ONSAnnualBusinessInquiry(ABI)estimatesshowaverageemploymentlevelsduringtheyear
Figure A-2 confirms the steady reduction in employment levels in Mature Engineering and LeadingEdge Technology industries, although confirms the steadier position within Bioscience, including useful growth in some years, albeit on a smaller scale. Since 2000, the percentage changes are: Science industries (Bioscience): 15% growth; Leading-Edge Technology industries: 32% fall; and Mature Engineering: 25% fall essentially the same as for all UK Manufacturing.
Given the broadly comparable output levels in 2000 and 2007 (slight fall in Leading-Edge technologies and growth in Bioscience), much of the fall can be recognised as productivity gain. Most of the markets in which Semtas employers compete extend beyond the United Kingdom, and this means that, except for a comparatively small number of enterprises operating in highly niche markets, Semta companies are subject to increasingly fierce global competition.
45
There are a number of determinants of national competitive advantage in global markets, though labour cost and currency exchange rates are particularly powerful. The emergence of huge competition from enterprises in low labour cost economies, in particular over recent years India in software development and China in manufacturing, show massive evidence of this. Probably the most concrete way of considering the global competitiveness of the UK Science, Engineering and Manufacturing Technologies is to examine their recent export performance. The Office for National Statistics produces quarterly figures of import and export data in its UK Trade in Goods updates Figure A-3 shows export levels (on a Balance of Payments BOP - basis) for the Science industries, Leading edge technology industries, and Mature engineering industries respectively (note that no figures are available for Wholesale Metals & Scrap or Science and Engineering R&D). The 2009 figures are estimates grossed-up from the first two quarters. Figure A-3: Export Performance of the UK Science, Leading edge technology, and Mature engineering industries, by comparison with All UK Manufacturing (scaled by 10)
Billions (BalanceofPaymentbasis, seasonallyadjusted) 100
90
80
70
60
LeadingedgeTechnology industries(Aerospace ,Automotive,Electronics,and MarineManufacture) MatureEngineeringIndustries (MetalsandMetal Products,Mechanicaland ElectricalEquipment Manufacture) ScienceIndustries(Bioscience lessR&Dcompanies)
50
40
30
20
AllUKManufacturing/10
10
0 2003 2004 2005 2006 2007 2008 2009est.
Source: ONS UK Trade in Goods 2009 estimates based on grossed-up first six-months data
In summary: Export performance in the Science industries has grown 49% between 2003 and 2008, Exports in the Leading edge technology industries grew slightly over the five years, with 2006 a hugely successful year, Export performance the UK Mature engineering industries has also improved, with a 5-year growth of 36%, compared with some 32% for UK Manufacturing as a whole.
46
As well as productivity (shown in Figure 2), profitability is very important to the well-being of enterprises in a sector. Figure A-4 shows estimated profitability, calculated (from ABI data) as Estimated Operating Surplus (Gross value Added Employment Costs) less Total Net Capital Expenditure, as a fraction of Total Turnover:
(Gross Value Added Employment Costs) less Total Net Capital Expenditure
______________________________________________________________________________________________________________
Total Turnover
for the three industry groups. Figure A-4: Estimated profitability in the UK Science, Leading-edge technology, and Mature engineering industries, by comparison with All UK Manufacturing
18%
16%
ScienceIndustries (Bioscience)
14%
MatureEngineering Industries
12%
AllUK Manufacturing
10%
8%
6%
4%
2%
0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: ONS Annual Business Inquiry (CapEx data subject to timing errors)
As can be seen, while there are substantial swings in some years, profitability in the Science industries (Bioscience) is the highest, arising partly from technical issues of the timing of R&D allocation. Not surprisingly, perhaps, mature engineering is generally more profitable than the Leading-edge industries, and corresponds closely to the average performance of All UK Manufacturing.
47
Also important is what happens to the profits made: clearly, future success depends at least in part on the proportion of profits that are ploughed back into Capital Investment. The development over recent years of this degree of plough-back is shown in Figure A-5. Figure A-5: Capital Investment (fraction of profits ploughed back) in the UK Science, Leading-edge technology, and Mature engineering industries, by comparison with All UK Manufacturing (Total Net Capital Expenditure as a percentage of Estimated Operating Surplus)
70%
60%
50%
40%
30%
Scie nce Industries(Bioscience)
20%
AllUKManufacturing
Le adingEdge Te chnology Industrie s
10%
Mature Engine e ringIndustries
0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: ONS Annual Business Inquiry (CapEx data subject to timing errors)
In summary, overall there is an intriguing (worrying) fall over recent years in the percentage plough-back. While Capital Expenditure covers a number of things, Figure A-5 appears to show that the fraction of operating surplus not ploughed back into the business in some way has been growing presumably at least some of this has arisen from the need to reward investors, perhaps in response to growing returns in financial markets. It will therefore be interesting to see what the effect on this ratio of the current financial downturn will be. As far as the three broad groupings are concerned, the fall in plough-back is greatest of the last five years in Bioscience (some 60% from 2002 to 2007), while the falls in plough-back in Leading-Edge Technology and Mature Engineering Industries are comparable (around 40%), both well above the average for UK Manufacturing as a whole. However, probably the most strategic element of capital investment is R&D expenditure, and Figure A-6 shows how this has increased in the three broad groups of Semta sectors over recent years.
48
Figure A-6: Innovation (R&D Expenditure) in the UK Science, Leading-edge technology, and Mature engineering industries, by comparison with All UK Manufacturing (scaled by 10).
millions
5,000 Science Industries (Bioscience)
4,500
4,000
3,500
3,000
2,500 Mature Engineering Industries
2,000
1,500 AllUK Manufacturing /10
1,000
500
1999
2000
2001
2002
2003
2004
2005
2006
2007
Source: ONS UK BERD 2007
In summary, R&D Expenditure in the Science industries: strong growth over recent years, in particular last 2 years. The percentage growth over the last five years is 27%. R&D Expenditure in the Leading edge technology industries: very comparable in absolute level with the Science industries (although from a much larger output base), but growth over recent years not so strong (13% between 2002 and 2007) Conversely, 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 last five years)
49
50
Annex B Structure of the current workforce in Semtas Sectors

Table A-4: Structure of the current workforce in Semtas Sectors (occupational groups containing the main technical occupations are shown in bold)
Sector Science Bioscience Leading-Edge Technology Automotive Electronics Aerospace Mature Engineering Metals (inc. Metal Products) Total across all Semta sectors*
371,900 284,400 212,800 158,500 441,200 3,900 27,100 346,400 122,200
Mechanical
Broad Occupational Group (SOC)
1 Managers & Senior Officials 2 Professionals 3 Associate Professional & Technical 4 Administrative & Secretarial 5 Skilled Trades 6 Personal Service 7 Sales & Customer Service 8 Process, Plant & Machine Operatives 9 Elementary
54,500 66,500 46,800 22,200 8,400 1,000 4,500 20,200 11,800
47,400 41,400 28,900 14,900 28,000 100 5,900 26,300 9,400
31,100 29,900 19,900 -9,000 53,700 0 3,800 72,500 16,800
7,200 7,300 6,900 1,900 20,500 0 0 3,400 2,800
20,900 36,000 19,600 17,800 38,300 0 1,200 21,800 4,800
86,500 40,200 35,200 38,800 162,900 400 3,900 99,400 36,400
83,800 38,800 33,200 32,600 84,500 1,800 5,600 67,300 32,300
30,100 19,800 19,000 17,900 33,000 0 2,300 25,800 5,200
Total Workforce
235,800
202,400
236,700
50,100
160,300
503,700
380,000
153,000
Electrical
Marine
1,969,000
Source: Experian analysis from ONS Labour Force Survey: employment estimates as of late 2008, rounded to nearest 100. Estimates below 10,000 (shown in parenthesis) subject to statistical unreliability. * includes Other Transport Equipment
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Table A-5: The changing qualifications profile of Semtas workforce, 1999 compared to 2008
Mature Engineering 1999 2008 18% 22% 35% 33% 32% 34% 15% 10% 100% 100%
NVQ Level 4+ NVQ Level 3 NVQ Level 2 or below No qualifications
Science Industries 1999 2008 48% 58% 19% 18% 23% 19% 9% 6% 100% 100%
Leading-Edge Technology 1999 2008 26% 34% 32% 29% 29% 28% 12% 8% 100% 100%
Table A-6: The changing occupational profile of Semtas workforce, 1999 compared to 2008
Leading-Edge Technology 1999 2008 15% 18% 11% 18% 8% 11% 9% 26% 0% 3% 24% 2% 100% 7% 21% 0% 1% 17% 5% 100% Mature Engineering 1999 2008 17% 20% 7% 9% 5% 8% 11% 27% 0% 4% 26% 4% 100% 8% 27% 0% 1% 19% 7% 100%
Occupation Managers & Senior Officials Professionals Associate Professional and Technical Administrative & Secretarial Skilled trades Personal Service occupations Sales & Customer Services Process, plant & machine operatives Other occupations
Science Industries 1999 2008 14% 23% 28% 25% 14% 19% 14% 7% 1% 5% 14% 3% 100% 11% 4% 0% 2% 10% 6% 100%
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Annex C Skill Shortages

Skill shortages in labour markets are more generally considered to represent possible market failures, in the sense that the state plays a role in delivering additional supply into the marketplace of (mostly) young people with relevant knowledge, and at least some of the skills to apply it. There has been extensive debate about skill shortages over the years in labour economics and skills policy, both in terms of whether they would ever really exist if labour markets were (made) flexible enough, and, given actual labour markets, how serious skill shortages can meaningfully be assessed. Few recruitment exercises result in the appearance of a number of adequate applicants in response to a vacancy notice, and skill shortages have, over the years, been a frequent mantra from one sector or another, often on the basis of comparatively little objective evidence. Labour Market Intelligence research in most sectoral bodies over the years has attempted to measure possible skill shortages by (subjective) employer responses to questions about their recent recruitment experience. In particular, surveys have generally asked questions about whether the responding employer has experienced hard-to-fill vacancies (HtFVs) over the last year. It was soon recognised, however, that real skill shortages relate to problems of recruitment that are not attributable to factors other than shortages of supply (for example vacancies being hard to fill because candidates are not keen to work in the geographical location of the recruiting employer, or where the salary being offered might not be competitive). This has led to survey questions on both HtFVs, and the subset of these that are believed to arise purely due to shortages of supply (sometimes called Skill-Shortage Vacancies SSVs). However, such surveys have generally focused at the level of the sector, providing, as evidence, the percentage of responding employers in a particular sector that have experienced HtFVs or SSVs in the past year. While interesting (where response rates are adequate) in relation to the relative overall recruitment position in different sectors, such indicators tell us little about the occupations in which there might be serious supply shortages in the labour market, which, as explained in Section 1, is necessary if skills-raising action is to be prioritised and corresponding learning supply clarified, and perhaps designed and developed. The most significant analysis of possible skill shortages relating to occupations has taken place in the context of Managed Migration policy. Following the contributions of former Work Permits UK Sector Advisory Panels, in advising the Home Office in relation to the national shortage occupation list, the Migration Advisory Committee (MAC) was established at the end of 2007. This has led to some particularly thorough analysis on the assessment of occupational skill shortages across the economy. The initial MAC methodology has used some 12 independent indicators of possible shortage in relation to the 192 occupations (from the - total of 353 - SOC 2000 categories) that are considered by various measures to be skilled (at NVQ level 3 or above). The top-down statistical analysis on these 12 indicators carried out from public datasets arising from various general economic surveys (in particular, the LFS, ASHE and NESS) is complemented by submissions of bottom-up evidence invited from employers and relevant stakeholders. This analysis, which is reviewed and updated at regular intervals 18 , is the most comprehensive and thorough known, although not without its problems.
18
Migration Advisory committee (2009) Shortage Occupations List . Migration Advisory committee (May 2009) First review of the recommended shortage occupation lists for the UK and Scotland Migration Advisory committee (October 2009) Second review of the recommended shortage occupation lists for the UK and Scotland: Autumn 2009 53
One of the most important issues that has arisen from this work is the relationship between possible skill shortages in the present (in practice, the recent past, for which data is available) and the likely/ expected position in the future. Since managed migration policy requires underpinning evidence to be particularly robust, the MAC has, to begin with, not given weight to arguments about the future. As will be evident from the reports on the emerging technology clusters, the nature of the skill-sets tend to be rather different between the recent past and the expected future. In particular, for expectations of future skill-set needs, in particular relating to likely growth in economic activity relevant to certain new technologies, the future specification tends to be comparatively broad brush and focused on underpinning knowledge and understanding, rather than their application into specific competences.
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For further information please contact Semta Customer Services: T: 0845 643 9001 E: customerservices@semta.org.uk W: www.semta.org.uk W: www.nsa-m.co.uk

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Skills and the future of UK Science, Engineering and Manufacturing Technologies

The 2010 realities, expected developments and key priorities

A Summary Sector Skills Assessment for Semtas sectors December 2009

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Sir Alan Jones Chairman, Semta

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Abbreviations References Annexes

Annex A: Annex B: Annex C:

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Skills and the future of UK Science, Engineering and Manufacturing Technologies

profit-related indicators are generally not so comparable internationally

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Mature Engineering Industries

100 LeadingEdge Technology Industries 80

40 Science Industries (Bioscience)

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Those with STEM Qualifications

Employers in STEM skill User sectors

Those with other Qualifications

Employers who do not use STEM skills

occoccupations upationsnot usinot using ngSTEM STEM skills skills

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Inter-employer moves in same sector and occupation

Suspend Work Family-raising, re-training etc.

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Skills and the future of UK Science, Engineering and Manufacturing Technologies

What Drives Demand for Skills?

Number of mentions* 169 131 122 72 68 65 51 33 30 23

see http://www.semta.org.uk/employers/funding_for_skills_training/sector_compact.aspx business performance measure see DTI (2005)

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Skills and the future of UK Science, Engineering and Manufacturing Technologies

What is the Current Demand for Skills?

Workers aged over 45

Young people (16-24) inc. trainees

29% 27% 30% 29% 38% 26% 34% 33% 29%

6% 10% 11% 20% 9% 20% 11% 11% 10%

34% 38% 29% 35% 40% 28% 43% 25% 34%

45% 53% 48% 45% 48% 64% 37% 64% 48%

31% 24% 32% 29% 30% 14% 36% 24% 29%

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Skills and the future of UK Science, Engineering and Manufacturing Technologies

What is the Current Supply of Skills?

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Skills and the future of UK Science, Engineering and Manufacturing Technologies

1999 24% 33% 30% 13% 100%

2008 31% 30% 30% 9% 100%

Semta 2005 Semta 2007

Source: NESS 2007 (LSC 2008)

iii Recruitment of new staff

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Those completing VET courses:

Skills and the future of UK Science, Engineering and Manufacturing Technologies

What is the Evidence of Current Mismatch?

Skills and the future of UK Science, Engineering and Manufacturing Technologies

Shortages in Engineering (Semta LMS 2007):

Table 7: Shortages in Engineering sectors

10% 11% 9% 10% 12% 21% 15% 11% 11%

17% 18% 16% 16% 22% 30% 11% 24% 17%

Skills & Future of UK Sci, Eng & Manuf

Skills & Future of UK Sci, Eng & Manuf