British labour market figures have been record-breaking in recent years, and for all the right reasons. The Bee Gees’ Saturday Night Fever dominated the charts the last time Britain had an unemployment rate as low as 2018. When it comes to measuring the health of the economy, however, the devil is in the detail.
That’s because productivity is a key driver of higher wages, better living standards and long-term economic growth. Since the financial crisis, the UK’s productivity figures have been headline-grabbing, but for all the wrong reasons. The average German worker produces more in four days than a British counterpart does in five, with productivity no higher now than it was before the financial crisis.
While commentators debate the complexities of the ‘productivity puzzle’, the reality is that we already know one important piece is missing. The UK faces a chronic skills shortage, with companies unable to access the skilled workforce they need to take advantage of technological change and maximise their potential.
To address this, the industrial strategy rightly focused on skills development – but failed to consider 15 per cent of the workforce, with not one mention of Britain’s self-employed.
To create an economy that can thrive in the future, IPSE, the trade body representing the UK’s self-employed, has developed a skills strategy for this sector. Reflecting the diversity of self-employment, its research showed the barriers people face in accessing training opportunities are wide-ranging.
For many, unpredictable schedules mean their training too needs to be flexible. Online, bite-size training can provide this flexibility, but knowing where to look and which providers to trust can feel like a stab in the dark. To help the self-employed narrow down their search, the report suggests the government should collate trusted training courses delivered by the private sector and make them available through a dedicated self-employment hub on gov.uk.
Reducing the cost of training should also be a priority. For those on low incomes, passing up the next paid opportunity to invest in training isn’t always an option and can leave some trapped in a cycle of low pay.
Learning from examples of best practice across Europe, granting education vouchers targeted towards the vulnerable self-employed could provide vital support to those at the lower end of the spectrum.
This is crucial, as training is vital for career progression: 30 per cent of those in lowpaid self-employment who have training escape the low-pay trap within one year.
More also needs to be done to help young people prepare for the future of work. Analysts predicting how our working lives will change are sure of two things: the ‘9 to 5’ is on the way out and people will have to upskill, reskill and reskill again to stay competitive across their working lives.
Introducing enterprise modules in further and higher education courses which produce a higher proportion of self-employed graduates would be one way to help students prepare for flexible careers.
Paul Krugman, a Nobel Prize-winning economist, said: “Productivity is not everything, but in the long run it’s almost everything.”
Policymakers are right to be concerned about this blight on the labour market statistics. With Brexit and technological change set to put further pressure on the UK’s skills shortages in the coming years, creating a training system fit for the twenty-first-century jobs market should be prioritised in government.
By Imogen Farhan