Learning and skills, Piketty, and 2020 vision

Thomas Piketty is causing quite a stir in the political economy world. Those of you who, like me, have braved his 700-page tome, Capital in the Twenty-First Century, will know the column inches devoted to his detractors exceed the length of his book by a fair margin. But his arguments matter because they have put the political economy of inequality back at the centre of national political debate. And this I think can only be a good thing as we approach the 2015 election.

Piketty’s argues that ‘when the rate of return on capital exceeds the rate of growth of output and income, capitalism automatically generates arbitrary and unsustainable inequalities.’

Or to simplify, if returns on private capital exceed the rate of economic growth, inequality worsens. The thesis is not new (but his dataset is more compelling). Remember The Spirit Level?

But among his other insights, Piketty makes a strong economic case for skills investment particularly well, stating that:

‘The main forces for [economic] convergence are the diffusion of knowledge and investment in training and skills. Knowledge and skill diffusion is the key to overall productivity growth as well as the reduction of inequality both within and between countries. Over a long period of time, the main force in favour of greater equality has been the diffusion of knowledge and skills.’

This ‘diffusion of knowledge and skills’, broadening the participation of citizens and the breadth of curricula, is at the heart of the new Niace general election manifesto, launched to generate a debate about the skills system we need and the lifelong learning culture we want for the UK. It sets out a bold vision for a truly lifelong learning society and quantifies the benefits of this for families, communities, employers and for the economy.

The manifesto has already generated a big debate and a positive political response. In it, we call for a major independent review of the long-term skills needs and funding issues for the UK, on a par with the Dilnot and Turner reviews of social care and pensions, a ‘new localism’ with Leps and councils centrestage, and new personal skills accounts, with stronger safeguards, putting learners and employers centrestage in a new, personalised learning and skills system.

The current arrangements for skills and lifelong learning are simply not designed to face the world in 20 – 30 years time. The demographic challenge alone, which presents pressing economic dilemmas for the learning and skills system of 2020 alone, shows that the 7m new young people projected to enter the labour market over that period will fill only around half of the estimated 13.5m vacancies employers are forecasting. Adult skills will be central to filling this gap. This is not simple exhortations to the cause, but pressing economic need.

Skills and learning policy takes centrestage in this debate. The 2013 OECD survey of adult skills reported that too many adults ‘have a higher risk of losing their jobs in today’s rapidly changing global labour market’ as a result of basic skills gaps. The 2014 UKCES employer skills survey highlighted how a third of employees – around 10 million people – receive no training whatsoever in the workplace. Our own 2014 participation in learning survey shows participation in learning declining with age, employment status and socio-economic class, meaning too many adults do not undertake the learning they and the economy need.

There needs to be a ‘new localism’ for

learning and skills, delivered through devolution

Alongside our manifesto, our fieldwork is helping to demonstrate practical ways to tackle adult skills shortages and advice and guidance reform. Our 2013/14 mid-life career review pilot engaged over 3,000 people showing, with the right support, people can gain the confidence they need to change career, gain new skills and enter the third phase of their life (50 – 75) with more optimism and real opportunities for prosperity and well-being. This is all the more pressing with the ageing demographic and longer working lives that we know is a major dynamic facing the UK economy of 2020.

There needs to be a ‘new localism’ for learning and skills, delivered through devolution, a strengthened individual-employer-government partnership, and a new Whitehall department responsible for business, education, skills and work.

This allows for a new social partnership integrating skills into industrial strategy and brings organisations together in a new, concerted effort to achieve prosperity for all in every part of the country, building on differing growth opportunities in each community, and enhancing prospects for every citizen, whatever their current skills and learning achievements. In other words, skills diffusion writ large.

Government spending on skills for people over the age of 24 has dropped significantly as a result of the wider fiscal tightening, and employer investment in training has also dropped. The current system simply does not reflect the enormous challenges we face, nor the opportunities we have. Iterative change will not make the difference either – the scale of the challenges and the complexity of the world we live in require something more radical and far-reaching.

Piketty is right to argue for diffusion of knowledge and skills as a key enabler of growth and the reduction of economic inequalities. The new Niace manifesto sets out a range of ways we can make this happen for the benefit of the UK’s economic future.