White Paper

The combination of work and study has been hailed as crucial to ensure that youth develop the skills required on the labour market so that transitions from school to work are shorter and smoother. This paper fills an important gap in availability of internationally comparable data. Using the 2012 Survey of Adult Skills (PIAAC), it draws a comprehensive picture of work and study in 23 countries/regions. Crucially, it decomposes the total share of working students by the context in which they work (VET, apprenticeships or private arrangements) and assesses the link between field of study and students’ work. The paper also assesses how the skills of students are used in the workplace compared to other workers and identifies the socio-demographic factors and the labour market institutions that increase the likelihood of work and study. Finally, while it is not possible to examine the relationship between work and study and future labour market outcomes at the individual level, some aggregate correlations are unveiled.

The past 40 years have witnessed significant changes to work arrangements globally. Overall, the changes have been characterised by less contract duration and job security, more irregular working hours (both in terms of duration and consistency), increased use of third parties (temporary employment agencies), growth of various forms of dependent self-employment (like subcontracting and franchising) and also bogus/informal work arrangements (i.e. arrangements deliberately outside the regulatory framework of labour, social protection and other laws).

The study’s emphases were on providing conceptual, empirical, and policy perspectives on the ‘rebalancing’ issue, and offering guidance on what might assist in ‘rebalancing’ the UK economy, particularly from a skills and employment policy perspective. More specifically, the research questions were as follows: • What is the nature and scale of the ‘rebalancing’ challenge in the UK, and its causes? • What has been the rationale for government intervention in the sectoral and spatial structure of the economy, both at home and abroad? • What types of interventions have been employed by governments to influence the sectoral and geographical structure of the economy, particularly in terms of skills and employment interventions? • What works and why? What have been the relevance, effectiveness and impacts of previous policy initiatives in ‘rebalancing’ the economy sectorally and spatially? • What might be done in the UK to create a more (re)balanced economy, help create the new economic circumstances, sectors, products and services on which a successful, sustainable and competitive economy can be built? And what are the implications for, and on, skills policy in supporting this process?

The need to ‘rebalance’ the economy as the UK recovers from recession is a high priority for the coalition government. As set out in the Plan for Growth published on 23 March 2011, the government aims “to achieve strong, sustainable and balanced growth that is more evenly shared across the country and between industries” going forward. Whilst there is substantial commentary on the intent to achieve ‘rebalancing’, there remains a lack of clarity and agreement on what ‘rebalancing’ means: some commentators refer to the balance between public and private employment, sectors (especially manufacturing and services) and London/the South East and elsewhere in the UK; others refer to ‘rebalancing’ in the context of public spending and receipts, imports and exports, and domestic/public consumption and business investment, and, most generically of all, between economic, social and environmental outcomes. Furthermore, there appears to be limited formal articulation of the rationale for the government to intervene in the ‘rebalancing’ process, how ‘rebalancing’ might be achieved most effectively, and how the inherent tensions and trade-offs in addressing different elements of the ‘rebalancing’ challenge should be managed.

The aim of this study is to provide an assessment of the skills needs in the low carbon energy generation sector to 2020 in support of the National Strategic Skills Audit for England 2010, undertaken by the UK Commission for Employment and Skills. For the purpose of this exercise the sector comprises wind, marine, microgeneration, carbon capture and storage, and nuclear sub sectors. This report presents the findings of the assessment which, while discussed in further detail below, are that: • The sector is currently relatively small scale in terms of direct jobs, but has a great deal of potential for growth; • Current and projected shortages of skills in the sector, particularly in relation to STEM subjects (Science, Technology, Engineering and Mathematics), means that the low carbon sector will need to compete for STEM graduates with industry as a whole; • Wind and nuclear will be the most important sectors in driving growth between now and 2020, but barriers such as access to financing and planning are significant; • Marine and carbon capture and storage are unlikely to contribute materially to employment in the period to 2020, but are more likely to come to fruition post-2020; • The extent to which new jobs will necessarily be generated throughout the value chain in the medium-term varies by sub sector. In the wind and nuclear sectors, it is likely that there will be relatively large numbers of jobs created in construction and installation, given the ambitious plans for installing new capacity to 2020. However, there is less likelihood of significant numbers of manufacturing jobs; • There is considerable potential to exploit skills transfer from other industries such as the upstream oil and gas industry to low carbon energy generation, which will also help to minimise the potential impact of a decline in employment within carbon intensive energy generation or nuclear power; • There is no clear evidence that technical jobs in the sector will change markedly over the next decade – rather, differences are likely to emerge by degree; • There is a lack of official national statistics on the low carbon sector and the on-going debate over what constitutes a ‘green job’; and • Government will play a critical role in how it seeks to stimulate demand with incentives, but also in how it can remove barriers that could otherwise hinder growth.

The aim of this study is to provide an assessment of the skills needs in the financial services sector to 2020 in support of the National Strategic Skills Audit for England 2010, undertaken by the UK Commission for Employment and Skills. This report presents the findings of the assessment which, while discussed in further detail below, are that; • Between 1998 and 2007 industry output doubled, but employment increased by only 2.2 per cent. Since then total employment in financial services is estimated to have declined between 5 per cent and 10 per cent; • In the coming decade all the drivers of change, such as increasing levels of regulation, the need for efficiency, consumer demand and globalisation are pointing downwards. In our view, overall employment is unlikely to return to 2007 levels in the next decade and could remain significantly lower; • Historically there have been certain skills gaps and shortages in particular in retail banking, and in retail and wholesale insurance. While some of these gaps and shortages may persist, others such as risk management and compliance skills and actuaries will come to the fore; • Regulation could limit the freedom of banks to innovate. This could result in polarised banking business models, with some banks focusing on core retail banking services, generating lower but more stable returns, while other niche providers serve clients willing to take greater risks; • Efficiency will be paramount in retail financial services as companies look towards recovery and the need to restore margins and profitability. There will be continuing job losses due to branch closures and moves towards more efficient distribution channels, and; • As emerging economies become more important, client-facing front-office functions in wholesale markets will need to be established close to international clients. As emerging economies grow in importance and develop their infrastructure, further middle-office activities may follow.

In this report, we look to 2022 and consider how the characteristics of these three worlds of work are likely to be shaped by the changes coming up over the next eight years. This includes setting out the recruitment, reward and employee engagement strategies that are likely to be most relevant as these worlds evolve, and what this means for businesses, workforces and HR. This report draws on a specially commissioned survey of 10,000 people in China, India, Germany, the UK and the US, who told us how they think the workplace will evolve and how this will affect their employment prospects and future working lives. Further input comes from a survey of almost 500 HR professionals across the world, who share their insights on how they’re preparing for the changes ahead. Rohit Talwar, Global Futurist and the CEO of Fast Future Research, has also contributed his cutting-edge thinking to this study. Our thanks to all those who kindly shared their perspectives. No exploration of the future of work could ever be definitive. Indeed, one of the defining characteristics of our age is its ability to surprise and confound. However, while things happen that we cannot predict, we can still be prepared.

One of the key megatrends affecting the UK and most other developed countries is an ageing population. Harnessing the potential of older workers will therefore become an increasingly important source of competitive advantage for both nations and businesses. To explore how the UK compares with other OECD economies in this regard, PwC has developed a new 'Golden Age Index' comparing how well they are utilising workers aged 55 and over. The index includes relative employment, earnings and training rates for older workers for 34 OECD countries over the period since 2003.

Our analysis suggests that up to 30% of UK jobs could potentially be at high risk of automation by the early 2030s, lower than the US (38%) or Germany (35%), but higher than Japan (21%). The risks appear highest in sectors such as transportation and storage (56%), manufacturing (46%) and wholesale and retail (44%), but lower in sectors like health and social work (17%). For individual workers, the key differentiating factor is education. For those with just GCSE-level education or lower, the estimated potential risk of automation is as high as 46% in the UK, but this falls to only around 12% for those with undergraduate degrees or higher. However, in practice, not all of these jobs may actually be automated for a variety of economic, legal and regulatory reasons. Furthermore, new automation technologies in areas like AI and robotics will both create some totally new jobs in the digital technology area and, through productivity gains, generate additional wealth and spending that will support additional jobs of existing kinds, primarily in services sectors that are less easy to automate. The net impact of automation on total employment is therefore unclear. Average pre-tax incomes should rise due to the productivity gains, but these benefits may not be evenly spread across income groups. There is therefore a case for some form of government intervention to ensure that the potential gains from automation are shared more widely across society through policies like increased investment in vocational education and training. Universal basic income schemes may also be considered, though these suffer from potential problems in terms of affordability and adverse effects on the incentives to work and generate wealth.