This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.theguardian.com/business/2015/jul/13/skills-crisis-is-key-flaw-in-george-osbornes-productivity-plan-says-cbi

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Skills crisis is key flaw in George Osborne's productivity plan, says CBI Skills crisis is key flaw in George Osborne's productivity plan, says CBI
(6 days later)
George Osborne’s pledge to fix Britain’s woeful productivity record will be called into question by a leading business group on Monday when it highlights a skills crisis and redoubles criticism of the government’s apprenticeship plans.George Osborne’s pledge to fix Britain’s woeful productivity record will be called into question by a leading business group on Monday when it highlights a skills crisis and redoubles criticism of the government’s apprenticeship plans.
As official figures this week are expected to show wages picking up and unemployment holding at a seven-year low, the CBI highlights that a growing number of employers are struggling to fill skilled jobs.As official figures this week are expected to show wages picking up and unemployment holding at a seven-year low, the CBI highlights that a growing number of employers are struggling to fill skilled jobs.
The chancellor used his post-election budget last week to unveil new measures to boost apprenticeship numbers and to bring in a higher minimum wage dubbed the “national living wage”. Faced with a productivity puzzle that has seen the UK’s output per hour fail to match economic growth, he also announced a productivity plan to put the recovery on a firmer footing.The chancellor used his post-election budget last week to unveil new measures to boost apprenticeship numbers and to bring in a higher minimum wage dubbed the “national living wage”. Faced with a productivity puzzle that has seen the UK’s output per hour fail to match economic growth, he also announced a productivity plan to put the recovery on a firmer footing.
But the CBI says skills shortages have already started to bite and warns that sectors seen as key by ministers are particularly hard-pressed, according to its annual skills survey.But the CBI says skills shortages have already started to bite and warns that sectors seen as key by ministers are particularly hard-pressed, according to its annual skills survey.
“The government has set out its stall to create a high-skilled economy, but firms are facing a skills emergency now, threatening to starve economic growth,” said the CBI deputy director general, Katja Hall.“The government has set out its stall to create a high-skilled economy, but firms are facing a skills emergency now, threatening to starve economic growth,” said the CBI deputy director general, Katja Hall.
“Worryingly, it’s those high-growth, high-value sectors with the most potential which are the ones under most pressure. That includes construction, manufacturing, science, engineering and technology.”“Worryingly, it’s those high-growth, high-value sectors with the most potential which are the ones under most pressure. That includes construction, manufacturing, science, engineering and technology.”
Two in three businesses expect to need more staff with higher level skills in the years ahead, but more than half of those surveyed, or 55%, fear that they will not be able to find them, according to the CBI’s poll, which was carried out with the publisher Pearson.Two in three businesses expect to need more staff with higher level skills in the years ahead, but more than half of those surveyed, or 55%, fear that they will not be able to find them, according to the CBI’s poll, which was carried out with the publisher Pearson.
Rising skills demand in key sectorsRising skills demand in key sectors
The survey of 310 companies, between them employing more than a million people, suggests demand for highly skilled workers is particularly acute in sectors that economists underscore as critical to rebalancing the UK economy away from its over-reliance on debt-driven consumer demand. A net balance of 73% of construction companies and 69% of manufacturers said their demand for high-skilled staff was rising.The survey of 310 companies, between them employing more than a million people, suggests demand for highly skilled workers is particularly acute in sectors that economists underscore as critical to rebalancing the UK economy away from its over-reliance on debt-driven consumer demand. A net balance of 73% of construction companies and 69% of manufacturers said their demand for high-skilled staff was rising.
Business groups have repeatedly warned that tackling the UK’s skills shortage is key to kickstarting productivity growth in the UK after years of lagging behind most other big economies. The CBI believes more apprenticeships will help but it criticises a plan in Osborne’s budget for a levy on large firms to pay for training and create 3m apprenticeships by 2020.Business groups have repeatedly warned that tackling the UK’s skills shortage is key to kickstarting productivity growth in the UK after years of lagging behind most other big economies. The CBI believes more apprenticeships will help but it criticises a plan in Osborne’s budget for a levy on large firms to pay for training and create 3m apprenticeships by 2020.
“The new levy announced in the budget may guarantee funding for more apprenticeships, but it’s unlikely to equate to higher quality or deliver the skills that industry needs,” said Hall.“The new levy announced in the budget may guarantee funding for more apprenticeships, but it’s unlikely to equate to higher quality or deliver the skills that industry needs,” said Hall.
Renewed evidence of skills shortages will provide more food for thought for Bank of England policymakers as they assess the pressure on inflation from wages. The nine members of the Bank’s monetary policy committee appear divided over the likely path of pay growth and the implications for when they should raise interest rates from the current record low of 0.5%.Renewed evidence of skills shortages will provide more food for thought for Bank of England policymakers as they assess the pressure on inflation from wages. The nine members of the Bank’s monetary policy committee appear divided over the likely path of pay growth and the implications for when they should raise interest rates from the current record low of 0.5%.
Related: The Tories, trade unions and British democracy under threat | Letters
The Bank’s chief economist, Andy Haldane, has said he needs more evidence of pay growth picking up before worrying about inflation. He warned last month that raising interest rates too soon could tip the UK back into recession.The Bank’s chief economist, Andy Haldane, has said he needs more evidence of pay growth picking up before worrying about inflation. He warned last month that raising interest rates too soon could tip the UK back into recession.
But his fellow policymaker Martin Weale believes the labour market is “fizzing away nicely” and wages have picked up faster than expected. Weale, who voted for rate rises last year, suggested in an interview with the Financial Times that the Bank should be ready to raise rates as soon as August.But his fellow policymaker Martin Weale believes the labour market is “fizzing away nicely” and wages have picked up faster than expected. Weale, who voted for rate rises last year, suggested in an interview with the Financial Times that the Bank should be ready to raise rates as soon as August.
For now, economists expect inflation to remain well below the Bank’s target and so there will be little pressure to end the period of ultra-low borrowing costs ushered in by the financial crisis more than six years ago. Markets are not pricing in a rate rise until well into 2016.For now, economists expect inflation to remain well below the Bank’s target and so there will be little pressure to end the period of ultra-low borrowing costs ushered in by the financial crisis more than six years ago. Markets are not pricing in a rate rise until well into 2016.
Zero inflationZero inflation
Official figures on Tuesday are expected to show inflation on the consumer price index (CPI) measure dipping back to zero in June, from 0.1% in May. Some economists in a Reuters poll forecast prices could even be down on a year earlier. That would mark a return to the negative inflation seen in April, which was the first instance in more than half a century.Official figures on Tuesday are expected to show inflation on the consumer price index (CPI) measure dipping back to zero in June, from 0.1% in May. Some economists in a Reuters poll forecast prices could even be down on a year earlier. That would mark a return to the negative inflation seen in April, which was the first instance in more than half a century.
While inflation is well off the government-set target for 2% and has been characterised by some government critics as a sign of economic fragility, for households, it means they are better off in real terms.While inflation is well off the government-set target for 2% and has been characterised by some government critics as a sign of economic fragility, for households, it means they are better off in real terms.
Wages rising in real termsWages rising in real terms
Official figures on Wednesday are expected to show wages rising 3.3% during the three months to May after growth of 2.7% in the three months to April. That would be the fastest pace for five years and bring relief after years of average pay falling in real terms because it lagged inflation.Official figures on Wednesday are expected to show wages rising 3.3% during the three months to May after growth of 2.7% in the three months to April. That would be the fastest pace for five years and bring relief after years of average pay falling in real terms because it lagged inflation.
“With CPI inflation still hugging zero, real wage inflation of 3% year-on-year is very robust and great news for consumer spending growth,” said Alan Clarke, strategist at Scotiabank.“With CPI inflation still hugging zero, real wage inflation of 3% year-on-year is very robust and great news for consumer spending growth,” said Alan Clarke, strategist at Scotiabank.