What makes somewhere a good place to do business? Many factors can come into play, from the transport system and food scene to taxes and regulations. But these days, the skills of the local workforce are becoming more of a deal clincher – or deal breaker if skills are lacking.
Access to skills has long been cited as a key factor when international companies are deciding whether or not to locate or expand in the UK. But in an era of advanced manufacturing techniques, cleantech and the transition to a carbon-free economy, along with rapid and constant advances in digital and life sciences, skills are even more critical for securing the long-term inward investment that is essential for creating jobs and growth. And the more important inward investment becomes to the UK economy, the more important skills become.
According to EY’s 2022 UK Attractiveness Survey (pdf), which gauges the state of foreign direct investment in different countries, inward investment into the UK rose by 1.8% in 2021 to 993 projects. This compared with 1,222 inward investment projects in France. Indeed, much stronger growth in inward investment projects across Europe – at 5.4% – meant that the UK’s European market share slipped to 16.9%, its second lowest in 10 years.
Moreover, as skills aren’t evenly distributed across the nation, their importance to investor decisions also has implications for UK efforts to narrow the economic disparities between different regions. EY’s 2022 UK Attractiveness Survey found that the availability of a skilled local workforce was the leading factor influencing investor decisions when considering investing in UK regions outside London – cited by 27% of investors, compared with 21% in 2021.
“When asked about new industry skills, such as greentech, cleantech, and digital, it becomes more important still,” says Josie Cluer, partner in People Advisory Services at EY. “If you care about levelling up, you have to care about skills.”
EY is a founding member of the Skills Taskforce for Global Britain, a group of experts brought together in 2021 by WorldSkills UK, a partnership between education, industry and UK governments, that works to raise standards in technical education and apprenticeships, champions future skills and empowers young people to succeed.
WorldSkills UK is part of the global WorldSkills network that spans more than 80 countries. The Skills Taskforce for Global Britain produced an in-depth report exploring the links between skills and inward investment and concluded that the UK skills base should be more internationally competitive and that skills delivery must be focused on what skills employers need rather than what can be supplied.
The report also highlighted the urgency and opportunity posed by the rapid development of advanced manufacturing techniques that incorporate AI and machine learning, cloud computing, data analytics, 3D printing, and the connectivity enabled by networked tools and machinery (otherwise known as the Internet of Things, or IoT). Taken together, these advanced manufacturing techniques are often dubbed Industry 4.0, or the fourth Industrial Revolution.
Neil Bentley-Gockmann, the chief executive of WorldSkills UK, stresses the importance of these developments. “There’s a massive opportunity for the UK to learn from other major economies about how they are targeting investors with the skills they’re developing in areas like cybersecurity, digital construction and Industry 4.0 to attract investment and create jobs,” he says. “Countries like Ireland, France, Singapore, and Australia are all much better at targeting the inward investor to come in and create jobs with the skills supply that they have. We can take a leaf out of their book.”
One way that WorldSkills UK works to raise standards in the UK is by promoting the benchmarking of international skills through its membership of WorldSkills. It gains insights into the skills of other countries through the WorldSkills biennial international competitions, which have been dubbed the “skills Olympics”. These allow member organisations to test the best of their nation’s skills against other countries. “In last year’s competition, the UK placed 10th in the world overall and finished fourth in digital skills, ahead of countries like Japan, Austria and India,” says Bentley-Gockmann. “That’s because we’ve focused on investing in the digital skills development of the young people and the trainers.”
Ultimately, the key to winning foreign investment is having technical and vocational skills that are flexible and align with the digital needs of companies looking to invest in the UK, as well as a skills training system that can deliver them. Greater Manchester mayor Andy Burnham recently set out such a vision for transforming the Greater Manchester area into the UK’s leading technical education city region through the creation of an integrated technical education system.
Dame Ann Limb, a member of the Skills Taskforce for Global Britain and chair of City and Guilds, says that when it comes to addressing the disparities between various UK regions, the focus should be on identifying those parts of the UK that can compete globally with other regions. “It’s not about whether the Oxford-Cambridge arc is a more innovative corridor than the Northern Powerhouse,” she says. “In a global context, it’s about corridors that can compete for new inward investment by having a higher quality of skills and knowledge than other corridors in other countries.”
Register for the WorldSkills UK International Skills Summit: International Skills Summit 4: Skills for the future – WorldSkills UK
