Managing Supply and Demand

In this article Dr Dick Evans Principal of Stockport College further develops his arguments in favour of major research into major skill needs in the UK.

In order for this country to compete in the global economies it must, once and for all, develop long term strategies for education and training, including the essential need for lifelong learning. The country must more fully recognise the consequences of the various transformations that are occurring at an ever accelerating rate in employment and in society in general. This certainly will require a fundamental and comprehensive reappraisal and redefinition of education and training with a greater concern with its purpose and outcomes. Pivotal to this is the need to achieve a realistic understanding of the balance in the relationship between supply and demand. Achieving the balance between supply and demand is not an easy exercise because of the uncertainties and volatilities associated with the transformations mentioned above, many of which are associated with global information and communications technologies.

These rapid transformations make it increasingly difficult to generate reliable statistics and hence accurate projections for future employment profiles and patterns.

Another crucial element in this country, which causes further confusion, is the adoption of the free market and increasing deregulation in education and training. Most other successful economies have more assertive systems of regulation in education and training, for example Japan and other Pacific Basin countries. The culture of ‘individualism’ encouraged in this country by the politics of the last two decades has to be referenced to what is realistic for the future economic health of the country and increasing individuals’ likelihood of sustaining their own livelihoods within a highly specialised and competitive environment.

A key question to ask is ‘What will the UK’s future economic health be based upon, and how will the country be able to sustain the costs associated with lifelong learning and the demands of the global economies?’ Another question is ‘ Can the country achieve a rational and planned balance between service and manufacturing based industries?’ Answers to these questions would then allow institutions to more effectively plan and determine the purpose and nature of education and training in the future. In particular, the further education sector and its constituent colleges can play a major role in achieving the match between supply and demand and improving the stock and flow of highly qualified people into employment and society. Sadly, one of the causes of Britain’s long decline in terms of global competitiveness is the continual lack of a long term investment in terms of research/ development, human resource development and effective market research particularly in manufacturing industries. The political and financial climate over many decades has been one of short-termism and a culture of quick profit for shareholders with preference over a long-term investment into industry.

It was fashionable, in the 1980s, to say that manufacturing was unimportant and did not matter and that the UK’s economy could survive and indeed thrive on service based industries. This is now seen to be a false and dangerous philosophy. A strong and viable manufacturing base is important and does matter. A recent survey from Eurostate Labour Force Unit (1) shows that the prosperity of the European regions is in direct relationship to the strength of their manufacturing base. This country has witnessed the wholesale destruction of its manufacturing base and this, sadly, has been inevitably accompanied by the reduction of the associated vocational provision in FE, particularly in the areas of engineering and technologies, science and construction.

If this country is to regenerate its manufacturing base, albeit a different one from that of the past, there needs to be a greater investment and commitment to vocational education and training, particularly within the FE sector. It is now clear that the UK needs a sustained period of investment in its manufacturing industries to be able to compete not only in Europe but beyond in the wider global economies.

Scientific technical world.

We do live in an increasingly scientific and technological world. Science and technology already dominates what people take for granted in their lives. Increasingly scientific and technological influences will have even greater prominence in daily life and in the products and services which will be in demand worldwide.

The recent publication from the DFEE, FEFC and TEC National Council Statistics Working Group ‘Skill Supply and Demand and Further Education’ (2) indicates indicative trends in employment between 1996 and the year 2003. Strong growth is indicated in managers and in technical supporting jobs in industry and sendees and in personal service jobs, but in spite of the decline predicted in a number of jobs in some occupations, for example skilled manual engineering and agricultural, there still continues to be a substantial demand for new skilled recruits to replace existing workers. For example, while the number of skilled engineering jobs is forecast to fall by 77,000 in the period of the survey, annual recruitment demand may still run at about 80,000 per year. This would indicate that colleges need to continue to offer and further develop high level high quality provision in engineering, science and technologies. Evidence already exists that much of this provision is declining and although enrolments continue to increase, they are very much at the lower levels of award and will not satisfy the demand from employers for highly qualified technicians. It is therefore essential that long-term investment in relevant education and training, particularly in science and technologies, is now undertaken.

Investment

In addition, there needs to be significant investment in research and development with positive support to employers by the Government, possibly by way of tax incentives or by the introduction of individual learning accounts for employees. For too long the shareholders have been the top priority with relatively low investment in research and development. Successful economies, such as Japan, bear testimony to the importance of investing significantly in research and development. Japan leads the world in the proportion of qualified scientists and engineers, with 60,000 per million of the population. Interesting to note that 800,000 Japanese are engaged in research and development and this is more than Britain, France and Germany combined. For any country to be globally successful in manufacturing, it must give recognition for the high practical skills base of its workforce and the importance of research and development, production and marketing of its products and services.

The current climate of free market precipitates a fundamental paradox when one attempts to analyse the issues around supply and demand. There are significant mis-matches between what individuals want (or think they know what they want) and what the country needs at present and in the future. All kinds of tensions are created as a result of this paradox, which is heightened because of the Government’s desire to achieve national training targets and the colleges’ need to realise student growth targets at the least cost. These tensions make it impossible to get a sensible balance between supply and demand. Very often there is an overproduction of qualified people, coupled with underprovision in many key areas. Key strategic provision is threatened when ‘bums on seats’ and ‘doing more for less’ are the sole criteria. As a result, colleges will opt to make provision which is in demand from the students but which might bear little relationship with what is really needed for the employment market and to establish a sound, wealth-creating workforce.

At present there is an imbalance between supply and demand because of the lack of a long term strategic plan and the continued operation of the ‘free market’. One just has to look at the levels of graduate unemployment and, more worrying, graduate under-employment (e.g.so called ‘Mcjobs’). The recent report by Peter Robinson (3) shows that most of the new vocational qualifications are in low tech disciplines and are primarily at the lower levels ofNVQ. Other publications(4,5) highlight the damage that is being done to key strategic provision by the continued adoption of the free market and the current funding methodologies being operated on education and training.

The dictionary definitions of‘supply’ and ‘demand’ do not really help us when attempting to understand these concepts. Both terms carry the requirement of responding or doing something which is required. There surely needs to be a detailed and systematic analysis of ‘what is required’ and ‘why it is required’. Who are the key players in this complex and currently confused landscape? Demand drivers include parents with belief structures often based on their own biographies and experiences. This is now a dangerous driver as the world has changed significantly and historical signposts offer little direction for the future. Other drivers include institutional priorities and imperatives for maximising income caused predominantly by the current FEFC funding regime which leads, sadly, to the neglect of the true needs of employers and society. Increasingly employers want people who are versatile and flexible, possessing core skills coupled with the appropriate knowledge and understanding. The information and communication revolution requires people already in employment to be up/cross skilled.

Lifelong learning

The need for lifelong learning is now widely recognised. The pace of technological change means that the ‘shelf life’ of work skills and knowledge is getting even shorter. More frequent movement between jobs, as well as between employment and other work settings, require regular learning of new competencies. More and more work requires ‘multiskilling’, and a wider and more flexible range of skills. Lifelong learning does not necessarily mean lifelong education. It must also embrace training as well as more informal learning in the workplace and in society. The demand leaders here would be the employers and this will require more effective strategic partnerships to be developed between the worlds of education and employment.

Another change that will require a fundamental review and reappraisal is that increasingly people on short term employment contracts will sponsor themselves for their studies to obtain future employment and this again produces a very different kind of demand and supply from the learner. The institutions will have to recognise these changes. Colleges will need to recognise these transformation and reconfigure their provision and the way it is delivered with more emphasis on distance and remote learning programmes, off-site operation and programmes of study which are unitised and modular in nature. The time-served linear provision will increasingly become a thing of the past and greater recognition to partial achievement by the learner must be given and equally importantly recognised by the Funding Councils. The current political and funding policies seem to perpetuate a very traditional and, it is now known, flawed view of education and training. Education and training must itself become more flexible and responsive to the demands of the future. The continued operation of the free market is precipitating a whole series of confusions and ambiguities in education and training and these are most certainly manifest in the issues around supply and demand. The key question should be ‘Should colleges freely submit to the market and uncontrolled supply or should they be more considered in the way they identify and manage the likely demands of the future?’ Surely the way forward is if there is a clear commitment by the Government to adopt a long term strategic plan for education and training. This must also be coupled with a clear vision of how this country is to locate itself within the global economies.

What should the shape and nature of industry be within the global economies that will allow wealth generation to occur but complemented by the economies that support the country’s operational infrastructure, a clear view and understanding of how this country will survive in the future? Only when there is this political will, can education and training respond and prioritise the educational and training provision that needs to be invested in with a clear vision nationally. Colleges can then develop strategic plans which address the key issues of adequacy and sufficiency for their catchment areas as well as realising more sensible matching between supply and demand.

References:

  • Labour Force Survey 1996
  • Skill Supply and Demand and Further Education – DfEE, FEFC, TEC National Council Statistics Working Group, December 1996
  • Rhetoric and Reality – Britain’s new vocational qualifications, Peter Robinson, Centre for Economic Performance, 1996
  • Towards a Nation of Shopkeepers : The Devocationalism of the FE Curriculum, Derek Frampton, (in publication Training Matters, Volume 5, Autumn 1996).
  • Output-Related Funding and the Quality of Education and Training, Geoff Stanton, International Centre for Research and Assessment, 1996.
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