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Failure to fully tap into workforce skills is holding back UK productivity, finds Work Foundation

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In the wake of the chancellor’s plans to make the skills system more responsive to employers, a report published today by The Work Foundation argues that skills shortages are only part of the problem.

The report shows how a failure to address the under-utilisation of skills, especially at the lower end of the labour market, constitutes a barrier to both social mobility and the competitiveness of the UK economy.

The Skills Dilemma: Skills under-utilisation and low-wage work warns the under-use of skills in the UK is resulting in lost productivity both for businesses and the economy as a whole. It argues that this trend could partly explain why the UK is lagging behind comparable countries in terms of labour productivity, despite efforts to improve the skills of its workforce.

The report shows that the problem is especially prevalent at the lower end of the labour market, where jobs too often provide little autonomy, progression or support. This can leave workers feeling underused and demotivated, with accompanying effects upon performance and productivity.

Paul Sissons, report author and researcher at The Work Foundation, said: "This is the missing side of the debate around skills. Skills under-utilisation can significantly affect the productivity of businesses and the wider economy, as well as impacting on the performance and progression of employees.

"From an employer's perspective, under-use of skills can be a waste of a valuable asset; it can result in a less motivated workforce, which may also be less productive. From the employee's point of view, under-use of skills means little autonomy, responsibility or progression, along with the frustration of knowing one's skills are going to waste."

The report draws on case studies in the retail and hospitality sectors and asks experts from government, trade organisations, unions and other leaders in the field to give their opinions on why they think this is happening, as well as what they think should be done.

Sissons continued: "In England, there is no established skills utilisation policy. In international terms, we are behind the trend – Norway, Finland, New Zealand, Australia and Singapore have all invested in better skills utilisation; in Scotland there is a skills utilisation programme funding a number of pilot projects. Policymakers in England need to design better policies for skills utilisation – and support employers to encourage innovation in business models and job design.

"Ultimately, the issue boils down to a need not just for more jobs but for better designed jobs, which encourage autonomy, responsibility, initiative and progression."

The report calls for wider recognition of the matter and urges policymakers to implement measures to begin tackling the problem. Among the report's chief recommendations is the implementation of measures aimed at promoting better job design. It also recommends the establishment of a workplace innovation fund that could provide small-scale funding for skills utilisation projects and support for employers taking steps to address the issue.