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Boosting skills essential to GDP

Increasing training in professional and technical skills by 10 percent could boost UK GDP by £163 billion by 2025. A 10 percentage point increase in the number of upper secondary school pupils enrolled in vocational education could lead to a 1.5 percentage point reduction in youth unemployment in the UK.

The net annual business benefit of training an apprentice in the UK in 2013/14 was £1500 per annum.  A ten percent increase in professional and technical skills over the next ten years could increase UK GDP by £163 billion by 2025, according to a new report commissioned by the City & Guilds Group, a global leader in skills development.[i] The report also highlights that increasing the number of 16-18 year olds enrolled in skills education could lead to a 1.5 percentage point reduction in youth unemployment in the UK.[ii]

The findings complement the UK Government’s ongoing investment into apprenticeships. Previous research by Cebr and the Skills Funding Agency showed returns of between £16 and £21 for every £1 invested. Between 2010 and 2011, the UK government invested £1.2 billion into apprenticeships and in 2010 saw a total economic impact of £25.3 billion.[iii]  In addition to the UK, the research also analysed South Africa, India and the US, and found that skills education can significantly benefit employers in all of these diverse markets. On average, the net annual business benefit of a training apprentice is £1500 per annum.[iv] Apprenticeships also benefit individuals; in the UK, level 3 apprenticeships and vocational qualifications may increase wages by up to 22 percent.[v] In the US, nine years after enrolment, apprentices will see cumulative career benefits of $60,000 more than their similar counterparts who did not participate in an apprenticeship.[vi] There are still a number of barriers that need to overcome; namely the stigma against vocational education – which is prevalent in all of the countries explored by the report – and the complexities of running an effective and responsive system that meets the needs of employers. 

Commenting on the report findings, Chris Jones, Chief Executive of the City & Guilds Group, said: ‘This report shows that given the high returns, investing in professional and technical education is a safe bet for individuals, employers and economies. It helps to fill skills gaps, boost productivity, enhance industries and increase employment. However, while professional and technical education offers so much potential, there are still challenges that are getting in the way– from too little data on the benefits of skills education, to overly complex skills systems and minimal employer involvement. Governments across the world need to understand these challenges and work with employers and education providers to tackle them head-on. ‘In the UK Government’s Comprehensive Spending Review, we saw an encouraging commitment to professional and technical education. Maintaining this commitment and building on it will be critical to solve the nation’s skills shortages and help our economy grow.’

Scott Corfe, Associate Director at Cebr said: ‘Our research shows just how much countries across the world have to gain by investing in skills. The UK could boost its GDP by £163bn by 2025 if it increased training in professional and technical skills by 10 percent. This, coupled with the decrease in unemployment will put the UK in a strong position for the future. We can assume other countries not covered in this report would see similar benefits. There is a clear case for investing in professional and technical education, so I hope governments, businesses and employers stand up, take notice and invest in tomorrow’s workforce.’

[i] Cebr Report for the City & Guilds Group (2015)

[ii] Cebr Report for the City & Guilds Group (2015)

[iii] Agency, S. F. (2014). Economic impact of apprenticeships A Cebr report for the Skills Funding Agency, (November).

[iv] Cebr Report for the City & Guilds Group (2015)

[v] BIS research paper, number 53 (2011): https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/32354/11-1282-returns-intermediate-and-low-level-vocational-qualifications.pdf

[vi] Cebr report for City & Guilds Group (2015)

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