A well skilled local population has proven to be a vital driver of economic renewal following previous recessions. The economic recovery from Coronavirus will be no different.
As we begin to emerge from the pandemic, new research from the Centre for Progressive Policy (CPP) has shown that boosting basic skills – by reducing the share of people who lack any formal qualifications – can be the engine of employment growth. We estimate that improving skills coverage in this way can boost employment by more than half a million.
The analysis builds a new model of local economies across England. It establishes a statistically robust relationship between basic skills coverage and employment, controlling for differences in health, population size and demographics. The headline finding is that a 10 percentage point drop in the share of the local working age population who lack any formal qualifications is associated with a 2.6 percentage point rise in the employment rate. Importantly, this rises to 3.3 percentage points in the most deprived areas.
Using this relationship, we can estimate the potential employment uplift if we were able to improve basic skills coverage across the country to levels seen in the best performing areas. Let’s take the example of Birmingham; in many ways a dynamic and prosperous economy, but one which still suffers from high levels of deprivation and low basic skills. About 13% of the working age population in the city lacks any formal qualification. If we were able to reduce this to about 3% – the rate enjoyed in places like Windsor or Bath – our model suggests employment in Birmingham would be up to 28,800 higher.