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Speech by the newly appointed Northern Ireland Advisor on Employment and Skills, Bill McGinnis, and Anne Heraty, Chair, Expert Group on Future Skills Needs at the All-Island Skills Conference, Millennium Forum, Derry, Co. Londonderry

Date: 09 October 2008 

Bill McGinnis

Skills are the engine room of the modern knowledge based economy and skills development is critical to our pursuit of strong economic growth. Skills drive productivity, attract foreign direct investment and underpin innovation. Skills are also essential for individuals to make their way successfully through a changing labour market. These include both technical and business skills as well as ‘softer’ generic skills such as problem – solving, team working and communications.

It is clear that governments North and South recognise the central role played by skills. They have developed comprehensive skills strategies which set out their ambitions for a well-educated and highly skilled population – ambitions which will ensure Ireland, North and South, competes successfully on the world stage.

Both the Northern Ireland Success through Skills Strategy and the Tomorrow’s Skills strategy in the South require a significant upskilling of the population so that future skill needs can be met effectively and hence underpin economic growth. This can be set against a background of an increasingly competitive global environment where other economies are also rapidly upskilling their workforces. The task now is to ensure the implementation of both our strategies. This will require the support of all stakeholders working together.

The question is, are we more likely to achieve these ambitions working together on a North/South basis or by working separately. The two skills expert groups that operate on both sides of the border firmly believe that our ambitions can be achieved more readily if we work closely together on skills issues. It is in all our interests to work collectively to understand the demand for skills across the island and to address identified skill needs in a flexible and responsive manner.

There is of course a long history of joint working between the North and South on skills and employment matters. We will be hearing more about examples of that work throughout this conference – both at the national and local levels. The Expert Group on Future Skill Needs in the South and the Northern Ireland Skills Expert Groups are also keen to play their part. They have been working closely together over the last number of months to develop the first All-Island Skills Study - and I am pleased to announce that the findings of that study are being published here today.

Copies of the report are available for you to take away and an Executive Summary has been placed in your Conference Information Pack. The study, for the first time, provides a robust all-island skills evidence base which will be used to inform future partnership and effective working between the two skills expert groups. It extends our understanding of skills demand across the Island of Ireland – drawing attention to the many synergies and challenges that exist.

The report sets out how the all-island economy has been performing over recent times and the role skills has played in that performance. It examines the impact of the current economic downturn on demand but also looks to the opportunities for the all island economy in the medium to longer term and how central the skills agenda is to grasping those opportunities.

This conference provides a valuable opportunity to present the findings of the All-Island Skills Study and to consider how we might build on those to ensure the value of North/South partnership is maximised for the benefit of us all.

I would now like to introduce Anne Heraty to you. Anne chairs the Expert Group on Future Skills Needs in the South. She has offered long and distinguished service as the chair of that group and I must say that I am indebted to Anne and the members of that group for the constructive way they have engaged with their Northern counterparts to produce this report. I know colleagues have been impressed by their ongoing openness in terms of sharing their experiences of skills issues.

I am pleased to hand over to Anne now so that she can present the key findings from the All-Island Skills Study.

Findings from All-Island Skills Report

Anne Heraty

Thank-you Bill for your introduction and kind words of welcome. At the outset I would like to wish you every success in your new appointment as Northern Ireland Skills Adviser. I too would wish to pay tribute to the engagement from the Northern Ireland Skills Expert Group and I am grateful for the opportunity to present the key findings from the All-Island Skills Report today.

Recent Economic and Labour Market Trends

Let me start by looking back to the performance of the all-island economy over recent years. During the last decade we have witnessed a sustained period of strong economic growth.

Annual average GDP growth on the island has exceeded 6% over the last decade. This has been far ahead of many other developed countries including the US, France, Germany and Canada. It is true to say that all-island growth rates have been driven in large part by the Celtic Tiger years in the South. But growth in Northern Ireland has also been impressive when compared against the rest of the UK and the Eurozone.

These strong growth rates have changed the Island of Ireland considerably. Not least it has become a much more attractive destination for inward investment and is a stronger magnet for skilled labour. Both jurisdictions have also become net inward migration economies. This is in contrast to previous decades. Recent trends in migration have been a strong driver of population growth and have helped to alleviate skill shortages in key sectors, North and South. Migrant workers have helped to improve the skill profile of the Island.

The all-island labour market has also changed beyond recognition. Employment across the island has grown from 2 million in 1996 to almost 3 million today.

These rates of employment growth are also impressive in the international setting. Over the last decade, all-island employment has been growing twice as fast as the US and Eurozone economies and more than five times faster than Denmark or Germany.

Unemployment too has fallen dramatically. The rate of unemployment on the island almost halved over the period 1996-2007 and, despite recent rises in joblessness, it is still low by historical standards. The all-island working-age employment rate has also been rising and is approaching the Lisbon Agenda 2010 target rate of 70%.

Recent Sectoral Trends

Looking now at sectoral trends it can be said that this strong labour market performance has been driven by rapid expansion in a number of sectors including Business and Financial Services, High-Value manufacturing, Wholesale and Retail and, up to recently, Construction. Looking specifically at the Business and Financial Services sector, it has roughly doubled in size in employment terms over the last ten years and now accounts for almost one in eight jobs across the island. This transformation is due, in large part, to significant inward flows of Foreign Direct Investment and the increasing export orientation of the sector.

Wholesale & Retail sector employment has also grown consistently - driven by increased consumer spending power. Education, Heath & Social Services sector employment, which includes elements of private education and health services, has also risen significantly. This reflects the Island’s increased prosperity and the needs of the growing population which has increased from 5.3 million to 6 million over the past decade.

The Tourism and Hospitality sector is making a significant contribution to the all-island economy and provides employment to some 290,000 people across a diverse range of occupations. While we have seen only a relatively small increase in the production industries sector – which is in contrast to most other economies which have experienced a decline - we should be pleased with relative growth in high-value manufacturing sub-sectors such as Information Communication Technology and the Life Sciences areas.

For example the ICT sector currently employs some 100,000 people on an all-island basis and is a key component within the export orientated focus of both jurisdictions. This sector provides employment for a range of diverse high-skilled occupations.

Recent Occupational Trends

Now turning to look at occupational trends, it can be seen that over a third of employment growth in recent times has been concentrated within professional and associate professional occupations .This is linked to employment growth in professional and business services and other graduate hungry sectors such as hi-tech manufacturing and health. Service and retail occupations have also risen steadily.

These seismic changes have transformed the demand for skills across the island. This is manifesting itself in the growing need for higher skilled employees.

Recent Skill Trends

These trends in the pattern of sectoral and occupational growth impact in turn on the demands for skills.

The number of people employed with graduate level qualifications has increased dramatically. Compared to 1999 there are now 340,000 more graduates in employment in the all-island economy. Employed persons with third-level qualifications now account for 35% of total employment across the island compared to 25% in 1999.

Conversely, over the same period, at the other end of the skills spectrum, the proportion of people employed with low level qualifications has fallen – from 30% of total employed to 23% today. This is in line with the decline in employment in traditionally low skilled sectors such as agriculture and traditional manufacturing sub-sectors such as textiles. The number of working–age persons with low attainment levels has also fallen.

Even with these significant improvements, it may be said that the island’s skills structure still lags behind international comparators- but it is catching up. This is the challenge ahead which both skill groups are seeking to meet within our respective skill strategies.

Current Economic Conditions

There is no doubt that recent economic performance across the island has been impressive and research has demonstrated the central role played by skills in that economic transformation. However as all of us are aware, we have now entered a period of economic uncertainty. We are all acutely aware of the impact of the global credit crunch and the recent sharp rises in commodity prices. The all-island economy, like other developed economies, is not immune to these changing conditions and the global influences are impacting upon our daily lives. Over the course of the year so far, we have witnessed falling house prices, a slow down in the residential construction industry and rising unemployment.

Future Opportunities

Nevertheless, the All-Island Skills Study is clear that we must not allow this current economic downturn to detract from our longer-term economic aspirations. The report points out that the medium-term outlook for the all-island economy remains promising. It is clear that the next few years will be difficult years for both economies - and while the study suggests that the island will not return to the ‘Celtic Tiger’ growth rates of recent years, both the North and the South are expected to experience sustained growth rates above the average Eurozone level over the medium to longer term.

Future Skills Needs

As in the past, skills will play a critical role in driving future economic success. Given the expected pattern of future sectoral and occupational employment growth it is predicted that there will be a continuing increase in the proportion of jobs requiring a high skill level, and a relative decrease in those jobs requiring low qualifications. The demand for high level skills will continue to rise significantly while the demand for lower level skills will continue to diminish. Total demand will be generated by a combination of both expansion demand – due to an expected increase in employment levels - and replacement demand , which relates to vacancies created by people retiring or leaving employment for a variety of reasons. Future expansion and replacement demand forecasts by main occupation are given in the report. They help explain why, even where there is no expected increase in employment levels by occupation, there may well be significant demand created due to the effect of replacement demand.

There is a clear message, therefore, for policy makers, employers and employees, all of whom are represented here today. Skills will continue to be the critical factor defining our future economic success. We must not take our foot off the accelerator as we collectively strive to upskill our people so that future skill needs are met.

Way forward

The key added value of this All-Island Skills Study is that it provides, for the first time, a picture of skills demand across the island and I very much welcome that. To reiterate what Bill McGinnis has already said, the report builds a solid foundation for future joint working, North and South, on skills issues. It demonstrates the many common skill challenges we face. It highlights how critical science, technology, engineering and maths skills will be to our future economic success. It demonstrates the importance of understanding and addressing skill needs in key growth sectors such as Information Communication Technology (ICT), Life Sciences and Professional and Business Services. It sets out the need to improve key generic skills such as numeracy, literacy, problem solving and team working.

Going forward, the study highlights that skills development will become even more important to all-island economic development. This is set against a background of an increasingly competitive global environment where other economies are also rapidly upskilling their workforces.

This raises the question, as to how we can further build upon the work of the Study . This is an issue that the two skills expert groups will be addressing in the near future.

The all-island study has shown that there are a number of potential areas of joint working that would help both jurisdictions realise their closely aligned future skills ambitions.

These are:

  • where certain data are not available in both jurisdictions or not wholly compatible , ( such as data on skill shortages , labour shortages , skill gaps and utilisation of skills ) - work could usefully be undertaken to further strengthen the all-island skills evidence base.
  • there is potential for North and South to work together in a co-ordinated way to see how the all-island skills picture can be enhanced and future skill needs met in high growth sectors including Information Communications Technology, Life Sciences and the Professional and Business Services sectors.
  • there is potential for enhanced collaboration and utilisation of our educational and training expertise on an all-island basis in the areas of education, upskilling and research.
  • the sharing of information on examples of best practice in the fields of tertiary education, training and employment can ensure that we learn the best from each other. Examples we are going to hear about later in the day are the Eures Cross-Border Partnership, North-West Workforce Development Forum and collaboration between the University of Ulster, North West Regional College and Letterkenny Institute of Technology.

Both skills expert groups and governments North and South firmly believe that this work will contribute to upgrading the skills profile of our labour force. There is no doubt that this, in turn, will help sustain the future competitiveness of the enterprise base and maximise individual’s employment opportunities. I am grateful for the opportunity to present the findings from this All-Island Skills report today and would encourage you all to read it in detail. As you do that, I would ask you to consider how you also can contribute to addressing the compelling need for increased skills across the Island. Thank you.

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