A new report, produced by the University of Sheffield and The Productivity Institute (TPI) showed that some areas in South Yorkshire are below the UK average in levels of productivity – about 17% below the UK average.
Barnsley, Doncaster and Rotherham experience the lowest levels of productivity in the region, while areas like Northern Lincolnshire and the east part of Yorkshire have shown higher productivity levels than the average for the UK.
But what does this mean? Productivity levels affect economic growth, and so an increase in this factor would generally benefit wages and living standards in the region. Unfortunately, growth levels in some parts of Yorkshire haven’t improved much in the past five years, according to Professor Jason Heyes, one of the authors of the new report. The report states there was slight growth between 2005 and 2019, but that it still lagged behind the UK average.
Addressing the skills gap at national and regional levels
The report emphasises that in order to close the skills gap, there needs to be a better alignment of national and regional policies that focus on innovation, trade and investment.
Heyes, from the University of Sheffield, said: “There are concerns of skills mismatches, and that raises issues in relation to whether the supply of skills and the demand for skills within the region are aligned, or clearly not aligned.”
One of the reasons for this misalignment is de-industrialisation in Yorkshire, as a result of the decline in manufacturing and the steel industry as a whole. Sheffield was built around the steel industry, and its decline has led to a significant skills gap, which in turn has affected productivity.
Lower attainment levels feed into skills mismatch
Heyes said: “We found that those areas that are falling behind UK productivity levels have lower attainment of skills and qualifications, higher levels of under-qualified employees and higher skills mismatches in industry, which implies an increased skills gap is a big driver in the stalling productivity of a local economy. This is demonstrated in places like Barnsley, Doncaster and Rotherham which are continuing to experience the consequences of de-industrialisation.”
Data from the report shows that: “Doncaster has the highest proportion of under-qualified employed individuals (32.1%), the highest across both regions and implying substantial skills gap in the area.”
Another area that needs support is apprenticeships, requiring “investment by employers and funding by the government”, according to Heyes. However, he did point out that the new Labour government is looking at reforming the apprenticeship system to make it more “flexible”.
Reform of apprenticeship system should improve youth uptake
The government plans to reform the apprenticeship levy introduced in 2017 and replace it with a new ‘growth and skills’ levy. To fund this, employers are being asked to rebalance their funding for apprenticeships and use the levy system to invest in younger workers.
National Apprenticeship Week ran from 10 to 16 February, highlighting the importance and value apprenticeships hold in closing the gap between people looking for employment and actually having the necessary skills. This brought together businesses to celebrate the positive impact apprentices have on the economy and regions across the UK.
The benefits apprenticeships bring mean that young people can gain hands-on industry skills and experience, while being paid and gaining qualifications that will lead to a successful career. This in turn can then help fix the skills gap, encourage more young people to work, and improve productivity levels across the region’s businesses as a result.
Improved local and regional funding will be key
The report also makes several recommendations on how to solve the overall problem of a lack of productivity in Yorkshire. These include supporting combined and local authorities to establish pathways to access training opportunities and funding.
Continued research is needed into good practice in apprenticeships, as well as analyses of employers’ skills requirements, to help forecast future regional needs. Another essential would be the creation of partnerships between chambers of commerce, the combined authorities, and universities. However, it’s important to note that the skills gap includes a lot of people with no contact with universities.
It’s also important to mention that Barnsley Metropolitan Borough Council have partnered with the South Yorkshire Mayoral Combined Authority with the aim of ensuring everyone has access to the benefits of work through their ‘pathways to work commission’, which explores how to reduce economic inactivity.
Bart van Ark, managing director of TPI, said: “There is an urgent need for governments at all levels – national, regional and local – to adopt a place-based perspective on productivity growth. Many UK regions have such low productivity levels that single interventions, even significant ones, won’t suffice. A systemic approach to pro-productivity policies requires them to be joined up and scaled up.”
Infrastructure investments are key to improving productivity
Following the recent news of Doncaster Sheffield Airport possibly reopening, this connectivity could be a factor in helping improve South Yorkshire’s productivity.
Heyes said: “It’s important in terms of investment, potentially important in terms of trade, you know, connecting the region to external suppliers and external partners and external opportunities.” He then explained how infrastructure is in desperate need of investment and that this is a drag on productivity.
Local governments are aware of this issue and are seeking to tackle it, as mentioned above in regard to Barnsley. The South Yorkshire’s local skills improvement plan is another example of an initiative aimed at employers, providers and stakeholders to help drive change, through identifying what is needed to make sure the requirements of the local labour market are met.
Heyes said: “There’s a lot of activity in this space at the moment, policy-wise at a local and regional level and I think local and regional policymakers are aware of the issues in some ways, probably much more aware of the issues than the national government is.”
