Manufacturing the talent of tomorrow

By Millie Rodgers.

What are skills?

Skills can be defined as the ability to use one’s knowledge effectively and readily in execution or performance. Their importance is clear, with the European Commission naming 2023 as the European Year of Skills. So, it comes as no surprise that skills are a topic at the forefront of many employers’ minds in the current labour market. We are persistently seeing major shortfalls, with 10% of organisations reporting a skills shortage vacancy [1] and 15% reporting at least one skills gap [2] in 2023 [3]. These statistics have both worsened over the last 5 years.

Why are they important to Scotland?

Over recent years, Scotland has been largely affected by a combination of inflation, rising energy prices, tight monetary policy [4] and volatile GDP [5]. These shocks spilt over into the manufacturing sector, which is a key contributor to Scottish output and employment, supporting over 181,000 jobs and producing 54% of all Scottish exports. Due to these external shocks, the sector has performed poorly with output over 2% lower than it was in 2021. This demonstrates the impact on the energy-intensive sector alongside slowing demand nationally and internationally.

This then has a direct impact on skills. Some of the key reasons for these skills gaps occurring in Scotland is that the training undertaken by individuals was only partially completed or they did not receive the appropriate training. The consequences of these skills gaps can then lead to increased workload for other staff, higher operating costs and difficulties meeting quality standards. This suggests that while employers are taking positive actions and investing in staff training, this training has not been exactly what was required.

The key skills we see identified by employers intertwine both technical and soft skills. Whilst specific knowledge and experienced is required in certain roles, we have seen a stark increase in employers pursuing a skills-based approach to hiring. These skills include decision making, problem solving, social skills and creative abilities. This is vital for Scotland’s future success.

Importance of diversity in manufacturing

The importance of diversity and equality in the manufacturing and engineering sectors has never been more crucial. Currently, there is a male majority in the workforce accounting for 73.7% of current employees and 26.3% identifying as female.

Shockingly, in 2023 there was a 17.2% gender pay gap [6], an increase from 12% in 2022 [7]. The Scottish average across all sectors was 3.7%. This pay gap also increases with age and is exacerbated by the motherhood penalty [8] which hinders primary care givers, who are often women, in the workplace. Over 91% of the manufacturing workforce also works full-time, suggesting there is potentially a lack of flexible or part-time working arrangements available.

Furthermore, Scotland’s population is ageing, as the total population is set to decrease by 1.5% over the next 25 years. By 2045, the number of people of pensionable age is also expected to increase by 20.6% whilst the working-age population is projected to decline by 2.4%. This enhances the challenges already facing the labour market and employers, increasing the importance of having an appropriately skilled workforce. Thus, the importance of migration to Scotland has become increasingly significant as without migration Scotland’s population would have declined by almost 50,000 people, as in 2023, death rates exceed birth rates.

Perceptions of the manufacturing industry also remain one of the largest barriers to recruitment into the sector, which further challenges diversity. In Scotland only 6% of 16–23-year-olds viewed manufacturing as viable future career. However, 23% were looking to digital/technology/IT roles suggesting there is a lack of visibility about current and future roles within the manufacturing sector. A failure to interact and attract the next generation will exacerbate existing skills challenges, damaging growth and productivity as 46% of large businesses say skills shortages are already putting strain on their workforce [9].

Increasing diversity within the sector will also bring vital benefits to the industry, such as increased innovation, creativity, and social cohesion. In 2021, 98.51% of manufacturing employees identified as White, this is above the Scottish national average. Targeting a more diverse workforce will help to increase talent in the sector, in-turn leading to increased productivity and output.

How to get involved and solve issues

However, there has never been a more exciting time to get involved in the future of the sector with the range of opportunities available.

To help support the next generation, the Scottish government invests £3.4 billion a year on post 16 education and skills. This is demonstrated through our world class universities and colleges that really focus on supporting the regional economies and are led by industry demand. The manufacturing sector in Scotland is also world leading and ranges across many industries including space, shipbuilding, renewables to name a few. Alongside this our apprenticeship system is also highly valued by both employers and apprentices with 1,500 Modern apprentices recorded over the last year and over 4,000 currently in training. Graduate apprenticeships are also popular with manufacturing and engineering employers.

So, it is vital that we can intertwine academia, industry and the public sector to pursue a positive path for the future of manufacturing.

To contribute towards these challenges, the Manufacturing Skills Academy as part of National Manufacturing Institute of Scotland (NMIS [10]), are running a range of projects aiming to help tackle issues in the short, medium and long term.

In the short-term, we are running a range of continuous development programmes (CPD) which are demand-led and provide training and up/reskilling opportunities. In the medium-term we are in a pilot phase for a Pre-Approved Talent system where we aim to capture unsuccessful talent in the final interview stage and redistribute this talent within the manufacturing labour market. Finally, in the long-term we are undertaking a foresighting project aiming to understand the skills and labour demands of the future so we can train the current workforce to meet these without any delays in between.

Finally, it is our collective responsibility across the sector to ensure the success of the next generation of manufacturing and engineering and participating in training and upskilling will help to ensure a positive outcome. A continually evolving and developing workforce is crucial to the future of the sector and it is vital to hold ourselves accountable to the success of this. Whether this is investing money or time for training staff or prioritising continual upskilling it is essential that every employer and the industry collectively takes these actions.

If you would like to find out anything further about the points discussed or how you can get involved, I can be contacted at millie.rodgers@strath.ac.uk or via LinkedIn.

 

References

[1] A skill-shortage vacancy is a vacancy that is hard to fill due to a lack of skills, qualifications or experience among applicants

[2] This skills gap is defined as 1+ employee that is not fully proficient.

[3] https://www.gov.scot/publications/scottish-employer-skills-survey-2020-2/pages/4/

[4] Tight monetary policy is undertaken by a central bank to slow down economic growth. This is in response to rising interest rates.

[5] GDP = Gross Domestic Product. The standard measure of the value added created through the production of goods and services in a country during a certain period.

[6] A 17.2% gender pay gap shows that women earn 17.2% less on average than men in the manufacturing sector.

[7] https://www.skillsdevelopmentscotland.co.uk/media/xqghcjwz/sectoral-skills-assessment-engineering.pdf

[8] https://www.gov.scot/publications/making-scotlands-future-recovery-plan-manufacturing-equality-impact-assessment-results/pages/3/

[9] A new image for manufacturing (barclayscorporate.com)

[10] National Manufacturing Institute Scotland