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Why we need a portfolio approach to skills: £22bn annual cost of low essential skills revealed by new research

New research in the Essential Skills Tracker 23 from Skills Builder Partnership, with fieldwork conducted by YouGov and backed by the CIPD, Edge Foundation and KPMG, reveals that essential skills are a missing piece in the UK’s productivity puzzle. The eight essential skills were shown to be one of the strongest predictors of positive life outcomes.

The research exposes the cost of low essential skills to the UK in 2022 – coming in at £22.2bn. More encouragingly it shows those with higher levels of essential skills experience improved social mobility, employment, earnings, job satisfaction and life satisfaction.

Let’s take a look at the some of the main findings.

Access to a wage premium of up to £4,600 a year

With higher levels of essential skills, individuals earn significantly more than their peers. Moving from the lower quartile essential skill score to the upper quartile essential skill score is associated with a wage premium of up to £4,600 each year for the average worker. 

13% of the population that experience real social mobility have a complete skills portfolio 

The research showed that full-time workers in the UK broadly fit into five groups ranging from ‘Skills Trap Proper’ to ‘Middle Class Achievers’. The 13% of the population that experience real social mobility (enjoying strong income, job satisfaction and life satisfaction) have a portfolio of good essential skills, literacy, numeracy and education, despite having had fewer advantages. 

Essential skills recognised by UK working population

UK workers overwhelmingly recognise the importance of essential skills for success within their career, with a higher proportion (92%) identifying them as vital than almost any other skill. 

Employers can have a significant impact on lifelong learning 

The paper found that although essential skill levels appear to drop-off after the age of 40 in the adult population, opportunities to build essential skills in work completely neutralise this effect. With the chance, these individuals continue to improve their essential skills and benefit from lifelong learning. 

A ‘good’ education?

An ostensibly ‘good education’ that builds literacy and numeracy but omits essential skills leaves 18% of workers with above average education level, literacy, and numeracy, and yet a very low essential skill score. This group of UK workers has the worst job satisfaction, life satisfaction, and sense of their life being worthwhile. They also earn much less than their peers.

Essential skills predict job satisfaction as strongly as income 

People’s essential skill score is very strongly associated with job satisfaction. The research found that a 2 step increase in essential skill score on the Universal Framework was associated with the same increase in job satisfaction as an increase of £55,000 in pay.

So what does this mean for employers, educators and impact organisations? 

Implications for employers

Employers looking to seize these opportunities can embed a structured and cohesive approach to essential skills across their business. This starts with clearly identifying the skills being recruited for in an inclusive and transparent way. The research shows that providing opportunities to build these skills at work can change the trajectory for older workers, preventing the apparent age-related skills decay. This means not just providing training, but designing better jobs that encourage lifelong learning.

These changes are likely to be popular with the 92% of employees that see essential skills as crucial in their careers and with the majority who would consider moving job for better skills building opportunities. For employers concerned about retention or engagement, it is likely that building your employees’ essential skills has a significantly higher return on investment than increasing their salaries.

Employers of all sizes have already realised significant gains from embedding the Universal Framework into their organisations. Many have sought Skills Builder’s  tools, training, resources and deep expertise to rapidly incorporate the skills into  their recruitment, staff development and outreach. 

To explore what it looks like in practice, you can read detailed case studies of partners including Thames Water, Allen & Overy, and LNER. To find out more about working with Skills Builder, just get in touch!

Implications for educators

Given the far ranging impact of essential skill levels, we simply can’t afford to leave to chance who benefits from building them in education and who doesn’t.

Thousands of schools and colleges in the UK and across the world have already come to this conclusion. Many of them have achieved excellence in building their students’ essential skills. To take one example, William Tyndale Primary School has been building essential skills explicitly for over eight years. Essential Skills and the Skills Builder approach are integral to the curriculum and as a result the school holds a Gold Award demonstrating excellence.  

We provide funded places to schools and colleges on the education Accelerator programme. This helps educators make a strong start and rapid initial progress in embedding the Skills Builder approach. Applications for the 2023-24 UK programme will open soon, and you can register your interest using this form. If your school or college is outside the UK, applications are already open.

Implications for impact organisations

For real social mobility in action, essential skills are the missing piece. Organisations across wide-ranging contexts from sports to arts and culture are making headway through embedding the Universal Framework into their interventions. This is helping to break the Skills Trap that those with fewer advantages find themselves in. 

Through high-quality essential skills provision and building their own teams’ capacity, partner organisations are demonstrating impact excellence, as awarded through our Impact Levels. One such example is Spiral. Joining up with employers to co-design their workshops, young people are equipped with the skills they need to transition into the workplace. This, in turn, provides opportunities for improved life outcomes. You can discover hundreds of programmes awarded with an Impact Level on our Impact Directory, and find out about our different Impact Programmes in the prospectus

Our collective impact as a Partnership

Over 850 employers, educators and impact organisations are working toward a shared goal: to ensure that one day, everyone builds the essential skills to succeed. The Essential Skills Tracker 23 is just the latest piece of evidence demonstrating why this mission is so vital to the societies we live in.

Watch the virtual launch event here

Click the video below to see a recording of the Essential Skills Tracker 2023 virtual launch event, with key insights from Tom Ravenscroft, Robert Crain and Will Seymour.