Investing in human capital is a crucial aspect of building an economy that is both more productive and fairer, and any growth strategy must incorporate an agenda for increasing human capital and workforce skills within that. So how should we approach the task of developing a skills strategy that complements a broader economic strategy? In this report for the Pissarides Review - published jointly with the Economy 2030 Inquiry which is also funded by the Nuffield Foundation - we address this issue by focussing on a set of sectors – financial and business services, the creative and cultural sectors and Life sciences industries – and technologies – clean technologies and artificial intelligence – that are of strategic importance for the UK.
The strategic sectors are good places to work for everyone. It is striking – and very welcome – that wages are higher, and wage-experience trajectories steeper, for workers at every level of educational qualification in these strategic sectors than in the rest of the economy.
Supporting the expansion of these strategic sectors to boost growth and spread good jobs means ensuring that current and future workers across the country possess the right mix of skills to effectively perform the required tasks. Overall, our analysis points to the growing importance of both general and specific skills that are typically acquired with more formal education. It is thus unsurprising to see that workers employed in the strategic sectors are much more educated than average, with the proportion of workers holding a university degree almost twice as high as the rest of the economy and growing over the last years.
However, there are worrying signals that the current skill mix of workers in the sector may not be adequate. The clearest indicator that demand exceeds supply for skills is the high wage premium associated with higher levels of education. This is clear throughout the educational distribution, and reflects the ongoing need for educational upgrading, such that more people leave the education system with higher education and skills. Without a sustained upgrading of the education and skills of workers, the economy will be unable to grow, especially in strategic sectors.