Use it or lose it

Jim Hillage, Director of Research Institute for Employment Studies

Employability has been at the centre of labour market policy for most of the last 10 years but the emphasis has been heavily placed on getting people into work (even for short periods) and not enough about sustainable and progressive employment. The 'work first' policy has had some success and is at least partly responsible for the highest employment rate the country has ever had. Nevertheless there are some downsides, one of which is that some employees enter the labour market, only to find themselves stuck in low-skilled or dead-end jobs.

Making the transition

Even if they acquire new skills or qualifications, they find it difficult to make the transition to higher-skilled and often more rewarding employment. How should government labour market policy help people in low-skilled jobs who have higher aspirations to move up in the labour market? The answer involves working with both employers and employees.

Employability is not just about having the ability to get a job, it is also about people being able to progress within and between jobs and then fulfils their potential. The skills and knowledge with which people enter the labour market and develop through employment and further learning are partly what makes them employable.

Marketing skills

However, there are a range of other factors as well, including knowing how to market their skills effectively to employers, and the labour market context in which they seek work (Hillage and Pollard, 1998). The policy development and evaluation evidence accumulated in recent years underlines the role that employment-focussed activities such as job search and job placement, accompanied by skill development, can play in helping low skilled people get jobs (DfES/DWP, 2007).

While there is some evidence that participation in training and learning can help sustain employment, there is very little to suggest that acquiring higher level qualifications alone is a route to a better job for someone with low-level skills. Obviously in theory the more human capital employees acquire, the greater the premium they should be able to attract in the labour market. The evidence on the economic returns to qualifications generally bears this out.

Wage premia

But the general does not always apply in the particular. The detailed studies show that the wage premia for academic qualifications are significantly higher than those for vocational qualifications and, among the latter, the returns vary by level and type of qualification (eg. the greatest returns are for qualifications such as BTEC rather than NVQs for which the returns are generally lower or non-existent). They also vary by mode of study, occupation, gender and age (Jenkins et al. 2007).

Barriers

So gaining any form of qualification is no passport up the occupational ladder. The reasons why low skilled people can get stuck at the bottom of the labour market are not just to do with their access to, and the value placed on, qualifications. There are a host of other barriers that can make it difficult to advance: lack of confidence and motivation; the lack of clear career paths and fragmented internal labour markets in modern fluid organisations; employer indifference or erroneous preconceptions of individuals and their capabilities; business strategies based on low skill and low pay etc.

The combination of these barriers is that people may have to change employers to get on. Evidence from the US indicates that job mobility often results in higher earnings than does staying in the same job and that low skilled employees may have to switch to a more progressive workplace to get on (Holzer, 2004).

Employee retention

Despite many employers' preconceptions, the research evidence shows that the provision of training and development enhances employee retention and people do not generally leave for better jobs once they have acquired new skills. However that may not be such a good thing, if employers do not provide opportunities for their employees to work to their productive potential. Employee skills surveys suggest that as many as two in five UK employees are working in jobs for which they are over-qualified (Felstead et al).

'Use it or lose it'

This suggests that the policy message for both employers and employees alike is that they need to 'use it or lose it', ie make the most of the skills they have at their disposal or not reach their productive or employment potential. Perhaps from Business Link, Train to Gain brokers or other policy agencies, to apply the skills their employees have by improving work design and job and career enhancement;

At the same time they need to enhance the opportunities for individuals to exercise their employability by helping them to build their own career through better adult career services and improve the transparency of the labour market.

References