As the recession trundles on, Sylvia Perrins, chief executive of the National Skills Academy for Financial Services, emphasises the importance of skills and education in getting the nation back on its feet.
Skills and education have long been recognised as the essential ingredient in a strong economy. Indeed back in December 2006, the Government issued the report Leitch Review of Skills: Prosperity for all in the global economy - world class skills. This stated that for the UK plc to be able to compete with the best in the world it needed to raise its skill levels across the board. One of the key messages stemming from the report was that for the UK, as a service economy, the investment in the skills of its people is fundamental, as they are our most precious resource. The links between higher skills and greater productivity were well made.
When the report was published the UK had a strong economy which was continuing to grow with one of the best employment rates in the world. Although many at this stage took the view that the days of boom and bust were long gone, Leitch warned against complacency and our ability to predict future economic conditions with certainty. Two years later the world has changed.
"As confidence in the sector has dwindled to an all time low, we must start to re-address the balance and invest in education and skills"We are facing some of the most difficult economic challenges ever experienced. The financial services sector seen by many to represent the success of UK Plc, with high levels of employment and success has gone into freefall. Despite this and because of this, education and skills matter. Indeed, Leitch pointed out that 70% of the 2020 workforce has already completed their compulsory education. Therefore, we need to continue to raise skill levels by focusing on those who are working and those now looking for work who have been affected by the recent job losses.
One of the salutary lessons we can learn from the financial crisis is that it re-enforces the messages that Leitch was making. In the past 12 months, thousands of jobs within financial services have been lost as companies downsize or collapse. As confidence in the sector has dwindled to an all time low, we must start to re-address the balance and invest in education and skills.
We must have better education at all levels within financial services businesses. More than ever before, having skilled and trained staff characterises the firm as more responsible and better placed to overcome existing challenges, regulatory changes and future growth. Too many times we hear that in tight economic circumstances one of the first budgets to be cut is the training budget, with businesses needing to focus upon survival. So does this mean an end to raising skills levels? The answer to this question has to be NO. I believe that investing in skills is a three way partnership between government, the employer and the employee.
Firstly, in a modern economy, the government has a role to play in supporting businesses and their employees with training. The success of the government sponsored Apprenticeship training scheme is a good case in point.An apprenticeship is as relevant within financial services as it is to the more traditional manufacturing or engineering industries. Professional qualifications combined with competency to perform specific job roles are the fundamental components of any apprenticeship. A solid education through routes such as these will provide employees with the skill sets to better perform and thereby improve overall productivity.
Secondly, businesses need to compete in a global economy and they will only be able to do so if they have a workforce that can match or beat the best in the world. Skills development and increased productivity go hand in hand. The FSA has also supported the concept of raising skills levels, for instance, the recommendations within the Retail Distribution Review support the move to increase minimum qualification requirements to Diploma level 4 of those in the Financial Advice subsector. There is a firm believe that customers will be better served by more qualified staff.
Thirdly, in a knowledge economy, a well educated workforce is a must and the personal incentives for employees and future employees to improve their education and skills are strong. Research shows a high correlation between greater lifetime earnings and higher skills levels. This provides a compelling argument for the individual to also want to invest in their education. Those that invest in lifelong learning demonstrate to current or future employers their readiness to take on new challenges and a desire to grow and develop. One of the most important lessons that education can teach is how to think independently, question and challenge.
If you look at the world through the eyes and ears of a three-year-old the world is a journey of discovery and as any parent of a lively toddler will tell you their constant questioning of why, is their way of making sense of the world. Sadly in many cases the bright eyed questioning three-year-old is transformed by the school process into somebody that never wants to return to education again. We have moved on a long way since the days that only those that could afford education received it.
Quite rightly education is a public good available free to those of compulsory school age. Re-creating the desire to learn and continuing lifelong education, thereby creating higher skill levels will help meet the challenges of the financial services industry within a knowledge economy.
Sylvia Perrins is an economics graduate from the London School of Economics and spent eight years with BP after joining it on its graduate programme. She then went into teaching, lecturing on business, finance, management and accountancy before moving into management. She is now the chief executive of the National Skills Academy for Financial Services.
