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Quarterly issue 4

Debate: The need to retrain and reskill your post-COVID-19 workforce

Author: ICAEW Insights

Published: 27 Nov 2020

UK businesses and policymakers need a revolutionary rethink of retraining needs to protect employees from a changing and uncertain future, and to close the digital skills divide.

Rajeeb Dey MBE

Founder & CEO of Learnerbly

The UK needs a reskilling revolution. A CBI & McKinsey report published in October highlighted that nine out of 10 employees in the UK will need some form of reskilling by 2030, requiring £130bn of investment. 

With the Office for Budget Responsibility estimating that fiscal support measures since the start of the pandemic have cost taxpayers £192bn, it would be wise for policymakers to consider how future investment is channelled – not just to maintain the status quo, but to futureproof the skills of employees. 

What’s clear is that COVID-19 has been the biggest catalyst for digital transformation for businesses where this is possible. Employees have had to adjust to working remotely and employers have had to reimagine how they do business in a remote-first world. However, employees need support to not only adapt to these changes but to also embrace the opportunities that emerge from digital transformation. Pre-pandemic, Parliament estimated that the existing digital skills gap sees the UK lose out on £63bn in GDP every year; this is only set to accelerate unless action is taken.

In a market with a shortage of necessary skills, such as high-level specialists in data science, cyber-security and data security, businesses have to transform into learning organisations. A vibrant learning culture, where investing time in both personal and professional development is not only accepted but encouraged, will enable employers to attract and retain top talent. A company’s learning approach will become a source of competitive advantage – its ability to out-teach the competition will set it apart. 

The business case is clear: with employee engagement levels on the decline during COVID-19 and the subsequent impact on morale, wellbeing and productivity, supporting personal growth is a key driver to boosting overall engagement and thus performance. 

With the shift to remote business, managers need to reconsider their current offerings of rewards and benefits, as office-based perks such as free food, an on-site gym and a cycle-to-work scheme may be less accessible in a post-COVID-19 era. Instead, offering employees a budget of time and money allocated for personal and professional development is beneficial to both the business and the employee. 

If we’re truly to have a reskilling revolution where everyone plays their part, we should reintroduce the salary sacrifice tax benefits – where employees are investing in professional development and training – that were revoked in 2018. In doing so, we can encourage individuals to invest more in their own development. 

Just as we invest in ISAs and pensions to build up our lifetime savings, we should also invest in our personal and professional development, particularly as work changes over the next 20 years. While we’re putting away money for our retirement, we’re making little effort to invest in our future skills, and that is going to be what keeps us and the economy productive and competitive. It is no longer a luxury but a necessity.

Iain Wright

Director of Business and Industrial Strategy at ICAEW

ICAEW’s Business and Industrial Strategy Team has undertaken a review with members of what skills will be needed to succeed in the modern economy. When we embarked upon this work, attention was concentrated on full employment and skills shortages that were proving very difficult to fill. As we complete the work, full employment is not necessarily top of members’ priorities.

The economic impacts of the pandemic have been unprecedented – damaging, disruptive and demoralising for far too many people. However, it is probably fairer to say that trends and forces already present in the global economy prior to the pandemic have accelerated. The faster pace of change has increased disruption. The world’s societies, economies and labour markets will be coming to terms with this impact for at least the rest of this decade.

Homeworking on at least a semi-permanent basis has become the norm for millions in the workforce. More flexible working has become the key model for many of our members. This has brought into sharp focus the need for digital skills as a basic prerequisite in the modern economy.

Digitalisation will be considered as basic as reading, writing and arithmetic. Those who aren’t digital natives will be left behind in the labour market, so there will be a constant need to stay up to date.

More flexible and remote working brings further challenges. The leadership and management skills traditionally deployed on a physical, face-to-face basis become obsolete. Developing different management skills dealing with more remote, disconnected teams will be essential. Good and new communication skills are essential.

Within ICAEW, the level of communication among directors and across different departments has risen dramatically since the start of the pandemic, to the point where I personally feel more connected and able to see more opportunities for collaboration than ever before.

Isolation is not a natural state for people. Managers and leaders need to develop heightened perception and engage in much more frequent communication with their teams, not merely to ensure outcomes are delivered but to check they are OK.

The blend of social awareness, emotional intelligence and empathy, together with resilience and flexibility, has sometimes been dismissed, compared with 'harder' skills such as technical competencies. Of course, the latter are important – our status as a professional body and the emphasis on high-quality standards and qualifications shows how vital such skills are. But those more humane attributes are increasingly coming to the fore as being key to achieving business success and ongoing employment.

The irony is that, in a global economy more disconnected, remote and dependent on technology than at any point in modern time, the importance of those softer skills becomes more evident than ever and will remain evident once the pandemic ends.

Peter Cheese

Chief Executive of the CIPD, the professional body for HR and people development

Wider changes were already driving a need for retraining and new digital skills development as the economy was evolving, but the pandemic has shown this needs to speed up. Shifts in jobs and skills demands across sectors will be widespread as the economic impact unfolds unevenly.

Businesses are learning fast through the crisis and are planning differently for the future. An example of this came when Microsoft said it was aiming to offer free digital skills training to 25m people around the world this year as it predicted a surge in global unemployment.

The need for change in skills development is not new, however. Although there are more people in tertiary education across the UK than ever before, the Open University’s 2019 Business Barometer found that 63% of UK organisations were experiencing a skills shortage; 55% said their company had struggled because of the lack of the right skills over the course of the previous 12 months; and three in five senior business leaders admitted that their organisation was not as agile as it needed to be due to a lack of the right skills.

UK businesses have underinvested in skills development in the workplace for too long. The recently released Employer Skills Survey from the Department for Education highlighted a contraction in training volume by organisations in preceding years. Now, as with economic downturns in the past, training budgets are under pressure again.

Relative to other OECD countries, the UK has a high proportion of low skilled jobs, indicating a lack of investment in our workplaces. These trends are not sustainable if we are to increase our productivity.

While changes will be needed in our education systems and skills funding policies, businesses will need to confront these challenges more directly. We all need to prepare for a range of different scenarios given the current uncertainty, and strategic workforce planning is critical. Business leaders need a clear plan of action on what skills and capabilities are needed, and how best to acquire them – to recruit, to develop in-house, to outsource or to automate. Workplace learning itself needs to be reinvented using technology.

We also need to distinguish better between the difference in behavioural skills and capabilities. Many employers have talked about recruiting based on attitude and then training employees in required job skills. We should not lose sight of this to ensure fairness of opportunity.

All jobs need transferable skills – communication, team working, critical thinking, creativity, resilience and adaptability, as well as a willingness to learn. This will be true whatever automation or artificial intelligence may bring us.

Organisations that create positive learning cultures, invest in their people and increase the diversity of their workforces and skills will be the leaders of the future. That is certain.

Finance and HR need to work together to understand these investments, to articulate the returns in terms of productivity. Governments can do more to align the demand and supply of skills, but business needs to lead the way.

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