Educating the Economy 30th March 2015 /

30 Mawrth 2015

Addysgu'r Economi

Lee Waters

Director, Institute of Welsh Affairs

Cyfarwyddwr, Sefydliad Materion Cymreig

Julie James AM

Deputy Minister for Skills and Technology

Dirprwy Weinidog Sgiliau a Thechnoleg

Tim Peppin

Director of Regeneration and Sustainable Development, WLGA

Cyfarwyddwr Materion Adfywio a Datblygu Cynaladay, CLIC

Educating the Economy

Tim PeppinWLGA

30th March 2015

Overview

• Positive inter-relationship• Social return on investment• Need for new and ‘joined-up’ thinking• Sustainable development – what is it about• What it is not• Implications for education and economy• Concluding comments

Positive inter- relationship

• Human capital - education improves skills of workforce, leading to greater productivity and economic growth

• Innovation - education improves capacity of the economy to develop of new ideas and technologies

• Knowledge transfer – education spreads knowledge needed to apply new ideas/make use of new technologies

• Quality of education is important – not just no. of years• Qualifications (entry requirement) vs skills (performance)• Economic growth leads to greater national and personal

wealth, increasing resources/opportunities for education • Causality? – does highly educated workforce strengthen

economy or does strong economy attract skilled workers?

Social return on investment

• Individual gain from investment in education

• Positive externality – wider societal gains

• Link between education and productivity

• Need for long term perspective• Importance re. flexibility and social

skills

Need for new and ‘joined-up’ thinking

• The concept of growth as ‘good’

• Need growth, but of the right type

• Concept of sustainable development helps

• Well-being of Future Generations Bill

SD – what is it about?

• encouraging development that meets our needs without adversely affecting the ability of our children (and theirs) to meet their own needs as they grow up

• providing a better quality of life for our own and future generations in ways which:

• promote social justice and equality (local/international)

• enhance the natural environment and respect its limits, using only our fair share of the earth’s resources

• enhance the cultural environment and sustain our cultural legacy

SD – what it is not

It is not:

• solely about the environment / ‘green issues’

• anti economic growth

• about financial viability (in a narrow sense)

• yet another set of issues to deal with...

• ... involving processes and ‘tick box’ mentality

Implications for education and economy 1

• Thinking ‘social, economic and environmental’ simultaneously

• Taking economic decisions that consider social and environmental impact

• Education to ensure we understand the inter-dependencies

• A more aware population/workforce will make better (more sustainable) decisions

• More aware businesses will demand workers who understand and make the connections

Implications for education and economy 2

‘Futures’ issues – threats and opportunities:

• external dependency vs education/training for indigenous entrepreneurship and local supply chains

• rising energy prices vs renewable energy generation

• mobility constraints vs sustainable transport

• reduced productivity vs innovation and eco-design (with HE/FE input)

• infrastructural deterioration vs investment in resilience measures

• ageing population vs new forms of health & social care (incl social enterprise)

• food scarcity vs local food production and processing

• increasing pressures on health vs preventative measures

• environmental stress vs enhancement of ecosystems services

• housing crisis vs development of affordable housing

• tourism slump vs local eco-tourism

Concluding comments

• Education fundamentally linked to economic performance

• Consider the parts of the economy we need to perform

• Need to be thinking and planning ahead – milestones

• What skills do we need to achieve those milestones?• What new business opportunities does this create?• Don’t forget the ‘foundational economy’• Education - the ultimate foundation

Coffee Break and Networking

Egwyl Coffi a Rhwydweithio

Dr Gavan ConlonPartner, London Economics

The economic and social impact associated with adult skillsEducating the EconomyLondon Economics, 30th March 2015

Are adult skills important?

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

48.8% of publicly funded training is accounted for by 16-17 year olds

29.6% of publicly funded training is accounted for by 18- 24 year olds

21.6% of publicly funded training is accounted for by individuals aged 25 or above - i.e. more than one in five hours of training - ie more than 193 million hours

• Yes! Information from the Individualised Learner Record suggests that more than 1 in 5 hours of all publicly funded training (16+) is received by those aged 25 or above. This corresponds to approximately 42% of all hours amongst those aged 18+. This represents approximately 193 million GLH in 2012-13

Does skills acquisition matter to the individual?• Normally, when economists looks

at the impact of education, training and skills acquisition, we consider the earning and employment effects.

• Analysis of the Individualised Learner Record (covering all publicly funded training in England) indicates that the acquisition of training boosts earnings and employment

• The effect is clear, persistent into the medium term and occurs for all qualification levels, and irrespective of location of delivery (i.e. workplace/classroom)

-1%

1%

3%

5%

7%

9%

11%

13%

15%

t+1 t+2 t+3 t+4 t+5 t+6 t+7

Level 4

Level 3

Level 2

Level 1

Time period

0%

1%

2%

3%

4%

5%

6%

7%

t+1 t+2 t+3 t+4 t+5 t+6 t+7

Level 4

Level 3

Level 2

Level 1

Time periodTime period

Earnings effect: Age 25+ (vocational only)

Employment effect: Age 25+ (vocational only)

Source: Department for Business Innovation and Skills Research Report 106

Does this only apply to ‘big’ qualifications?

Some commentators suggest that earnings and employment returns are only important if they are associated with ‘full qualifications’.

Not true! There are earnings and employment returns associated with qualification attainment – but also associated with improvements in (small increments in) skills proficiencies

Evidence presented the OECD indicates that after controlling for qualification level, there are additional earning and employment returns associated with literacy, numeracy and ICT proficiencies – and penalties for not up-skilling

This means that there are always benefits associated with improving skills – there is no saturation point

What does this mean in financial terms?

• Talking about econometric analyses of earnings and employment outcomes is all very nice in theory – but what does this mean in terms of money?

• Quite a bit!

16 18 64

£

Opportunity cost associated with further qualification attainment

Annual earnings associated with adjacent

level of attainment

Additional earnings associated with higher

level of attainment

Lifetime benefit from qualification =Present Value ( - )Additional earnings

associated with higher level of attainment

Opportunity cost associated with further qualification attainment

For instance, recent research for the OU estimated that relative to possession of only 5 or more GCSEs at grades A* - C (or equivalent), the

mean net graduate premium associated with an UG degree for a representative OU student

(completing the degree PT at age 39) was estimated at approximately £95,000 for a male and

£51,000 for a female.

The corresponding net public purse benefit was estimated at approximately £95,000 for a

male and £47,000 for a female.

There were also very significant economic returns to the individual and the public

purse associated with other forms of qualification attainment – i.e. stand-alone modules, HE

Diplomas. Foundation Degrees

What about the wider economic benefits?

• Individuals and the public purse both benefit from investment in human capital – but we need to talk about employers...... do they see

benefits? Yes, in addition to the greater skills acquired, a substantial proportion of learners indicate that businesses generate a benefit from enhanced training – both in a static sense - but also in a dynamic sense (this is known as absorptive capacity!)

• Employees also mention their improved skills in the workplace, including a better ability to do their job (and better career prospects) – though this does not mean that learners leave training firms (more likely to be the opposite!)

Improved skills that can be used across a range of jobs/industries

Increased ability to do their job

Better career prospects

Improved employment prospects

Got a job that better suited their skills and circumstances

85%73%71%

54%

73%

Helped employers make better use of latest technological innovations

Helped employers better train their workforce

Helped employers become more productive

Helped employers develop/redesign new processes, products or services

Helped employers better meet the needs of their clients

31%43%34%

38%

51%

Research undertaken for OUIW

What about the wider non-economic benefits?

• Its not just about money!• Learning, training and skills

acquisition has the opportunity to be transformative and have a life changing effect on people’s own lives, as well as the lives of their families and those in their communities

• Adult skills improve (literacy, numeracy, communication , presentation and problem solving); however, many learners also indicate that that they are more enthusiastic about learning, have better direction in their lives, better able to help their own children improved self esteem, and improved quality of life

More enthusiastic about learning

More likely to undertake further learning

More likely to undertake further learning at higher level

Increased self-esteem

Improved quality of life

86%86%75%

92%

66%

Improved literacy skills

Improved numeracy skills

Improved communication skills

Improved presentation skills

Improved problem-solving skills

63%43%

68%70%

76%

Research undertaken for OUIW

Thanks – any questions?

Dr Gavan ConlonPartner, London Economics020 3701 7703gconlon@londecon.co.uk

Interpreting the OECD slide• Skills proficiencies are classified as Level 0/1, Level

2, Level 3, and Level 4/5

• Given the heterogeneous returns to skills identified in the feasibility study, the analysis is undertaken at three different levels of formally recognised education: Lower-secondary (and below), upper-secondary (and post-secondary non-tertiary) and tertiary level.

Return to tertiary education compared to upper-secondary –at level 3 literacy proficiency

Return to level 2 literacy compared to level 0/1 at upper-secondary level

Estimates are colour coded – green (tertiary), red (upper secondary) and blue (lower secondary), while different shapes correspond to different skills proficiency levels:

Level 0/1Level 2Level 3Level 4/5

Returns to education are identified as the gap between shapes of different colours

Returns to skills are identified as the gap between different shapes of the same colour

Rhys Williams Government and Business Relations Leader, G.E. Aviation /Arweinydd Cysylltiadau Llywodraeth a Busnes, G.E. Aviatio

Imagination at work.

Introduction to GE Aviation Wales

See tutorial regarding confidentiality disclosures.

Every 2 seconds, a GE-powered aircraft takes off.

P&W JT9,JT8,JT3RR Olympus,

RB211 22B,524 C/D/H,535,Conway

CFM56-3,5A

1924 Opening in

London

Imperial Airways

1940/ 89

BA Site in Wales

2000 CFM-7 Capability

1991 GE Acquisition

GE Wales Milestones

2007

GE90 – 115B

Capability

2008 GP7000

Capability

1998 CFM56-5B Capability

• OEM Support CFMI/GE• +1200 Employees• 1.2M sq. ft. - Supported by two

“state-of-the-art” engine test facilities

• Repair & Accessory Overhaul – at engine overhaul or individual unit level

1999 GE90-94B Capability

GE90-94B, 115B,

CFM56-3,5A,5B,5C

and 7BGP7000

RB211 524H

RB211 (Boeing 747, 767)Thrust >60, 000

GE90 (Boeing 777)Thrust 76,000 to 115,000

GP7000 (Airbus A380)Thrust 70,000 to 81,500

CFM56 (Airbus A320,340, Boeing 737)Thrust 18,000 to 34,000

BOEING 737-600

Aircraft Engines Serviced at GE Wales

GE WalesPowering a global fleet

+90 customers worldwide+90 customers worldwide

31GE – Aviation

GE Proprietary Information Subject to restrictions on the cover or first

page

ATO Wales

Continuing with growth

GE90

CFM56

RB211

GP7000

$1.0B$1.2B

$1.4B

'06 '07 '08

$1.5B

'09

$1.8B

’10

$1.9B

’11

$2.2B

’12

$2.6B

’13

$2.7B

’14

GE Aviation Wales Apprentice programme• GE Aviation Wales – One of largest

Apprenticeship Schemes in Wales

• 100 Engineering & Business Apprentices

• In partnership with Coleg y Cymoedd and the University of South Wales

• 3 year programme

• Invest over £1.4million in 2013

• Extensive network of assessors who provide coaching, mentoring and training,

• In 2013, GE received over 900 applications for the 25 apprenticeship places available.

• 60 Interns

• Network 75, Bursary Scheme & Masters Programme

• Duke Of Edinburgh & STEM

Graduate & Internal Schemes

Internships• 12mth scheme: Aimed at technical & non-technical

degree students across all areas of business• Feeder program to other schemes

Masters & Trainee programs• Take the best of the interns and support them on a

masters scheme• Both Engineering & Business courses in functional areas

“Wales Leadership Schemes”• 2-3 years in duration, fast tracking to accelerate learning

& growth• Rotational roles in shop supervision, materials

management, planning, six sigma, quality• Create general business & leadership skills• Use existing employees & best of interns & trainees

• Why do we need “pipeline programs”

– Maintain highly skilled shop, replace natural attrition & fuelling growth.

– Develop technical skills & general business skills

• What are our programs

– Apprenticeships for school leavers

– Internships & traineeships for graduates

– Internal schemes to accelerate learning

• How do we do it

– Local recruitment of apprentices

– UK wide recruitment of graduates

– Local development of internal talent

Working with the community

Universities/schools

• 2014 – 4000 Volunteer Hours

• 22 Volunteer projects

Caerphilly Miners HospitalRestore & refurbish the hospital into a centre for the community

LlamauSupporting and offering training and skills to vulnerable young people of Wales

GE & charityGE Volunteers

STEMCareer days, site visits, work experience, EESW, STEM Ambassadors, Techniquest Numeracy Initiative, Womens Network, Girls Get SetUniversity InternshipUniversity of South Wales, Bath and Bristol offering roles in purchasing / materials functions, HR, Finance and engineering “National Graduate Placement Careers”

Ty-HafanWelsh 3 Peaks-Over $1.6m raised

BITC Give & Gain DayPenygraig Project to create a sustainable town centre for the community

Lunch and Networking

Cinio a Rhwydweithio

1- The role of Business in Adult Education’sa) Fundingb) structure (Type,

Curriculum etc)

2- How can the apprenticeship model be adapted to make a greater impact on the Welsh economy?

Roundtable Discussion

1 - Rôl Busnes mewn Addysg Oedolion:

a) Cyllidb) Strwythur (Math, Cwricwlwm ac ati)

2 - Sut y gellir addasu'r model prentisiaeth i gael mwy o effaith ar economi Cymru?

Trafodaeth Bwrdd Crwn

Coffee Break and Networking

Egwyl Coffi a Rhwydweithio

1- Is the focus on qualifications beneficial to the Welsh economy or do we need more focus on other skills?

2- What skills does the Welsh economy need more of among the adult population?

Roundtable Discussion

Trafodaeth Bwrdd Crwn

1 - A yw'r ffocws ar gymwysterau yn fuddiol i economi Cymru neu oes angen i ni ganolbwyntio ar sgiliau eraill?  2 - Pa sgiliau mae economi Cymru angen mwy ohonynt ymhlith y boblogaeth oedolion?

Lee WatersDirector, Institute of Welsh Affairs

Cyfarwyddwr, Sefydliad Materion Cymreig