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Skills and the future of UK Science, Engineering and Manufacturing Technologies

The 2010 realities, expected developments and key priorities

A Summary Sector Skills Assessment for Semta’s sectors December 2009

Skills and the future of UK Science, Engineering and Manufacturing Technologies    

Foreword
Semta is the licensed Sector Skills Council for businesses in the UK engaged in Science, Engineering and Manufacturing Technologies: it supports them in achieving global competitiveness through investment in skills. Every business depends on the skills of its workforce to drive productivity, sustainability, growth and success, be it national or global. Semta works with the companies in its sector to understand their skills needs and help ensure they are delivered. Semta is led by employers in each of the sectors it works with. We are working with companies of all sizes, helping employers to develop staff to ensure their business is well placed to beat the recession and secure a sound recovery. Our aim is to raise the skills levels and competitiveness of the sectors and ensure each area has the right people with the right skills at the right time. Research with our employers has determined our key actions and shaped our business plan. The priorities set out in our strategic plan for 2008 – 2011 are to:

Semta is attuned to its responsibility including advanced manufacturing, green and emerging industries, and is actively bringing together other key Sector Skills Councils and skills agencies to contribute to strategic and practical solutions for business. While Semta is rightly action-focused, it is crucial that our action be both well informed and well-targeted by a proper understanding of how labour markets work. Skills policy is all about how to effectively provide a foundation for powerful market forces in a cohesive direction. In particular, to make a real and practical difference, action needs to intelligently respond to the realities of how employers in our sectors recruit the key skills that will help UK science and engineering businesses compete successfully on the global stage and then continue to invest in their staff to raise skill levels ready for ever tougher world class performance. That is where Semta’s research team comes in. In response to the leadership of the UK Commission for Employment and Skills, Semta’s research work continues to raise its game, building on a strong reputation for thorough, sound and innovative insights in the wide range of realities of this complex field. This summary, Semta’s contribution to the UK Commission’s National Strategic Skills Audit, is an excellent example of what can be achieved, and I commend it to you.

• • •

improve the match between skills supply and demand to suit the local economy; up-skill those with no qualifications; improve management and leadership skills; and tackle issues relating to an ageing workforce.

So Semta is working strategically, not only to raise the skills of the current workforce to cope with the recession and take advantage in the upturn, it is also supporting initiatives to improve the talent pipeline of new entrants to these sectors. We are committed to building a stronger and more prosperous economy and to supporting the new, active industrial policy laid out in the Department for Business, Innovation and Skills’ New Industry, New Jobs white paper.

Sir Alan Jones Chairman, Semta

Skills and the future of UK Science, Engineering and Manufacturing Technologies  

Foreword Contents

1 2 3 4 5 6 7 8 9

Semta and the Skills in its Sectors: our approach to a Summary Sector Skills Assessment What drives Demand for Skills? What is the Current Demand for Skills? What is the Current Supply of Skills? What is the Evidence of Current Mismatch? What will be the Future Demand for Skills? What will be the Future Supply of Skills? Can Supply meet Demand? Semta’s response: Priorities for Action

1 9 13 15 19 23 25 27 29

Abbreviations References Annexes

33 35 41

Annex A: Annex B: Annex C:

The realities of Semta’s sectors Structure of the current workforce in Semta’s sectors Skill Shortages

Skills and the future of UK Science. Engineering and Manufacturing Technologies   .

Engineering and Manufacturing Technologies 2 . summarised in headlines as follows: • Some 75.4). In practice this means a sectoral scope covering: • Aerospace Engineering.cogent-ssc.uk/ 3 covers Research and Development (R&D) activity within Pharmaceuticals (SIC 24.semta. among other things. and Science and Engineering R&D) 4 see Hatzichronoglou (1997) 1  . Medium. This detail will be presented in the forthcoming full report of the Semta Sector Skills Assessment. • British engineering exports amounted to over £130 billion in 2006: 40% of total UK exports of goods and services. This characterisation allows the important differences between sectors of different degrees of maturity to be recognised. including self-employed as well as employed status contributors see http://www. • Electrical Engineering.Skills and the future of UK Science. the requirement for this summary is to present full coverage of the skills position of Semta’s sectoral scope within a much shorter document. are: • Science industries (Bioscience sectors 3 ) • Leading edge technology industries (Electronics. The key geographical characteristics of these sectors are shown in Annex A. This summary will therefore focus on a broader-brush description.Technology classifications recognised in the OECD categories 4 of manufacturing. Metal Products. engineering and manufacturing are strategic UK industries. and will. Manufacturing of medical devices.and Low. for each dimension. and • The UK is Europe’s top location for investment in pharmaceutical and biotechnology research and development. • Electronics. An assessment of the skills position in Semta’s ‘footprint’ would therefore require. provide perspectives on indicators for three categories of science and engineering employers. Automotive. Semta is charged by government to assess and tackle skills problems within Science. Semta’s remit is large and important. and • Metals (including Metal Products and Wholesale Metals and Scrap). eight separate sets of analysis in order to be fully valid and comprehensive. • Automotive Engineering (including Rubber Tyre manufacture and repair). • UK engineering and science turnover was £257 billion in 2007. • Bioscience. • Marine Engineering. The sectors all have certain skill needs in common. with manufacturing handled by Cogent . These three classes of activity within Semta’s sectors.000 companies and a workforce of some 2 million 1 make up our ‘footprint’.org.see http://www. Electrical Equipment and Mechanical Equipment). but detailed analysis over recent years has confirmed that each also has certain of its own specific skills requirements and priorities. • Mechanical Engineering. The approach picks up on the High-. broadly corresponding to three stages in the maturing of technologies.com/). Engineering and Manufacturing Technologies 1 Semta and the Skills in its Sectors: our approach to a Summary Sector Skills Assessment Science. However. Aerospace and Marine) • Mature engineering industries (Metals. differentiated by thresholds of the ratio of Research and Development (R&D) Expenditure to Sales (the distinctions between 1 2                                                              Labour Force Survey (LFS) estimates.

100 834.620 780 630 250 14. across the home nations and English regions.400 7. The sectors.800 49.900 14.g.                                                              5 profit-related indicators are generally not so comparable internationally 2 . with (1/10th of) the corresponding levels for All UK Manufacturing shown for comparison. rather than the OECD average) the ratio of R&D expenditure to operating surplus 5 . all enterprises should seek improvement in many ways. is shown in Table 1.000 Leading-Edge Technology Workplaces 12.050 Employment 165. As indicated the Semta sectors are massive contributors to the UK economy.200 56. Figure 1 shows the development over recent years of turnover in the three industry groups.410 54.900 30. To ensure survival and prosperity in the global marketplace. where suppliers need to innovate to improve product and cost effectiveness to their customers. and SIC categories.100 21. which relies on advanced technical skills.840 3.Skills and the future of UK Science. including productivity-enhancing incentives and business process improvement (e. showing the intensity of activity in the three industry groups across the United Kingdom.900 195.730 Employment 707. including amount of activity in the three industry groups in the English regions.230 1.200 Annex A shows more detail about the geographical distribution of Semta’s sectors. allocated to each industry group are shown in Annex A. Engineering and Manufacturing Technologies   the three categories are in fact made on a measure of ‘profit plough-back’. Lean Manufacturing) as well as technological innovation.000 455.300 18. It is also important to recognise that many Semta sectors have strong value-chain relationships.250 2.280 Employment 375.220 490 240 100 6. Leadingedge technology companies rely on companies in mature engineering industries as input to their supply chain. The geographical structure of Semta’s sectors.200 34. It is important to note that maturity of a technology cannot be an excuse for complacency: even businesses with decades of successful international business in an established technology can be enhanced through deployment of innovation to strengthen their competitive position. as well as the scale of activity for each of Semta’s eight main sectors.400 3. Table 1: Distribution of activity in the three industry groups between the home nations Science Industries England Scotland Wales N.000 Mature Engineering Workplaces 47. Ireland UK Source: ABI 2007 Workplaces 5. using (for UK sectors.

output from all Semta’s industry groupings has been growing faster than UK Manufacturing as a whole. following the dip in the early years of the century arising from the impact on engineering of the dot. Bioscience. • • • • Mature Engineering industries continue to contribute the largest output. is the productivity of their workforces. from a skills perspective. The most significant element of these industries’ performance. £Billions 140 120 Mature  Engineering  Industries 100 Leading‐Edge  Technology  Industries 80 60 All UK  Manufacturing/ 10 40 Science  Industries  (Bioscience) 20 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 In summary. has been growing steadily and strongly in the last 10 years. 3  . Figure 2 shows recent trends in the raw labour productivity for each (Approximate Gross Value Added per employee – average over the year). and Over the last five years. and Mature engineering industries. with All UK Manufacturing by comparison.com bubble burst. Leading-edge technology.Skills and the future of UK Science. by comparison with All UK Manufacturing (scaled). Engineering and Manufacturing Technologies Figure 1: Contributions to the UK Economy over recent years from the UK Science. though smaller in scale. Output of all three industry groups has been growing since 2004.

• Productivity in the Science industries is the highest of the three groups. at 44. Engineering and Manufacturing Technologies   Figure 2: Growth in raw labour productivity in the UK Science. 4 . though with a higher growth from 2002 to 2007 than achieved by Leading-edge Technologies industries. GVA per employee £80. though its growth over the last five years for which data is available is not as high as in the Science industries (38%). Leading-edge technology. by comparison with All UK Manufacturing.000 Science Industries  (Bioscience) £70. • Raw Labour Productivity in the Leading edge technology industries is next highest.000 £0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: ABI In summary. the productivity increase between 2002 and 2007 amounts to 53%.000 £20. Profitability. which arises partly because the added value in any one year has benefited from particularly high R&D in earlier years. and R&D expenditure. including Export performance.000 Leading‐Edge  Technology  Industries All UK  Manufacturing £50. and Mature engineering industries.Skills and the future of UK Science. sometimes many earlier years.000 £60.000 £10.3%. Annex A shows recent trends for the three industry groups in relation to a number of other important indicators. Capital investment.000 £30. while • Productivity in the UK Mature Engineering industries is lowest of the three (and below UK Manufacturing as a whole).000 Mature Engineering  Industries £40.

cleaners. However. HR professionals.384. Healthcare. Transport. Catering.860. The main implication of the fact that most of the key technical occupations on which Semta’s sectors extend across other sectors is that employers in Science. Lab Technicians. sometimes in significant numbers. Admin staff. people in these occupations also work in other industries. Electrical and Electronic Technicians. while the occupations.000 1. which shows the estimated numbers of people employed in the different sectoral and occupational groups. Metal Fitters. there are also significant numbers working within other sectors – in this case including the construction and building services industries. while key occupations.000 24. 5  . Engineering and Manufacturing technology sectors have to compete with employers in those other sectors to attract the best talent. to specific Sector Skills Councils. while most Mechanical Engineers work in companies within Semta’s sectors. Mechanical Engineers.056.) All other occupations (e.000 2. and the size of each element of the workforce. for example.000 3. are of core importance to Semta. and passenger transport. occupational.000 29. Metal Products manufacture) ‘Science and Engineering’ occupations (e. Engineering and Manufacturing Technologies The Workforce in Semta’s sectors: key realities for sound analysis Reality 1: the importance of occupations Skills policy in the UK recognises the importance of the Sectoral dimension. and their skill-sets (and the labour markets in which these skills are ‘traded’).000 27.000 Source: employment estimates from Experian analysis of ONS Labour Force Survey (LFS) data 2008 The matrix shows the different sectors represented by the columns.804.g. Reality 2: Mismatches of supply and demand for skills are essentially an issue of ‘quality’ (not numbers). The issue is the degree of match between the capabilities of candidates and the requirements of the job. oil and gas.) Total all occupations All other sectors (Banking. Accountants. Local Government. with the exception of the lowest skill levels. Software companies. Aerospace Engineering Manufacture. This representation also shows that. and to introduce the allocation of responsibility for occupations. Annex B shows in more detail the matrix structure of the workforce for which Semta has responsibility.g. etc. This reality has recently led the UK Commission for Employment and Skills (UKCES) to attribute greater importance to occupations. Bioscience. Rarely in a buoyant economy is there a perfect candidate. then there can always be applicants for a job vacancy.493.Skills and the future of UK Science.353.000 25. Thus. Thus the challenge is assessing the gap between the apparent capabilities of actual candidates and what is required for the role. Hospitality) Total All Sectors = Whole economy 913. and their skill-sets. are represented within the rows.g. Table 2: the structure of the workforce Semta’s sectors (e. IT practitioners. etc.969. Biologists. as well as for sectors.000   1.580. most skillsets and labour market ‘trading’ are. As long as there remain unemployed people who genuinely want to work (and that is likely to be the case in all economies). The actual structure and scale of the workforce covered by Semta can be seen in Table 2.

that those who have 6 . Reality 3: the limitations of the ‘linear’ assumption about workforce entry. Engineering and Mathematics (STEM) subjects and skills. the accompanying skills.Skills and the future of UK Science. aerospace manufacturers)  occupations using STEM skills (directly) occupations not using STEM skills Those with STEM Qualifications   Employers in STEM skill User sectors (e. involves acquisition of knowledge. Figure 3: work opportunity choices for those with different qualifications Employers in STEM skill Core Sectors (e. 2009) shows the various possibilities for labour market entrants with STEM-related qualifications.g. Figure 3 (adopted by the former Department for Innovation. The need for a focus on occupations is even greater when assessing the relationship between employer demand and educational provision. but rarely to sectors.g. In particular. Learning provision. in education (as opposed to training). at whatever level and in whatever context. Where this knowledge is technical it relates mostly to occupational expertise (albeit in some cases. Universities and Skills for their 2008 consultation on demand for STEM skills – DIUS. social work)     occoccupations upations not  usinot using ng STEM  STEM skills skills  The wide range of work possibilities that exist. for each individual with STEM knowledge and skills to offer. groups of occupations). to talk about a specific quantitative shortfall.g. knowledge and learning provision is generally structured around subjects. we can probably live with these (apparent) limitations of this candidate’s abilities…” It is therefore not meaningful. With Semta’s scope.e. The ‘linear’ model for ‘professional formation’ and labour market entrants – i. must be recognised for a sound understanding of the realities of technical labour markets. although superficially appealing. Engineering and Manufacturing Technologies   The issue for the recruiting employer is effectively assessing the limits to the size of that ‘skill shortfall’ gap. Technology. Real employer recruitment decisions can often be of the type: “Given the fact that we have to have someone to start next month if we are to deliver on that important contract. and to some degree. there is a natural focus on Science. airlines)     occupations using STEM skills (directly) occupations not using STEM skills Those with other Qualifications Employers who do not use STEM skills (e. given the various constraints under which businesses operate.

Botany. biophysics and biochemistry. 1999 7  .e. As a result. in most cases where employers are not finding it easy to recruit e. Reality 4: workforce entrants from the formal education system are not employers’ only source of skills supply. who move between employment of different kinds. it is most strongly evident (and statistically evidenced) in relation to the first destinations of graduates.Skills and the future of UK Science. Perhaps the most important conclusion from this reality is that recruiting employers in Semta’s sectors are in sometimes fierce competition with a number of other employers for the talent of those with good STEM knowledge and skills. Zoology. Microbiology. Figure 4: The dynamics of workforce flows 7 Other Work (other sectors and/or occupations) Initial Workforce Entry Higher Education Apprenticeships Further Education + other VET School Leavers Inter-employer moves in same sector and occupation Cease Work Suspend Work Family-raising.                                                              6 i. re-training etc. it is the case that the fraction of engineering graduates going into firms in sectors corresponding to the precise engineering discipline they have studied is comparatively low in most cases. college students and Apprentices). Molecular Physics. Broadly-based Bioscience programmes. and those with accountancy degrees go and work as accountants – is now recognised to be an unrealistic view of the world. While this is true at all levels of initial workforce entrants (school leavers. where over recent years less than one-third of those graduating from any ‘core’ biological sciences courses 6 entered work in Bioscience.g. Biology. and other courses in Biosciences. Genetics. 7 adapted from ITNTO/AISS. new graduates of the required calibre with relevant science or engineering degrees. While the scale of flows over recent years of engineering graduates into financial services has generally been exaggerated. and sometimes with relevant qualifications. Engineering and Manufacturing Technologies studied electrical engineering go straight into electrical engineering work. and those with experience. and only one-tenth of mechanical engineering graduates went into the mechanical equipment sector. The same applies to Science. as well as on re-entering the labour market after career breaks for whatever reason. this problem is very unlikely to be resolved by attempts to increase the number of people on these (degree) courses: the answer is more likely to lie in the need to increase the attractiveness of work in that sector/occupation. Figure 4 shows that employers recruit new staff both from those entering work for the first time.

as well as those leaving full time education. Engineering and Manufacturing Technologies   Much debate in skills policy focuses on ‘initial entrants’. and on full-time education arrangements. and from those whose skill levels have been raised through workplace and work based learning provided – either directly or indirectly .by employers themselves. and funding. 8 . not least since these are the main flows of ‘new’ talent into labour markets.Skills and the future of UK Science. and consider also factors that could encourage and support skillsacquisition in these different contexts. This is clearly important. new skills supply also arises from those completing Vocational Education and Training (VET). However. This confirms the need for skills policy to extend beyond attention to current full-time education systems. and the value of the knowledge and skills possessed by those leaving full-time education is important for the economy. it is essential to be aware that. arrangements.

This is a £100 million government commitment to investing in improving workforce skills in the science. stating the following drivers as most important to their business. Apprenticeships. At the macro level.Skills and the future of UK Science. i.aspx business performance measure – see DTI (2005) 9  . Engineering and Manufacturing Technologies 2 What Drives Demand for Skills? It is important with all enterprise support policy. to recognise that macro-economic perspectives are often not how issues are seen at the company level. 3 and 4. engineering and manufacturing technologies  sectors 8 .semta. Table 3 summarises the initial survey of companies involved in Semta’s Sector Compact. and this probably reflects the importance of lean manufacturing to the employers in Semta’s sectors. Management & Leadership and Business Improvement Techniques.uk/employers/funding_for_skills_training/sector_compact.                                                              8 9 see http://www.: • • • • • • • • Globalisation Economic growth Technology development Demographics Multi-level governance and regulation Environmental change Changing identities and values Consumer demand At the level of the business. within the framework of the Sector Compact. In total. set measurable targets and evaluate the impact of training. This investment helps employees towards a number of different qualifications and training routes including National Vocational Qualification (NVQ) Levels 2. and skills needs generally arise in response to business drivers. the main drivers are reasonably well recognised.e. Semta has been leading a major skills initiative with employers in its sectors. Semta is working with companies to identify how skills investment can improve their business. Cost & Delivery (QCD) Age Profile Ways of working/Processes Economic Conditions Local/Global Competitive Pressures Markets Technology Waste Management/Reduction Safety. 539 companies completed a Business to Skills diagnostic. Cost & Delivery (QCD 9 ) as a business driver. Table 3: Business drivers ranked in a survey of Sector Compact companies Business Driver Quality. including skills. drivers are manifest in relation to market developments (often influenced by the above factors). Security and Environment Legislative * (Employers were able to cite more than one Business Driver) Number of mentions* 169 131 122 72 68 65 51 33 30 23     169 employers mentioned Quality.org.

in both manufacturing and research. materials science. Manufacturing is also likely to become more service-orientated due to increased customer demand. The main drivers for skills change in the manufacturing environment as noted by the European Commission (see ‘Manufuture – a vision for 2020’) are: Increasingly competitive global economic climate In future. Values and public acceptance of new technology There is a need to take ethical concerns into account when science and new technology are being adopted and exploited. and on customer requirements. Asia and China in particular are becoming an increasing force in the global marketplace. and the integration of hitherto separate technologies exploiting the converging nature of scientific and technological developments. 10 . Furthermore. The adoption of new technologies in manufacturing will also depend on the availability of industrial standards and testing procedures. At the same time.and resource-saving technologies. having an impact on mobility. The regulatory environment. Socio-demographic aspects Manufacturing in 2015 to 2020 will be called upon to provide solutions meeting new societal needs and the demands of an increasingly ageing society. while innovation might require completely new sets of skills. technology and engineering. The development of new production processes based on research outcomes. Environmental challenges and sustainability requirements The manufacturing sector will also have to comply with stricter environmental regulation in future. The intellectual property rights (IPR) system might have to respond to changes in an innovation process that is increasingly based on knowledge sharing and networking. At the level of the labour supply. manufacturing and research sectors will be confronted by the retirement of the large numbers of older workers currently in the workforce. which should further stimulate the adoption of energy. Rapid advances in science and technology This will include the fields of nanotechnology. supply-chain management and customer relations. as well as on localised production. mechatronics. ICT and biotechnology. there is a continuous increase in foreign direct investment in manufacturing outside Europe. manufacturing companies will be more dependent on flexibility and speed. countries like China will generate huge demand for imports and their lagging technical competence will take some time to redress. could become a critical factor. Despite the inevitable exodus of less-skilled production jobs to lower-wage countries. This will have consequences for the organisation of production. Investment in ensuring the right people with the right skills at the right time will be critical to productivity. electronics. may radically change both the scope and scale of manufacturing. Engineering and Manufacturing Technologies will depend in the coming years on a range of skills relating to science. standards and IPR Stricter environmental and safety regulation will no doubt lead to changes in manufacturing. Engineering and Manufacturing Technologies   Expected Future Demand drivers in a global context Success in Science. the availability of which. competitiveness and innovation. it should be noted that this could lead to Europe falling behind in some areas of technology.Skills and the future of UK Science. India also envisages the prospect of seizing a substantial share of global contract manufacturing business. size of the labour force.

in order of importance: • • • • The introduction of new technologies or equipment. Introduction of new working practices. 11  .Skills and the future of UK Science. Development of new products and services. The key drivers of skills change include. New legislative or regulatory requirements. Engineering and Manufacturing Technologies In the Semta Labour Market Survey 2007. UK Engineering employers were asked to identify reasons for skills changes over the last 2-3 years and why skills would change over the next 2-3 years.

Engineering and Manufacturing Technologies   12 .Skills and the future of UK Science.

Skills and the future of UK Science, Engineering and Manufacturing Technologies

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What is the Current Demand for Skills?

The technical skills required in the Science, Engineering and Manufacturing Technologies industries are based on a set of underlying scientific principles (the ‘underpinning knowledge’ for each occupational role), plus the expertise of applying these to a multiplicity of real world problems (the ‘application skills’), tempered with the understanding of what works cost-effectively that comes from experience with a wide range of practical situations and constraints (providing the overall ‘competence’ of an experienced employee). The realities of demand for additional skills resource can probably best be estimated by the evidence of relevant employers’ recruitment activity. Table 4 shows, for 2007, the amount of recruitment carried out (all occupations) by Engineering employers, and the split between different types of recruit. Table 4: Recent recruitment evidence from Engineering employers
Percentage of Engineering establishments that have recruited in the last 12 months Percentage of establishments recruiting by type of employee:

Recent Graduates

Workers aged over 45

Young people (16-24) inc. trainees

Other

Metals Mechanical Equipment Electrical Equipment Electronics Automotive Marine Aerospace Other Transport Equipment Engineering (UK)

29% 27% 30% 29% 38% 26% 34% 33% 29%

6% 10% 11% 20% 9% 20% 11% 11% 10%

34% 38% 29% 35% 40% 28% 43% 25% 34%

45% 53% 48% 45% 48% 64% 37% 64% 48%

31% 24% 32% 29% 30% 14% 36% 24% 29%

Source: Semta Labour Market Survey (LMS), 2007 (base = 2,567) Weighted data

This confirms that recruitment by Engineering employers extends across a wide range of ‘supply channels’, well beyond the ‘new graduate’ market, and emphasises the importance of a supply of adequate applicants both of experienced workers and those who complete Vocational Education and Training (VET) courses. While it is important to remember that ‘new graduates’ are not the beall-and-end-all of recruitment, the need to strengthen innovation in response to increasing global competition, and the fact that science- engineering and manufacturing technologies will increasingly be a central part of the knowledge economy do emphasise the strategic nature of this element. It may be less a question of numbers than of ‘quality’. The picture for Bioscience employers in 2009 can be summarised as follows: • 48% had recruited in the past 12 months • Of those that recruited, 11% recruited school leavers, 10% recruited apprentices, 44% recruited people with a bachelors degree, 28% recruited people with a Masters degree and 33% recruited people with a PhD. Overall, as shown in the decline of employment levels (Annex A Figure A-2), Semta’s sectors, with the exception of Bioscience, have limited expansion growth in their workforces. However, the age profiles of this workforce (with greater representation of older workers), demonstrates that there continues to be considerable need for more workers each year in terms of replacement demand.

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Skills and the future of UK Science, Engineering and Manufacturing Technologies  

It is also essential to recognise, when skills demand is being considered, that demand is heavily influenced by employer’s product/service market strategy. It is not always the case that higher product/service (quality) specification requires higher level skills for effective delivery, and there are questions about the prevailing assumption of relentless rise in employer demand for more and higher skills. Significant change in demand patterns would be dependent on shifts in businesses market positioning and work organisation.

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Skills and the future of UK Science, Engineering and Manufacturing Technologies

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What is the Current Supply of Skills?

As indicated in Section 1, skills supply consists, for employers, of three main components: 1) The skills of current staff, which will continue to represent the majority of the human resources and talent that an employer can deploy in the coming months and years; 2) The additional skills of current staff that can be achieved by investment by the employer (and sometimes by an individual staff member) – which can be viewed as the employer tackling its own skill gaps 10 ; 3) The additional skills of new recruits, from one or more of three sources: a) Recruitment of experienced people, generally moving from other employers; b) Recruitment of less experienced workers, but who bring certain specific skills and competence, on completion of relevant vocational education and training; and c) Recruitment of generally inexperienced workers, from those completing full-time general education (school, college or university – and with general qualifications at differing levels – e.g. from HE graduates, postgraduates and post-doctorates). Public policy generally assumes that components 1 and 2 are essentially the responsibility of employers themselves, and not of the state. In particular, the need to retain as much of its valued existing skills base as possible relies on a company’s leadership and management capabilities – the achievement of an overall working environment that makes good people want to stay. However, learning providers whose core income arises from public funding will often have a role to play in the upgrading of employers skill-sets, i.e. in addressing  skills gaps – inadequate competence within the current workforce. In particular, where a company is working to extend its capabilities for innovation (for example through appropriate and cost-effective use of new technologies and materials), the leading-edge knowledge available in some universities would be expected to represent an important asset. The Global Context Many of the larger companies within Semta’s sectors are already major global players, while other  smaller ones have ambitions to achieve this position. It is therefore essential when assessing skills demand and supply for UK science, engineering and manufacturing technologies enterprises, to think beyond the UK’s national boundaries. It is also necessary to recognise that competition is global, not just in relation to winning new customers and new business (competition for sales), but also to winning world-class skills and talent (competition for skills). The international dimension of skills supply is important, partly because it represents a growing element of competition for UK businesses for talent, but also because, as well as being a threat, it opens up opportunities for UK businesses, and because it takes skills policy beyond the traditional assumptions of a focus on UK learning provision. In principle, the European Union (in fact the European Economic Area (EEA) and Switzerland) represents a single labour market. While there are clearly various practical challenges to workforce mobility around Europe (for example language                                                             
it should be noted that significant skill shortages experienced at recruitment will lead to increases in skill gaps, where employers recruit in spite of definite deficiencies in all candidates – as a result the new recruit adds a further element of skills gap to the employer’s existing position.
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Skills and the future of UK Science. Immigration is understandably a very hot political topic. It is likely. 70% had technical skills gaps (Semta Engineering LMS 2007). and PBS Tier 2. The situation beyond the EEA is importantly different. in principle there are no legal barriers to recruitment by UK firms of talented staff from other European countries. i Retaining existing staff Perhaps the most obvious point about assuring the supply of the skills a company already has at its disposal is the need to retain valuable knowledge and skills of the existing workforce. While the debate continues about levels of migration flows. in that recruitment from. that such recruitment will grow. where approval for admission depends on either an occupation being on the UK Border Agency’s ‘official shortage list’. 16 . While this may seem obvious. employers in Semta’s sectors need effective human resources in a wide range of functions. and such admission is understood to be a temporary measure. Table 5 shows that over a ten year period (1999 to 2008) the overall proportion of the workforce with S/NVQ Level 4+ qualifications increased from 24% to 31% (+7%). There are various elements of UK ‘managed migration policy’. Commonwealth countries requires gaining approvals for work permits and immigration. not least with the help of measures to improve the transparency of qualifications from other member states (through the European Qualifications Framework (EQF) and other initiatives). or the employer having conducted an unsuccessful ‘Resident Labour Market Test’ (a genuine attempt to recruit from the resident labour market that has evidently produced no acceptable applicants). engineering and technology. the sound leadership and management required for strategic workforce planning is not always present. As indicated. for example. Engineering and Manufacturing Technologies   and pension transfer issues). It is this that is therefore the major focus of an analysis of skills supply. there is little disagreement that: • • admission through overseas recruitment can be justified where it really is almost impossible to recruit adequate levels of certain skills from the resident UK labour market. to be accompanied by action to accelerate increased supply of such skills in the UK labour market. Of the 17% of UK engineering companies with skills gaps. but a small number of employers in Semta’s sectors continue to recruit certain skill-sets from overseas when UK supply is inadequate. but the core skills that will determine the value a company can add in its core business are the technical skills related to science. ii Skill-raising of existing staff The increased focus on higher level skills to enable companies within Semta’s sectors to move up the value chain can be evidenced by the changing qualifications profile of the workforce. The two most relevant ‘routes’ of the UK’s new ‘Points Based System’ (PBS): • • PBS Tier 1 (for ‘highly-skilled’ migrants – specified by high-level qualifications).

A general lack of applicants will compound future demographic problems and have an effect on numbers of new entrants via the apprenticeship route. Table 6 shows that £1. iii Recruitment of new staff • Experienced workers: An ageing workforce (9% of the current workforce is aged 60 plus (LFS 2008)) will mean that significant numbers of skilled individuals will be leaving the industry in the near future. However. particularly: in-house training. leading to further hard-to-fill vacancies and skills gaps as employers compete for the best talent.790m £1.Skills and the future of UK Science. 1999 compared to 2008 Total Semta Qualifications level S/NVQ Level 4+ S/NVQ Level 3 S/NVQ Level 2 or below No qualifications Source: LFS 1999. FE.231m £1. equipment supplier/ vendor training. 25% of small sites and only 4% of micro sites (Semta LMS 2007). 67% of establishments trained their employees and of these 25% trained 90%+ of the workforce. commercial training providers. Table 6: Total training expenditure: on and off-the-job training Total Off-the-job On-the-job % of training costs for offthe-job training 31% 44% Semta 2005 Semta 2007 £1. Semta’s engineering employers use a number of training provision routes. employers are cutting back on in-house training facilities but there is also an issue about lack of internal capability and expertise to train others within the workforce. • Apprentices: Only 11% of companies in UK Engineering provide apprenticeships: 57% of large sites.85 billion was invested in training in Semta’s sectors in 2007 and that there is an increasing use of off-the-job training for the workforce. In terms of training activity for Semta’s sectors. 22% of establishments trained less than 25% of the workforce (NESS 2007). employer associations/professional bodies and HE (Semta LMS 2007). 39% of medium-sized sites.853m £559m £823m £1. To reduce overheads. 17  . Engineering and Manufacturing Technologies Table 5: The changing qualifications profile of Semta’s workforce. 2008 1999 24% 33% 30% 13% 100% 2008 31% 30% 30% 9% 100% Annex B – Table A5 highlights the change in qualifications profile for Semta’s key industry groups.030m Source: NESS 2007 (LSC 2008) To ensure an adequate supply of skilled people throughout the workforce.

Engineering and Manufacturing Technologies   • ‘New graduates’: In 2008/09. mainly in terms of practical skills. 11 However.511 certifications (a 33% increase on 2003).Skills and the future of UK Science. chemistry and physics increased significantly. In HE. mathematics and single science and a decrease in numbers doing GCSE Double Science and Design and Technology.                                                              11 12 DBIS (2009e) HESA (2007) 13 JCQ. there were 71. 17% of Semta employers felt graduates were poorly prepared for work (NESS 2007). 2009 14 Science and Innovation Investment Framework . As an alternative to graduates. 12 • (Secondary) School-Leavers: There has been an upward trend in the numbers doing GCSE physics. 13 The Diploma in Engineering was introduced in September 2008.2004:2014 Annual Report 2009.775 engineering S/NVQ registrations (a 40% increase on 2003) and 48. the trend in HND achievement shows a substantial decline which has not been compensated by growth in Foundation Degree achievements. maths and engineering subjects. 2 and 3). this positive news must be must be taken in the context that 33% of Semta employers felt that 16 year old school leavers were poorly prepared for work (NESS 2007).800 learners took up a place. In terms of the supply of technicians to the sector. BIS 18 . first degree entrants showed encouraging rises in science courses with notable increases in physics. entries to GCE ‘A’ level  courses in mathematics. further mathematics. 2. Available at three levels (1. • Those completing VET courses: In 2007. 14 However. some employers are now focusing on technicians via the Higher Apprenticeship in Engineering. making it one of the most popular Diplomas to be delivered. Process Excellence and Project Management are particular skills gaps among engineering graduates that need addressing.

MAC. 2009). 2005 and Sector Skills Development Agency (SSDA). Engineering and Manufacturing Technologies 5 What is the Evidence of Current Mismatch? There are a number of key elements that make up the international competitiveness of an enterprise and a sector. This would involve a case being made for there being a ‘market failure‘. Two elements of mismatch between labour supply & demand are generally considered in skills policy: • • evidence of skill shortages – these lead to problems when employers try to recruit people (in the UK labour market) with particular skill-sets. there remains a real productivity issue in UK manufacturing by comparison with competitor economies (Engineering Employers’ Federation (EEF). and that labour productivity in Semta’s sectors has. At the higher knowledge and skills levels often necessary for innovation. but their presence is often claimed and rarely proved. 2009b) is to encourage and support this more flexible type of provision. in spite of very considerable growth in work commitment over recent years. 2008): • Investment • Innovation • Skills • Enterprise. The current evidence of supply and demand mismatch of skills relevant to Semta’s employers thus arises from two sources: • • Source 1) Evidence from Semta’s own primary research (Labour Market Surveys – ‘LMS’s . it is accepted that. and explains the important recent work on occupational skill shortages carried out by the Migration Advisory Committee (see. as shown in Figure 2. 2002. Annex C summarises current understanding of attempts to assess serious skills shortages. Semta will continue to monitor. 19  . though there might be a possible role for the state if adequate learning provision were not available for the employer to invest in. and Source 2) Evidence from the MAC work of occupations that have been deemed to be in serious shortage. University structures and funding mechanisms do not generally make it very easy for HEIs to deliver the targeted ‘bite-sized’ learning provision that businesses generally need. in economic terms. Skill shortages have long been the focus of interest in labour market and skills policy research. learning provision from Higher Education Institutions (HEIs) might well be necessary.Skills and the future of UK Science.of relevant employers) that covers occupations (or skill-sets that relate to occupations). and evidence of skill gaps – where not all employees are felt to have the full set of skills/competences necessary to carry out their work to the standards expected. As indicated above. and HMG (now the Department for Business Innovation and Skills) monitors the performance of UK Business in five key Productivity and Competitiveness Indicators (DBERR. grown encouragingly over recent years. and • Competition The indicator in relation to Skills that has received the most attention is labour productivity. However. It is therefore important to remember when considering mismatches in labour markets that it is the implications of such market imperfections on the overall enterprise. and corresponding growth in productivity. innovation. for example. While there are many pitfalls to making valid international comparison of productivity. investment and productivity of enterprises that are what really matters. 2005. 2007). arising only in response to the needs of players in primary (goods and services) markets. the tackling of skill gaps is generally understood to be the task of each employer. the quality and effectiveness of such focused provision. secondary – or derived . It is true that productivity and competitiveness depend on more than skills. The Government’s overall strategy (DBIS.markets. it is essential to bear in mind when considering skills issues that labour markets are. through its employers.

Engineering and Manufacturing Technologies   1) Semta’s most recent evidence on hard-to-fill vacancies and skills gaps experienced by its employers: Shortages in Bioscience (Bioscience LMS 2009): • • • • 19% of establishments had hard-to-fill vacancies over the last 12 months 15% of establishments reported skills gaps over the last 12 months 11% of establishments had hard-to-fill vacancies over the last 12 months 17% of establishments reported skills gaps over the last 12 months Shortages in Engineering (Semta LMS 2007): Table 7: Shortages in Engineering sectors % establishments reporting hard-to-fill vacancies over the last 12 months % establishments reporting skill gaps over the last 12 months Metals Mechanical Equipment Electrical Equipment Electronics Automotive Marine Aerospace Other Transport Equipment Engineering (UK) Source: Semta LMS 2007 10% 11% 9% 10% 12% 21% 15% 11% 11% 17% 18% 16% 16% 22% 30% 11% 24% 17% It is estimated that 6% of Semta’s workforce had skills gaps (NESS 2007).(e. It was felt that these companies were most at risk in the current recession as they are least equipped to face future skills related challenges. because occupational labour markets are broadly unaffected by sectoral boundaries. 15% of UK Engineering companies (covering some 4% of total engineering employment) had poor strategic manpower planning capability. Establishments with the most poorly developed HR capabilities and commitment had the following criteria: • • • • • Employment stable or decreased over last 12 months Not recruited over the last 12 months Do not expect skills needs to change over the next 2-3 years No training undertaken over the last 12 months or does not know Do not identify any workforce skills gaps or does not know Overall.Skills and the future of UK Science. science and engineering technicians) occupations. Analysis of data from Semta’s LMS 2007 highlighted varying degrees of strategic manpower planning capability. 2009) includes the majority of Professional Engineering.g. While in many cases the list indicates that the shortage is occurring in the Energy and Utilities sectors. and Technician. Most of these companies were either micro (<10 employees) or small (10-49 employees) businesses that tend to form the supply chain of larger companies. Mechanical and Electrical Engineers).g. 2) Occupations of importance to Semta’s sectors currently deemed by the MAC to be in shortage: The latest shortage occupation list recommended by the Migration Advisory Committee (October. 20 . this both indicates more general challenges with such occupations and re-emphasises the competition for businesses in Semta’s sectors for the best talent.(e. as explained in Section 1.

Engineering and Manufacturing Technologies Mismatch can also arise in relation to under-utilisation of employee skills. as well as examining shortages in the current labour market (as shown by recent labour market evidence) it is necessary to think ahead about likely needs in coming years. there remain concerns in a number of Semta’s sectors (in particular Bioscience) that graduates are being used too often in roles in which good technician or apprentice could probably be more effective and/or cost-effective. With reduced uncertainty arising from a clear industrial policy commitment. Finally.Skills and the future of UK Science. the expected shortages. in particular: new technologies in aerospace plastic electronics technology silicon electronics composite materials industrial biotechnology nanotechnology. and the main Science and Technology Cluster areas are shown in Section 9. and then tackle. this strengthens the case for accelerating the supply of technicians through step increases in apprenticeship programmes. As recognised in the new Government skills strategy ‘Skills for Growth’. it is possible to assess. 21  . These areas are addressed in the SSC Cluster reports produced at the same time as this Summary. The technology areas of most direct relevance to Semta’s sectors are also most relevant to Advanced Manufacturing. Close examination of skills utilisation within Semta’s sectors confirms that there is a significant element of using people for tasks that do not make use of their knowledge and skills. it is important. This is addressed in more detail in Section 8. While this can happen in the early years of careers. but it is worth noting that Government has recently committed to a strategic programme in support of likely growth sectors (see DBIS 2009b).

Engineering and Manufacturing Technologies   22 .Skills and the future of UK Science.

over recent years. with some corrections for the recent downturn in employment. identified 90 change drivers that could influence their demand and supply. for 2007 to 2017 (UKCES. Many factors play a role in the way technologies are deployed and how businesses and markets develop. A recent major study of foresight scenarios for IT skills for the European Commission (CEPIS. while levels are expected to rise slowly but steadily in the Bioscience sectors.600 5. 15 This move to higher level skills has helped to drive innovation and competitiveness of Semta’s sectors. and it was recognised that more drivers would probably emerge.460 3.Skills and the future of UK Science.480 3. with employment level breakdowns by both sectors and occupations. Engineering and Manufacturing Technologies 6 What will be the Future Demand for Skills? Assessing future supply and demand for skills is both very complex and inherently risky.800 8. because of the significant amount of replacement demand. it can be seen that management. 2007).460 From Annex B. albeit not at the same growth rate of the last ten years. ONS 23  . there is expected to be an even greater focus on higher level skills as a proportion of the total workforce. recruitment requirements in the coming years will continue to hold up. professional and technician occupations now make up 54% of Semta’s workforce (41% ten years ago) and this shift can also be seen through Semta’s key industry groups. overall employment levels are expected to continue to fall in the coming years for Engineering Manufacture.360 3.400 17.120 32.600 162. In terms of the future occupational profile. This arises particularly from the substantial attrition expected in the coming years from the retirement of the vast majority of the post-war ‘baby-boom’ cohort. were there to be another project workshop The Institute for Employment Research (IER) at the University of Warwick has produced. Table A-6.500 31.720 1. Semta has commissioned the IER to refine its models in relation to Semta’s sectors.scenario) for the UK economy. amply proving the risks involved in forecasting. 2008).300 18. The projected net new requirement shown in Table 8 is based on projections produced for Semta in 2007. ten-year look-aheads (using a single – ‘most probable’ . 2008. In broad terms. Table 8 Estimates of future new requirement in the next 5 years and the implications for annual new demand UK Engineering Sector Metals Mechanical Equipment Electrical Equipment Electronics Automotive Marine Aerospace Other Transport Equipment Engineering (UK) Projected new requirement 2010-2014 61. is currently being revised to take into account the impact of the major economic downturn since the 2007 forecasts were run. 15                                                              LFS 1999.300 Projected requirement per annum 12.300 6. In spite of the fact that ‘expansion demand’ will be negative.800 17. not anticipated in 2007. and new projections will be available soon. The most recent.300 1.660 360 1.

Skills and the future of UK Science. The  detailed projections present a carefully considered view of what the future might look like.aspx 24 . The forthcoming full Sector Skills Assessment will examine the factors around the more likely variations on the IER benchmark scenario. They represent a benchmark for debate and reflection.uk/about_us/media_centre/sector_skills_agreements. 2008) to emphasise that the projections prepared by the IER are not the only possible future 16 .                                                              16 various foresight scenarios and their implications are elaborated in Semta’s Sector Skills Agreements – see http://www. assuming that past patterns of behaviour and performance continue over the longer term.semta.org. Engineering and Manufacturing Technologies   It is important (see UKCES.

and remain sufficient not to be a constraint on recruitment. it is expected that employer commitment to retention of the most valuable skill-sets and workers will rise. individual GCSE science entries show very noticeable increases. However. • (Secondary) School-Leavers: In 2008/09. 17                                                              17 DBIS (2009e) 25  . ii Skill-raising of existing staff Commitment to companies’ investment in their human resources is likely to continue to grow. following significant investment in relevant vocational qualifications and apprenticeship frameworks. Numbers taking Business-Improvement Techniques (B-IT) S/NVQs are encouraging due to the need to create a culture of process excellence and lean manufacturing. The UK Science and Society strategy has been launched with Expert Groups on Science Learning and Science for Careers set up to advise Government on strengthening science and mathematics education and improving science careers information. • ‘New Graduates’: The recovery of interest in STEM subjects evident from ‘A’ level cohort sizes and Universities and Colleges Admissions Service (UCAS) trends should generally increase flows through relevant HE courses. and in some cases not survive. Availability of graduates with relevant knowledge (and certain skills) at both first degree level and beyond is likely to increase. of apprentices to employers. and raising the value. with improvements in apprenticeship design accelerating the supply.Skills and the future of UK Science. • Apprentices: Current Government commitment to raising apprenticeship numbers should have a positive impact. Engineering and Manufacturing Technologies 7 What will be the Future Supply of Skills? i Retaining existing staff As the value of human resources in general. though employers’ efforts to increase retention could reduce the amount of churn/career development movement. Growth in the proportion of those graduates particularly attractive because of their industrial experience will continue to depend on the investment that science and engineering employers make in offering work placements. those enterprises that cannot keep their most valuable contributors will not thrive. • Those completing VET courses: There has been strong growth in the numbers taking vocational qualifications within Semta’s engineering sectors. and of technical expertise in particular. to the future productivity and competitiveness of enterprises in Semta’s sectors becomes more evident. Over time. Growth in apprenticeship numbers in Science industries is to be anticipated. iii Recruitment of new staff • Experienced workers: This is expected to continue. not least as experience is gained in securing the greatest return on training and related investment. numbers have started to fall recently as employers have started to cut back on training. advice and guidance.

Engineering and Manufacturing Technologies   26 .Skills and the future of UK Science.

with a particular focus on the provision of training in process excellence and lean manufacturing. we believe that the relevant question is in fact: can supply at an adequate quality level meet expected future demand? Semta’s assessment in the light of the analysis for this Summary is that supply in the coming years could indeed meet likely demand. c) Enabling the shift into higher value manufacturing will require increased ability to multi-skill or up-skill the existing workforce. particularly adults. The issues above are further explored in Section 9 as they overlap with the key sector priorities identified by Semta and its employers. drawing on the various quality-raising resources available. delivery and quality). 3) Image and attractiveness of the sector will need to be improved to attract a greater share of a diminishing pool of potential new entrants. though maximising the quality of candidates and deployment of talent would need a number of current plans to be effectively implemented: 1) Employers to further develop the effectiveness of harnessing their team’s skills-sets in support of greater productivity and competitiveness through a) Exploring the benefits of raising their demand for level and quality of talent in support of higher specification products and services. b) Working with employees to facilitate the raising of skills of real relevance to innovation and productivity. 2) Learning providers at all levels to strengthen their focus on delivering learning in support of employers’ need (in relation to learning content relevance. Engineering and Manufacturing Technologies 8 Can Supply meet Demand? As indicated in Section 1.Skills and the future of UK Science. as part of the Sector Skills Agreement process. otherwise there will not be sufficient supply to cover future replacement demand due to retirement. 27  . to effectively utilise their skills. via the Sector Strategy Groups (SSGs). particularly technician level skills and fostering a culture of training and continuing professional development (CPD).

Engineering and Manufacturing Technologies   28 .Skills and the future of UK Science.

technicians. 29  .Skills and the future of UK Science. ranging from 26% of large establishments to 57% of micro establishments. particularly for SMEs. grow and sustain their position. This has to change over the next five years. welding and general engineering skills. tool setting. The main technical skills gaps included: CNC machine operations. There is a need to increase the number and quality of apprenticeships (particularly at medium and small sites) to offset the skills lost through retirement and leavers. because skill requirements are certain to change in the future due to the innovative. Semta current priorities. Poor strategic workforce planning capability links directly to the need for better management skills in this area. high productivity and excellent customer service. Specific Leadership and Management (L & M) training is considered to be the foundation of good management practice required for any company to build a more robust and competitive business. mainly among their core technical workforce (professional engineers. Computer Aided Manufacture (CAM). Only 49% of managers in Semta’s engineering sectors are qualified to S/NVQ Level 4+ (this figure was 45% ten years ago). electronics skills. complex and competitive nature of the sector. This highlights the varying strategic workforce planning capability of engineering companies. Engineering and Manufacturing Technologies 9 Semta’s response: Priorities for Action This section summarises. particularly SMEs. 52% of Semta’s engineering employers felt that their employees would not need to acquire new skills or knowledge over the next 2-3 years. This will directly improve bottom line performance. Only 11% of companies in the UK Engineering sectors provide apprenticeships. metal working. Key Theme 4: Strategic Workforce Planning In 2007. This will go some way to alleviate a future shortage of technical skills. craftspersons and operatives). Key Theme 2: Process Improvement (Productivity and Competitiveness) Relatively few companies in Semta’s sectors are using process improvement techniques. It is essential that many more companies in these strategic sectors are utilise accredited process improvement tools and techniques to compete in a global economy to survive. electrical skills. The skills gaps in these technical roles have the most significant impact on the business (Semta LMS 2007). in the light of the foregoing analysis. which will continue to be reviewed as both market and policy conditions evolve. Implementation of lean manufacturing processes will enable companies to create quality products. tool making. The following common themes were highlighted across Semta’s Engineering sectors from the Sector Skills Agreements: Key Theme 1: Leadership and Management This is the most important of the four themes – since if managers are not interested in up-skilling then the rest of the organisation will not do it. Key Theme 3: Technical Workforce Development 70% of engineering establishments that reported skills gaps have technical skills gaps. and new skills needed through changing technology.

30 .Report of a team led by Lord Sainsbury. Engineering and Manufacturing Technologies   The following themes were highlighted across Semta’s Bioscience sectors from the Sector Skills Agreement: Key Theme 1: Leadership and Entrepreneurship This is viewed as a significant area of opportunity and improvement for the sector. Key Theme 4: Networks and Clusters Networks and clusters are a critical enabler. Encourage young people to aspire to a career in science and engineering and increase the number of adults employed in other sectors to consider Bioscience as an attractive and rewarding sector when retraining and up-skilling as a consequence of redeployment and/or career advancement. along with proximity to suppliers and markets. Key Theme 2: Top Quality Workforce Closing the skills gap by increasing the supply of quality people. the STEM subjects and a focus on practical skills.e.Skills and the future of UK Science. but also in the smaller biological labs where often technically competent and academically strong young entrepreneurs require improved support and business acumen/skills to grow and develop the business. Key Theme 3: Image and Attractiveness To help the public at large have a better understanding of science generally (science literacy) and Bioscience as a consequence of improved general education and a more balanced representation of information in the public domain i. industry should take a more participative role in this area. not only in the large companies.e. Minister for Science). Delivery of provision will be even more successful if pursued through the clusters and networks already developed. Identify ‘core’ subjects and activities within the curriculum i. Skills are an important component of successful clusters. Cluster development is central to the growth of bioscience and actively supported by the Government since the 1999 Sainsbury report (Biotechnology Clusters . It is important to encourage leadership at a regional/local level in partnership and through existing clusters and networks to develop a critical mass of influence.

new technologies in aerospace .nanotechnology The SSC network is contributing to this new direction. New Jobs (DBIS. Mechanical Electrical Aerospace Key: Lead priority SSA theme Leadership and Management + Entrepreneurship (BIO) Technical Workforce Development + Top Quality Workforce (Bio) Productivity and Competitiveness + Process Improvement (MME) Strategic Workforce Planning (WSP) (SWP) Apprenticeships (MME) Image and Attractiveness (BIO) Networks and Clusters (BIO) Semta’s response to New Industry. which could play a role in the UK’s future global competitiveness. Marine 31  . with the publication. These are: • • • • • Low Carbon Industrial Strategy Ultra low carbon vehicles Digital Britain Life sciences and pharmaceuticals Advanced manufacturing: . and Semta is active in a number of SSC ‘clusters’ examining the skill needs in the different areas.industrial biotechnology . Automotive Bioscience Electronics Metals.plastic electronics technology . in April. 2009 of a white paper presenting proposals for initiatives in relation to a number of strategically significant areas of technology.composite materials . Semta is leading the Advanced Manufacturing ‘cluster’ and playing a significant role in a number of the others.Skills and the future of UK Science.silicon electronics . 2009a): In response to the recession. Government industrial policy has focused on a more pro-active approach. Engineering and Manufacturing Technologies Figure 5: Summary of sector-specific priorities Diagram illustrating the themes for priority action and relationship to the respective Sector Strategy Groups across Semta’s footprint.

Engineering and Manufacturing Technologies   32 .Skills and the future of UK Science.

Mechanical and Electrical engineering Maintenance and Repair Organisations (Aerospace industry) National Employer Skills Survey (for England) National Skills Academy for Manufacturing National Vocational Qualification Organisation for Economic Co-operation and Development Office for National Statistics Points Based System Doctorate of Philosophy Quality. Universities and Skills (former) Department of Trade and Industry European Economic Area Engineering Employers’ Federation European Qualifications Framework European Union Further Education General Certificate of Education General Certificate of Secondary Education Gross Value Added Higher Education Higher Education Institution Higher Education Statistics Agency Her Majesty’s Government Higher National Certificate/Higher National Diploma Human Resources Hard-to-fill Vacancies Institute for Employment Research Institute for Employment Studies Intellectual Property Rights Information Technology IT. Cost & Delivery Research and Development 33  .Skills and the future of UK Science. Innovation and Skills Destinations of Leavers from Higher Education’ (HESA datasets) (former) Department for Industry. Engineering and Manufacturing Technologies Abbreviations ABI ASHE BERD B-IT BOP CAD CAM CBI CEPIS CNC CPD DBIS DLHE DIUS DTI EEA EEF EQF EU FE GCE GCSE GVA HE HEI HESA HMG HNC/HND HR HtFVs IER IES IPR IT ITCE JCQ L&M LFS LMI LMS LSC MAC MME MRO NESS NSAM NVQ OECD ONS PBS PhD QCD R&D (ONS) Annual Business Inquiry (ONS) Annual Survey of Hours and Earnings Business Enterprise Research and Development Business-Improvement Techniques Balance of Payments (basis for international trade statistics) Computer Aided Design Computer Aided Manufacture Confederation of British Industry Council of European Professional Informatics Societies Computer Numerical Control Continuing Professional Development Department for Business. Communication and Electronics Joint Council for Qualifications Leadership and Management (ONS) Labour Force Survey Labour Market Intelligence Labour Market Survey Learning and Skills Council (England) Migration Advisory Committee Metals.

Skills and the future of UK Science. Technology. Engineering and Mathematics Scotttish Vocational Qualification Strategic Workforce Planning Universities and Colleges Admissions Service United Kingdom UK Commission for Employment and Skills United States of America Vocational Education and Training Work-based Learning 34 . Engineering and Manufacturing Technologies   SIC SME S/NVQ SOC SSA SSC SSDA SSG SSVs STEM SVQ SWP UCAS UK UKCES USA VET WBL Standard Industrial Classification Small/Medium-sized Enterprise Scottish/National Vocational Qualification Standard Occupational Classification Sector Skills Agreement Sector Skills Council (former) Sector Skills Development Agency Sector Strategy Group ‘Skill-Shortage Vacancies’ Science.

Department for Business.co. 2008 (see http://www. Cost.accessed November 2009) CEPIS (2007): ‘Thinking ahead on e-skills for the ICT Industry in Europe’.cbi.accessed November 2009) DBIS 2009e): ‘Science and Innovation Investment Framework 2004:2014 Annual Report 2009’.bis.uk/research_and_analysis/~/media/publications/D/DIUS_RR_08_21 . November 2007) (see http://www. 2009) DBIS (2009a): ‘New Industry New Jobs: Building Britain’s Future’.uk/wpcontent/uploads/publications/Higher-Ambitions. engineering and biology between the years 2002 and 2007’. November 2009 (see http://www.accessed October 2009) 35  . October 2009 (see http://www.uk/~/media/publications/A/annual-report-2009 accessed November 2009) DBERR (2008): ‘The 2008 Productivity and Competitiveness Indicators’.gov.pdf . Research Team DIUS Research Report 08 21 (see http://www. Innovation and Skills.accessed November 2009) DIUS (2009): ‘The Demand for Science. Innovation and Skills.uk/NR/rdonlyres/D042247C-2A61-48F6-B9D780032DF620D6/177/CatchingUpwithUncleSam_Dec2001. Department for Industry.gov. Council of European Professional Informatics Societies report for the European Commission. DBERR.accessed November.doc – Accessed October.bis. UCAS. Nord Anglia Education for Confederation of British Industry (see http://www. March 2005 (seehttp://www.berr.pdf .uk/files/file49953.pdf accessed November 2009) DBIS (2009d): ‘Skills for Growth: The national skills strategy – analytical paper’. Delivery: measuring business performance’.gov.gov. 2009) DBIS (2009c): ‘Skills for Growth: The national skills strategy’. November 2009 (see http://www. Engineering Employers’ Federation. Innovation and Skills.bis.Skills and the future of UK Science. November 2009 (see http://www.pdf – accessed November.berr..uk/consultations/~/media/publications/D/Demand_for_STEM_Skills . 2009) EEF (2002): ‘Catching up with Uncle Sam: The EEF final report on US and UK manufacturing productivity’. Department for Trade and Industry.pdf . chemistry.ecdl. Engineering and Manufacturing Technologies References CBI (2009): ‘Emerging stronger: the value of education and skills in turbulent times’ – Education and skills survey 2009. Engineering and Mathematics (STEM) Skills’.gov. Department for Business. April 2009 see http://www. applicants and acceptances to mathematics. Universities and Skills.org. Department for Business. January 2009 (see http://www.uk/files/file51023. physics.accessed November 2009) DBIS (2009b): ‘Higher Ambitions: the future of universities in a knowledge economy’.dius.gov.org/files/cepis/20090901023457_Thinking%20Ahead%20on%20e-Skills%20in.accessed October 2009) DTI (2005): ‘Achieving Best Practice in your Business: Quality.gov.dius.dius.eef.uk/pdf/qualitycost. December 2001 (see http://www.uk/pdf/20090406-cbi-education-and-skills-survey-2009. Department for Business Enterprise and Regulatory Reform.pdf . Innovation and Skills.industryforum.uk/wpcontent/uploads/publications/Skills-Strategy-Analytical-Paper.uk/wp-content/uploads/publications/Skills-Strategy.org.gov. Department for Business.pdf . Technology.pdf .accessed November 2009) DIUS (2008): ‘Trends in applications.

accessed October 2009) European Commission (2004): ‘Manufuture – a vision for 2020: Assuring the future of manufacturing in Europe’. May. May 2007 (see http://www. 2009) SSDA (2007): ‘Cross-country analysis of productivity and skills at sector level’. T (1997): ‘Revision of the High-Technology Sector and Product Classification ‘.uk/upload/pdf/rr23exec-sum_1. October 2009 (see http://www. Technology and Industry Working Papers 1997/2 (see http://titania.semta.accessed November.statistics. 2009) 36 . October 2005 (see http://www.org.eef. SSDA Research Report RR14. 1999 JCQ (2009): evidence from Joint Council for Qualifications 2009 datasets LFS (1999.uk/NR/rdonlyres/65DD8600E113-4DE1-BEF5-F8F609365950/1304/catchingup.pdf .manufuture.pdf – accessed November 2009) Hatzichronoglou.’ Information Technology National Training Organisation/Alliance for Information Systems Skills.accessed October.org. 2009) Semta (2009): ‘Labour Market Survey for Bioscience’ (unpublished – contact Semta for details) SSDA (2005): ‘Sectors Matter: An International Study of Sector Skills and Productivity’. 2009) MAC (2009): ‘Skilled.org. 2009) Semta (2008): ‘Engineering Skills Balance Sheet’.homeoffice.pdf . 30 January 2009 (see http://www. Office for National Statistics. Engineering and Manufacturing Technologies   EEF (2005): ‘Catching up with the Continent – Final report on EU and UK manufacturing productivity’. Sensible: Second review of the recommended shortage occupation lists for the UK and Scotland: Autumn 2009’.pdf .aspx .lsc.ukces. 2008 (see http://readingroom.aspx . Report of the High-Level group – November 2004 (see http://www. June 2004 (see http://www.ukba. 2009) ONS: evidence from the Labour Force Survey 1999 and 2008 datasets LSC (2008): ‘National Employers Skills Survey 2007: Main Report’.org/vl=6612954/cl=15/nw=1/rpsv/cgi-bin/wppdf?file=5lgsjhvj7nkj.sourceoecd.uk/public_bodies/research/engineering_balance_sheets. 2009) ONS (2009): ‘UK Business Enterprise Research and Development 2007’.accessed November.uk/pdfdir/berd0109.uk/employers/science__bioscience/about_sector_skills_agreements/bioscience_s sa. Semta/NSAM December 2008 (see http://www.gov.pdf accessed October. for the Sector Skills Development Agency. Sector Skills Development Agency. University of Sussex. Shortage. Engineering Employers’ Federation.uk/sitecontent/documents/aboutus/workingwithus/mac/first-reviewlists1/0409/mac-2nd-review-09?view=Binary – accessed November. Migration Advisory Committee.gov.org.org.semta. Learning and Skills Council.Skills and the future of UK Science.pdf accessed November.uk/lsc/National/nat-nessurvey2007mainreport-may08. IES and SPRU.accessed November 2009)  Semta (2007): ‘Labour Market Survey for Engineering’ (unpublished – contact Semta for details) Semta (2008): ‘Sector Skills Agreement for Bioscience’ (see http://www.ukces.gov.pdf – accessed November. 2009) HESA (2007): evidence from Higher Education Statistics Agency 2007 datasets ITNTO/AISS (1999): ‘Skills 99 – IT skills summary’.uk/upload/pdf/final-report-sectors-matter-r-050927. Research Report RR23. OECD Science.org/documents/manufuture_vision_en%5B1%5D.

pdf . UKCES. 2009) Wilson.org. 2009 (see http://www.ukces. 2009) UKCES (2009b): ‘Towards Ambition 2020: skills.ukces.org.uk/consultations/~/media/publications/S/STEM_IER_Report_Web_version accessed November.pdf – accessed October. March.uk/upload/pdf/UKCES%20LMI%20Report%20A5%20With%20Links. Engineering and Manufacturing Technologies UKCES (2008): ‘Working Futures 2007 – 2017’.accessed Nov.dius. (2009): ‘The Demand for STEM Graduates: Some benchmark projections’.accessed October 2009) UKCES (2009a): ‘Information to Intelligence: a Common LMI Framework for Sector Skills Councils’. growth’ – Expert Advice from the UK Commission for Employment and Skills.uk/upload/pdf/skills_jobs_growth_finalpdf_231009. October 2009 (see http://www. (IER for) UK Commission for Employment and Skills.pdf . jobs.gov. December. 2008 (see http://www. R. Rob Wilson.uk//upload/pdf/Working%20Futures%203%20FINAL%20090220.ukces.org. 2009) 37  . January 2009 (see http://www.Skills and the future of UK Science. UK Commission for Employment and Skills. Warwick Institute for Employment Research for the Council for Industry and Higher Education.

Skills and the future of UK Science. Engineering and Manufacturing Technologies   38 .

Engineering and Manufacturing Technologies Annexes 39  .Skills and the future of UK Science.

Skills and the future of UK Science. Engineering and Manufacturing Technologies   40 .

290 455.330 144.710 834.300 6.000 75.000 Mature Engineering 5.000 380 8.900 250 14.100 54.410 21.300 490 18.100 1.900 6. Ireland UK Sector Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces Employment Leading-Edge Technology 1.100 Total Semta 7.620 375.430 69.210 50.710 71.490 58.700 8.400 5.520 110.240 14.230 49.100 820 31.400 100 3.700 1.930 130.840 163.250 56.500 10.540 95.400 209.400 240 7.800 2.500 960 23.410 125.310 86.400 4.000   41  .400 5.930 89.330 27.600 1. Engineering and Manufacturing Technologies Annex A The Realities of Semta’s Sectors Table A-1: Geographical Characteristics of the three industry groupings Science Industries 540 18.Skills and the future of UK Science.570 143.050 194.750 39.600 440 11.300 65.100 180 6.300 1.900 Nation/ Region North West North East Yorkshire & The Humber West Midlands East Midlands South West South East London East of England England Scotland Wales N.680 1.790 64.050 1.700 3.200 3.600 4.200 780 34.000 14.200 12.247.600 360 17.100 2.100 1.710 145.700 8.330 58.300 2.100 87.890 45.100 39.600 510 15.840 707.930 77.500 6.900 630 30.450 59.310 201.900 7.300 1.700 47.100 1.400 5.700 4.200 11.500 6.630 69.370 55.000 3.300 5.000 770 17.484.300 1.200 380 7.220 165.880 43.500 1.

410 25.100 2.000 2.500 930 19.350 28.600 510 15.200 1.500 1.800 354.220 165.400 4.310 240.700 3.180 22.100 5.100 110 3.100 180 6.Skills and the future of UK Science.700 3.200 100 6.100 80 600 110 900 100 1.500 530 11.500 160 5.400 120 4.500 40 9.100 12.580 57.300 <20 1.910 138.100 94.900 190 6.310 33.450 30.800 540 7.200 1.000 900 8.700 120 3.850 86.600 310 11.400 240 7.010 17.600 1.000 80 600 20 300 80 22.300 1.400 1.900 40 1.200 380 7.800 100 3.000 620 11.200 510 10.900 740 8.100 600 9.600 440 11.300 2.900 110 17.400 440 10.030 41.900 5.030 12.900 <20 5.930 37.100 1.700 44.900 800 10.200 22.500 480 19.600 30 2.900 North West Employment Workplaces North East Yorkshire & the Humber West Midlands East Midlands Employment Workplaces Employment Workplaces Employment Workplaces Employment Workplaces South West Employment Workplaces South East Employment Workplaces London East of England Employment Workplaces Employment Workplaces England Employment Workplaces Scotland Employment Workplaces Wales Employment Workplaces N.700 320 8.300 210 2.800 380 13.400 100 3.410 26.100 7.300 410 12.440 26.600 280 6.000 370 18.510 31.400 1.700 1.900 34.700 2.810 36.300 280 11.540 31. Ireland Employment Source: ABI 2007 42 Electrical Marine Metals .670 126.400 3.600 710 10.500 610 11.400 5.300 2.500 730 13.870 31.200 500 15.100 820 31.900 530 10.100 100 12.800 1.200 2.700 480 4.000 7.900 560 39.300 1.700 60 14.700 160 10.400 200 7.400 630 83.600 50 5.500 340 13.500 400 4.000 380 8.300 490 18.000 28.210 50.900 50 100 200 1.900 140 6.100 29.500 400 7.250 26.500 1.800 1.000 770 17.600 190 12.100 310 12.300 790 17. Engineering and Manufacturing Technologies       Table A-2: Distribution of intensity of activity for Semta’s main Sectors around the United Kingdom Science Industries Bioscience Leading-Edge Technology Automotive Electronics Aerospace Mature Engineering Mechanical Nation/ Region Sector Workplaces 540 18.100 40 5.300 110 5.600 30 1.700 1.

by comparison with All UK manufacturing.10 *33.1 & 35.57 29 31 Sectors Basic Metals and Metal Products (inc.3 Rubber Tyres Other Transport Equipment 43 .excluding 33.1* Automotive Marine Aerospace Science Industries (Bioscience) 24.1 35.1 Pharmaceuticals Science and Engineering R & D Manufacture of medical and surgical equipment and orthopaedic appliances Residual sub-sectors (assumed to be Mature Engineering) 25.11/25.42 73. and 51. Wholesale Metals & Scrap) Mechanical Equipment Electrical Equipment Leading-Edge Technology Industries 30. The Industry groupings are as follows: Table A-3: Industry Group allocations Mature Engineering Industries SIC categories 27. Engineering and Manufacturing Technologies The Realities of Semta’s Sectors: the performance of key industry groups The skills needs of employers in Semta’s sectors arise from the realities of their context. 28. 33 34 35.Skills and the future of UK Science. Engineering and Manufacturing Technologies sectors in terms of the recent trends of key indicators of the three broad groupings introduced in Section 1.3 Electronics .52 & 51.41 & 24. 32. This section seeks to summarise the main characteristics of the Science.12 35 except 35.

with the exception of the Science industries (in particular Bioscience). While there has been widespread concern for some time that manufacturing in the UK is increasingly under threat. by comparison with All UK manufacturing: • • • • • • the number of enterprises in which the workforce is employed.000 M a ture  Eng ine ering   Indus trie s 40. the fraction of profits ‘ploughed back’ into capital expenditure. more competitive companies. and numbers in employment in manufacturing have fallen.000 S cience  Indus trie s   (B ioscience) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0 Source: ONS Annual Business Inquiry (ABI) 44 . the total employment levels. in reality most enterprises have responded effectively to the changing market conditions. Leading edge technology. engineering and manufacturing technologies industries in the United Kingdom are generally in good shape. and the R&D expenditure. Engineering and Manufacturing Technologies   Recent Performance and Current Position of the Key Industry Groups The science. and how this has changed over time.000 Lea ding ‐E dg e  Technolog y  Indus trie s 10. as it will partly arise from consolidation.000 60.000 20. Figures A–1 to A-6 show a number of key characteristics and recent performance of the three industry groups. This is not necessarily a serious concern.Skills and the future of UK Science. the export performance.000 50. which can bring stronger. the estimated profitability. Figure A-1 shows that. there has been a net fall in the number of enterprises over recent years. and Mature engineering industries. A major indicator of a sector’s scale is the number of enterprises. by comparison with All UK Manufacturing (scaled by 10) 70.000 A ll U K  M a nufa cturing / 10 30. Figure A-1: Numbers of employers in the UK Science.

lower – sometimes significantly lower – than the Labour Force Survey estimates. much of the fall can be recognised as productivity gain. Since 2000. 45 . From a skills point of view.000 1.000 Mature  Engineering  Industries 600. Given the broadly comparable output levels in 2000 and 2007 (slight fall in Leading-Edge technologies and growth in Bioscience). Leading-Edge Technology industries: 32% fall.200. Leading edge technology. and Mature Engineering: 25% fall – essentially the same as for all UK Manufacturing.000 800. Semta companies are subject to increasingly fierce global competition. as a result. Figure A-2: Employment in the UK Science. except for a comparatively small number of enterprises operating in highly niche markets. figures from the ABI do not include self-employed workers in a sector. the percentage changes are: • • • Science industries (Bioscience): 15% growth. Engineering and Manufacturing Technologies The comparatively very high numbers of companies in mature engineering confirm the prevalence of Small and Medium Enterprises (SMEs) in this business. Most of the markets in which Semta’s employers compete extend beyond the United Kingdom. albeit on a smaller scale. by comparison with All UK Manufacturing (scaled by 10) 1. and this means that. and Mature engineering industries.000 1.000 All UK  Manufacturing/ 10 200. As indicated in Section 1. a core indicator relates to the overall employment levels in sectors. although confirms the steadier position within Bioscience.000 Science  Industries  (Bioscience) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0 Source: ONS Annual Business Inquiry (ABI) – estimates show average employment levels during the year   Figure A-2 confirms the steady reduction in employment levels in Mature Engineering and LeadingEdge Technology industries.400. and are.000. including useful growth in some years.Skills and the future of UK Science. Figure A-2 shows how these have developed over recent years for the three industry groups.000 Leading‐Edge  Technology  Industries 400.

The emergence of huge competition from enterprises in low labour cost economies.basis) for the Science industries. Mechanical and  Electrical Equipment  Manufacture) Science Industries (Bioscience  less R&D companies) 50 40 30 20 All UK Manufacturing /10 10 0 2003 2004 2005 2006 2007 2008 2009 est. Export performance the UK Mature engineering industries has also improved. and  Marine Manufacture) Mature Engineering Industries  (Metals and Metal‐ Products. Leading edge technology industries. Source: ONS UK Trade in Goods – 2009 estimates based on grossed-up first six-months data In summary: • • • Export performance in the Science industries has grown 49% between 2003 and 2008. by comparison with All UK Manufacturing (scaled by 10) £Billions (Balance of Payment basis. and Mature engineering industries. show massive evidence of this. Probably the most concrete way of considering the global competitiveness of the UK Science. 46 . with 2006 a hugely successful year. with a 5-year growth of 36%. Engineering and Manufacturing Technologies is to examine their recent export performance. Leading edge technology. Engineering and Manufacturing Technologies   There are a number of determinants of national competitive advantage in global markets. The 2009 figures are estimates grossed-up from the first two quarters. though labour cost and currency exchange rates are particularly powerful. Figure A-3: Export Performance of the UK Science.Skills and the future of UK Science. Electronics‐. in particular over recent years India in software development and China in manufacturing. The Office for National Statistics produces quarterly figures of import and export data in its UK Trade in Goods updates Figure A-3 shows export levels (on a Balance of Payments – BOP . seasonally adjusted) 100 90 80 70 60 Leading‐edge Technology  industries (Aerospace‐ . Automotive‐. and Mature engineering industries respectively (note that no figures are available for Wholesale Metals & Scrap or Science and Engineering R&D). compared with some 32% for UK Manufacturing as a whole. Exports in the Leading edge technology industries grew slightly over the five years.

Not surprisingly. 47 . and corresponds closely to the average performance of All UK Manufacturing. perhaps. and Mature engineering industries. Engineering and Manufacturing Technologies As well as productivity (shown in Figure 2). by comparison with All UK Manufacturing 18% 16% Science Industries  (Bioscience) 14% Mature Engineering  Industries 12% All UK  Manufacturing 10% Leading‐Edge  Technology  Industries 8% 6% 4% 2% 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: ONS Annual Business Inquiry (CapEx data subject to timing errors) As can be seen. calculated (from ABI data) as Estimated Operating Surplus (Gross value Added – Employment Costs) less Total Net Capital Expenditure. Leading-edge technology. profitability in the Science industries (Bioscience) is the highest. as a fraction of Total Turnover: (Gross Value Added – Employment Costs) less Total Net Capital Expenditure ______________________________________________________________________________________________________________ Total Turnover for the three industry groups. while there are substantial swings in some years.Skills and the future of UK Science. profitability is very important to the well-being of enterprises in a sector. Figure A-4: Estimated profitability in the UK Science. arising partly from technical issues of the timing of R&D allocation. mature engineering is generally more profitable than the Leading-edge industries. Figure A-4 shows estimated profitability.

However. while the falls in ‘plough-back’ in Leading-Edge Technology and Mature Engineering Industries are comparable (around 40%). the fall in ‘plough-back’ is greatest of the last five years in Bioscience (some 60% from 2002 to 2007). As far as the three broad groupings are concerned. Engineering and Manufacturing Technologies   Also important is what happens to the profits made: clearly.Skills and the future of UK Science. both well above the average for UK Manufacturing as a whole. While Capital Expenditure covers a number of things. Figure A-5: Capital Investment (‘fraction of profits ploughed back’) in the UK Science. Leading-edge technology. probably the most strategic element of capital investment is R&D expenditure. and Mature engineering industries. by comparison with All UK Manufacturing (Total Net Capital Expenditure as a percentage of Estimated Operating Surplus) 70% 60% 50% 40% 30% Scie nce  Industries (Bioscience) 20% All UK Manufacturing Le ading‐Edge  Te chnology  Industrie s 10% Mature  Engine e ring Industries 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: ONS Annual Business Inquiry (CapEx data subject to timing errors) In summary. overall there is an intriguing (worrying) fall over recent years in the percentage ‘plough-back’. The development over recent years of this degree of plough-back is shown in Figure A-5. and Figure A-6 shows how this has increased in the three broad groups of Semta sectors over recent years. Figure A-5 appears to show that the fraction of operating surplus not ploughed back into the business in some way has been growing – presumably at least some of this has arisen from the need to reward investors. It will therefore be interesting to see what the effect on this ratio of the current financial downturn will be. 48 . perhaps in response to growing returns in financial markets. future success depends at least in part on the proportion of profits that are ‘ploughed back’ into Capital Investment.

500 Leading‐Edge  Technology  Industries 3. in fact at the same rate as UK Manufacturing as a whole (some 25% over the last five years) • • 49 .000 500 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: ONS UK BERD 2007 In summary. £ millions 5. Leading-edge technology.000 3. but growth over recent years not so strong (13% between 2002 and 2007) Conversely.000 Science  Industries  (Bioscience) 4. The percentage growth over the last five years is 27%.500 All UK  Manufacturing /10 1. • R&D Expenditure in the Science industries: strong growth over recent years.000 1. by comparison with All UK Manufacturing (scaled by 10). R&D Expenditure growth in the UK Mature engineering industries has grown faster. in particular last 2 years. Engineering and Manufacturing Technologies Figure A-6: Innovation (R&D Expenditure) in the UK Science.500 Mature  Engineering  Industries 2.000 2. R&D Expenditure in the Leading edge technology industries: very comparable in absolute level with the Science industries (although from a much larger output base).Skills and the future of UK Science.500 4. and Mature engineering industries.

Skills and the future of UK Science. Engineering and Manufacturing Technologies   50 .

100 19.800 4.100 346.400 83.600 67. Engineering and Manufacturing Technologies Annex B Structure of the current workforce in Semta’s Sectors Table A-4: Structure of the current workforce in Semta’s Sectors (occupational groups containing the main technical occupations are shown in bold) Sector Science Bioscience Leading-Edge Technology Automotive Electronics Aerospace Mature Engineering Metals (inc.900 400 3.900 28.100 160.400 2. Plant & Machine Operatives 9 Elementary 54.500 66.900 33.400 41.200 8.800 20.200 38.969.600 84.300 0 1.300 25.500 1.500 20. Metal Products) Total across all Semta sectors* 371.300 503.800 22.800 158. Estimates below 10.800 86.900 27.900 -9.900 26.200 32.100 29.900 19.400 212.200 Mechanical Broad Occupational Group (SOC) 1 Managers & Senior Officials 2 Professionals 3 Associate Professional & Technical 4 Administrative & Secretarial 5 Skilled Trades 6 Personal Service 7 Sales & Customer Service 8 Process.000 17.400 28.900 284.800 5.400 36.000 Electrical Marine 1.900 99.700 50.200 3.600 17.800 19.000 53.800 38.200 11.400 1.800 72. * includes Other Transport Equipment 51 .500 16.200 35.300 32.400 236.300 30.500 0 0 3.400 122.500 46.000 19.000 4.000 153.200 21.800 33.000 0 2.800 38.900 14.500 441.300 9.900 20.800 162.900 1. rounded to nearest 100.300 6.700 380.000 Source: Experian analysis from ONS Labour Force Survey: employment estimates as of late 2008.400 31.000 100 5.200 Total Workforce 235.200 7.800 202.500 40.Skills and the future of UK Science.800 5.000 (shown in parenthesis) subject to statistical unreliability.900 36.700 0 3.800 47.800 7.

Engineering and Manufacturing Technologies   Table A-5: The changing qualifications profile of Semta’s workforce. 1999 compared to 2008 Mature Engineering 1999 2008 18% 22% 35% 33% 32% 34% 15% 10% 100% 100% NVQ Level 4+ NVQ Level 3 NVQ Level 2 or below No qualifications Science Industries 1999 2008 48% 58% 19% 18% 23% 19% 9% 6% 100% 100% Leading-Edge Technology 1999 2008 26% 34% 32% 29% 29% 28% 12% 8% 100% 100% Table A-6: The changing occupational profile of Semta’s workforce. plant & machine operatives Other occupations Science Industries 1999 2008 14% 23% 28% 25% 14% 19% 14% 7% 1% 5% 14% 3% 100% 11% 4% 0% 2% 10% 6% 100% 52 .Skills and the future of UK Science. 1999 compared to 2008 Leading-Edge Technology 1999 2008 15% 18% 11% 18% 8% 11% 9% 26% 0% 3% 24% 2% 100% 7% 21% 0% 1% 17% 5% 100% Mature Engineering 1999 2008 17% 20% 7% 9% 5% 8% 11% 27% 0% 4% 26% 4% 100% 8% 27% 0% 1% 19% 7% 100% Occupation Managers & Senior Officials Professionals Associate Professional and Technical Administrative & Secretarial Skilled trades Personal Service occupations Sales & Customer Services Process.

Skills and the future of UK Science. is necessary if skills-raising action is to be prioritised and corresponding learning supply clarified. and the subset of these that are believed to arise purely due to shortages of supply (sometimes called Skill-Shortage Vacancies – ‘SSV’s). Few recruitment exercises result in the appearance of a number of adequate applicants in response to a vacancy notice. which. This has led to survey questions on both HtFVs. While interesting (where response rates are adequate) in relation to the relative overall recruitment position in different sectors. often on the basis of comparatively little objective evidence. However. and. such indicators tell us little about the occupations in which there might be serious supply shortages in the labour market. both in terms of whether they would ever really exist if labour markets were (made) flexible enough. how serious skill shortages can meaningfully be assessed. and skill shortages have. Migration Advisory committee (May 2009) First review of the recommended shortage occupation lists for the UK and Scotland Migration Advisory committee (October 2009) Second review of the recommended shortage occupation lists for the UK and Scotland: Autumn 2009 53 . Following the contributions of former Work Permits UK ‘Sector Advisory Panels’. however. in advising the Home Office in relation to the national shortage occupation list. given actual labour markets.SOC 2000 categories) that are considered by various measures to be ‘skilled’ (at NVQ level 3 or above). This has led to some particularly thorough analysis on the assessment of occupational skill shortages across the economy. or where the salary being offered might not be competitive). Engineering and Manufacturing Technologies Annex C Skill Shortages Skill shortages in labour markets are more generally considered to represent possible market failures. such surveys have generally focused at the level of the sector. the percentage of responding employers in a particular sector that have experienced HtFVs or SSVs in the past year. ASHE and NESS) is complemented by submissions of ‘bottom-up’ evidence invited from employers and relevant stakeholders. The initial MAC methodology has used some 12 independent indicators of possible shortage in relation to the 192 occupations (from the . The most significant analysis of possible skill shortages relating to occupations has taken place in the context of Managed Migration policy. as evidence. the LFS. in the sense that the state plays a role in delivering additional supply into the marketplace of (mostly) young people with relevant knowledge. the Migration Advisory Committee (MAC) was established at the end of 2007. In particular. and perhaps designed and developed. which is reviewed and updated at regular intervals 18 . and at least some of the skills to apply it. This analysis. although not without its problems. is the most comprehensive and thorough known. surveys have generally asked questions about whether the responding employer has experienced hard-to-fill vacancies (HtFVs) over the last year. over the years. that real skill shortages relate to problems of recruitment that are not attributable to factors other than shortages of supply (for example vacancies being hard to fill because candidates are not keen to work in the geographical location of the recruiting employer. Labour Market Intelligence research in most sectoral bodies over the years has attempted to measure possible skill shortages by (subjective) employer responses to questions about their recent recruitment experience. providing. There has been extensive debate about skill shortages over the years in labour economics and skills policy.total of 353 . The ‘top-down’ statistical analysis on these 12 indicators carried out from public datasets arising from various general economic surveys (in particular. been a frequent mantra from one sector or another. It was soon recognised. as explained in Section 1.                                                              18 Migration Advisory committee (2009) Shortage Occupations List .

rather than their application into specific competences. to begin with.Skills and the future of UK Science. As will be evident from the reports on the emerging technology ‘clusters’. the MAC has. the future specification tends to be comparatively broad brush and focused on underpinning knowledge and understanding. the recent past. Since managed migration policy requires underpinning evidence to be particularly robust. In particular. Engineering and Manufacturing Technologies   One of the most important issues that has arisen from this work is the relationship between possible skill shortages in the ‘present’ (in practice. the nature of the skill-sets tend to be rather different between the recent past and the expected future. for expectations of future skill-set needs. not given weight to arguments about the future. in particular relating to likely growth in economic activity relevant to certain new technologies. for which data is available) and the likely/ expected position in the future. 54 .

Skills and the future of UK Science. Engineering and Manufacturing Technologies 55 .

uk   .co.semta.uk W: www.org.uk W: www.org.Skills and the future of UK Science. Engineering and Manufacturing Technologies     56 For further information please contact Semta Customer Services: T: 0845 643 9001 E: customerservices@semta.nsa-m.