Publication: Investing in skills audit 2021/22

Partnership working key to maximising skills investment

by Stephen Boyle, Auditor General for Scotland

A skilled workforce is vital to Scotland's economic growth. Equipping people with relevant skills can help them to progress to more fulfilling, secure and well-paid work, which in turn has wider social benefits. Developing individuals’ skills can also help to increase their ability to carry out more advanced tasks, which has the potential to add more value to the economy and improve national productivity. But the impact of the Covid-19 pandemic on jobs creates the risk that differences between the skills people have and those employers need could widen.

The pandemic has made it more important than ever that Scotland’s skills system is operating effectively so that it works well for both employers and individuals. This includes people who have been the hardest hit economically by Covid-19, such as young people and low-paid workers. The Scottish Government recognises this and it has included skills and training in its Covid-19 economic recovery plans, which set out its ambition for sustainable and inclusive economic growth.

The Scottish budget includes over £2 billion every year for both the Scottish Funding Council, which funds further and higher education and research, and Skills Development Scotland, which supports people and businesses to develop the skills they need (including delivering apprenticeships and other work-based learning). That significant investment needs to be targeted effectively, to meet the skills needs of specific regions and sectors and the wider Scottish economy.

Research prior to the Covid-19 pandemic suggested that Scotland's labour market faces a combination of skills shortages, skills gaps and skills underutilisation. Employers said that they had experience of:

• hard-to-fill vacancies caused by shortages of the skills they need
• people not being sufficiently skilled to perform their role effectively
• people being over-skilled and over-qualified for the job they are employed for.

Key sectors such as health and social care, business services and education are experiencing particular challenges in recruiting people with the skills they need. There is also a need to recruit and reskill people to respond to the climate emergency and advances in digital technology. The economic impact of Covid-19 may create permanent structural changes in the economy, with some sectors declining while others grow, and so reshaping the skills employers will need in future.

The Scottish Government, together with Skills Development Scotland and the Scottish Funding Council are the key public bodies charged with ensuring that the right skills are available at the right time, in the places where they are most needed. As the economy begins to open up and in time recover from the pandemic, clear leadership and effective partnership working will be critical factors in better matching skills supply to the needs of employers and learners. That's how the Scottish Government's investment in skills will ultimately help the economy to recover and grow.

I have asked Audit Scotland to look at how effectively the Scottish Government and its partners are working together to ensure the skills system responds to the current and future needs of people and businesses in Scotland. This includes examining how the skills system is operating, how much is spent on skills provision and the impact of Covid-19 on skills plans. I anticipate publishing a report on the findings later this year. More information on the audit can be found here.