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Industry 4.0: How Can Universities Respond to Future Labour Market Needs

18 Mar 2019 | Elizabeth Shepherd Analysis of Labour Market Intelligence (LMI) at the local, regional or occupational level can provide universities with a valuable strategic decision-making tool.

Analysis of Labour Market Intelligence (LMI) at the local, regional or occupational level can provide universities with a valuable strategic decision-making tool. In anticipation of the forthcoming Advance HE Surveys and Insights conference in May, Elizabeth Shepherd, Director within the IFF Research Higher Education team shares insight into how universities can harness the analytical power of LMI. 

Supporting the UK economy

Within the 2017 Industrial Strategy, the UK government outlined several Grand Challenges facing our economy that will shape Britain in the decades ahead. These challenges, the Government suggests, involve developments in technology that are set to transform industry in the UK and internationally, and present ‘an invitation to business, academia and civil society to work together to innovate and develop new technologies and industries in areas of strategic importance to our country’.  They emphasise the scale, speed and complexity of the fourth industrial revolution, and that public and private sector must work with universities to put the UK at the forefront of this seismic global change. 

So what role could universities play to support the UK economy as we move towards Industry 4.0? 

It is certain to be a multi-faceted role that will include innovation through R&D, increased university – industry partnership and opportunities for international academic collaboration. Most fundamentally, however, universities are under increasing scrutiny to ensure they provide a talent pipeline of highly and appropriately skilled workers. Skills that will enable graduates to support economic growth, drive innovation and meet the evolving needs of the labour market of the future – the needs of Industry 4.0. 

Graduate experience

Graduate labour market performance is influenced by their learning experiences (amongst other personal characteristics), and other pursuits like extra-curricular activities or part-time jobs whilst at university. These experiences should provide graduates with the technical knowledge and transferable skills needed to fulfil their potential as highly skilled workers. However, as illustrated by the Grand Challenges posed by the Government within the Industrial Strategy, UK industry and the employment landscape are quickly evolving. Linked to this, so are the technical knowledge and skills they require. 

The IT sector in the UK is clearly at the forefront of Industry 4.0 and subsequent demand for highly skilled graduates. A report produced by the then UK Commission for Employment and Skills entitled Working Futures suggests growth in the UK IT sector will significantly outpace growth in the wider economy in terms of both output and employment between 2014 and 2024, as shown by the graph below taken from the report.  

Figure 1: Sectoral prospects, Working Futures 2014 – 2024  

Figure-1-Sectoral-prospects-Working-Futures-2014-2024

The future of IT

The latest edition of the Working Futures series, published in 2016, provides a comprehensive and detailed model of the future of the UK labour market. It projects the future size and shape of the labour market by considering employment prospects by industry, occupation, qualification level, gender and employment status. The report suggests that: 

‘Technological progress supported by strong capital investment within the information technology industry will be a major factor in stimulating long-term growth, even though it is likely to weaken employment growth in some traditional roles.’

Insight, if accurate, that will impact traditional and non-traditional occupational profiles, and the types of skills and technical knowledge needed within the IT sector. The next round of Working Futures projections are due to be published next month by the Warwick Institute of Employment Research. These will include future prospects for output, productivity and employment by detailed industry sector. 

Labour market projections of this kind can provide invaluable tools for universities, for whom ensuring the successful employment of graduates has become a significant priority. This in part is due to the prevalence of metrics designed to assess rates of graduate entry into employment. Deliberate emphasis on delivering high levels of graduate employment throughout university strategy is therefore not unexpected. Resulting from this, important questions are being raised surrounding how best to align labour market demand and higher education supply. 

IT insights

Working closely with universities to explore these types of research questions gives us a unique insight into how best to use data to guide strategic portfolio development and align higher education provision more closely with graduate outcomes – data our Higher Education team know intimately. Studies like Working Futures, Graduate Outcomes and the Employers Skills Survey provide a rich and highly contextual source of labour market intelligence (LMI). Understanding how this can be used to support university strategic planning is something that the IFF Higher Education team are actively involved in.

Take the Employer Skills Survey (ESS), for example, one of the largest employer surveys conducted in the world and a study we are immensely proud to have run for the last decade. The study, based on responses from over 87,000 employers, provides a detailed understanding of the level and nature of employer demand for new staff and the ability of the labour market to meet this demand. When employers report vacancies within their business it can either be a positive indication of growth or highlighting where they have been unable to recruit individuals with the right skills. Within the study vacancies are categorised into three types; Vacancies, Hard to fill vacancies, and Skills-shortage vacancies (SSVs). An SSV is a type of vacancy caused by a lack of skilled or qualified individuals to take the job. Of all vacancies reported in 2017 across the UK, 22% were SSVs. In real terms, of just over 1 million vacancies reported, over 220,000 were vacancies that were hard to fill because of reported skill shortages – SSVs. 

The real value of the scale of ESS comes with the analytical power it brings at a local, sectoral and occupational level. Detailed analysis shows that just over 11,000 SSVs throughout the UK are reported from within the Information and Communications sector. Around half of these 11,000 SSVs are within three key occupations; Programmers and software development professionals, IT user support technicians, Web design and development professionals. Analysis by Local Enterprise Partnership provides insight by geography, suggesting that of all vacancies in the Information and Communications sector in Greater Manchester, 52% are a result of skill shortages, in comparison to only 16% in the South East.  

Future labour market needs

In response, by harnessing this detailed level of LMI, could universities throughout the UK consider expanding their own provision to better meet the localised needs of Industry 4.0, and in this case the IT sector? Should they consider offering new courses to equip graduates with skills relevant to the evolving IT industry? Or new modes of delivery that harness innovations in technology, allowing students to learn flexibly using new digital solutions, whilst working within the sector?

Detailed analysis of LMI can be resource intensive and produce data that are complex to interpret. However, interpretation of these data can provide a valuable strategic decision-making tool, enabling universities to support graduates of the future to become highly skilled participants of Industry 4.0. 

Elizabeth Shepherd is a keynote speaker at the Advance HE Surveys and Insight Conference on 8 May 2019.

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