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How Local Skills Drive Economic Development

Places are about people. While it might seem obvious to say it, people are a major resource for economic development. Indeed, I would argue that our human resource is the most important resource we have.

In Australia, we still often consider resources that are in the ground or growing in the fields, before we think of people. Not enough attention is given to how we can act locally to develop people so they can become more globally competitive and competent.

The OECD describes global competence as a multidimensional capacity: ‘Globally competent individuals can examine local, global and intercultural issues, understand and appreciate different perspectives and world views, interact successfully and respectfully with others, and take responsible action toward sustainability and collective well-being.’

Australian mineral and agricultural resources have conspired to encourage us to overlook human capital. Other countries less fortunate than us, with fewer natural resources, have been forced to focus on human capital development and, as a result, are much better prepared for the demands of the twenty-first century.

It has never been more important for Australia to develop skills that will lift us to the next level and compete successfully in global markets. Our time as the Lucky Country is running out.

Local, regional and state governments have an essential role to play in pursing coherent skills strategies that enhance our productivity and competitiveness. These skills not only nurture local creativity, civility and participation, they also increase our technical and management capacities to innovate, act entrepreneurially and run world-class businesses.

In what follows, I provide a brief overview of some recent perspectives on the development of local skills. It is important to note the need for better skills across all occupations and industries, as well as the integration of learning pathways that join-up local education providers with employers and industry.

Finally, while education and training must be connected to the demands of the labour market and the capacity of local economic actors to compete in global markets, let us not forget that it is also about a human experience. Our education and skills help us to be more creative, to participate and engage with one another and to adapt in a rapidly changing society.

Talent-Driven Economic Development: A New Vision and Agenda for Regional and State Economies

The Brookings Institute in the USA has produced a 2019 report on the role skills development to boost economic growth.

Focusing on the role of regional and state government bodies, this research argues that ‘workforce capabilities far surpass any other driver of economic development.’

Four key themes are presented:

  1. Economies grow when they develop and deploy their people in ways that maximise their productive potential. Structural shifts in the labour market now mean that human capabilities are the fundamental driver of regional and state economic development. How talent is developed and deployed is of fundamental concern to local and state economic development organisations.
  2. Economic development objectives—business growth and worker prosperity—are mired by two labour market challenges:(1) talent development pathways are too unclear and unequal, limiting the supply of prepared workers; and (2) private sector hiring and training norms have shifted in ways that undermine inclusive talent development and deployment. Corporate sector training in the US tends to disproportionately go to highly educated workers, which limits inclusive talent development.
  3. Economic development organisations have not been designed to address these labour market challenges, hindering their effectiveness in a talent-driven economy. While workforce quality is paramount to core economic development interests, such as business attraction, retention and expansion, the availability of skilled labour is very important to investment location decisions.
  4. Economic development organisations can reorient their activities and expand their capabilities by generating talent intelligence, developing talent incentives and supporting talent systems. Economic development organisations can play a role in workforce development, economic development and education. This involves investing in research, mobilising resources and developing relationships.

Priorities for economic development

Finally, the paper proposes five discrete priorities for economic development leaders:

  1. Realign state economic development spend to invest in proven training solutions, such as customised job training grants and community college partnerships.
  2. Target economic development incentives towards opportunity-rich business practices that help build local talent pipelines.
  3. Develop and disseminate new skills-based hiring tools that facilitate more efficient and equitable hiring practices.
  4. Test new local talent financing solutions, such as revolving learning funds, that target training toward high-demand jobs.
  5. Experiment with new regional talent exchange intermediaries that connect middle schools, high schools, community colleges, higher education institutions, and in-demand skills providers with businesses in key growth sectors.

Follow this link to the report.

Developing Local Skills in a Global Market (OECD)

Other work on local skills development comes from the OECD’s Local Economic and Employment Development (LEED) Programme in Paris. It its contribution to the OECD Skills Strategy in 2012, the programme emphasised the importance of delivering locally shaped responses.

It is at the local level that collaborative approaches can be taken to not only boost skills levels but also attract and retain talent; better integrate people into the labour market and better match skills supply and demand.

To be successful, says the LEED Programme, such actions require the breaking down of policy silos within government policy sectors and ensuring that different types of stakeholder (e.g., colleges, universities, employers, employment services, unions, economic development agencies, social enterprise) are able to work effectively together.

Key proposals include:

  • Joining up local skills strategies, with a particular focus on young people. These strategies include efforts to address youth unemployment, as governments seek to secure school-to-work transitions and prevent the occurrence of a ‘lost generation’ following the economic downturn.
  • Improving how human capital is utilised in the labour force. Local education and training institutions can play a central role in supporting employers as they move towards higher-value added product market strategies through R&D, technology transfer, networking and the provision of relevant training, particularly management training. More and more, such strategies are focusing on traditionally low-skilled sectors which employ significant amounts of local people such as care, retail, tourism and low-tech manufacturing.
  • Leveraging training and skills development in SMEs. Small firms typically have lower levels of training activity than larger firms. However, SMEs tend to participate in knowledge intensive activities to learn new operational techniques and procedures, performed largely inhouse. Policy makers can help to support such informal transfer of knowledge through the development of employer networks and local skills ecosystems.
  • Skills for entrepreneurship. The more local economies are able to support the creation of new enterprises, the more likely they are to create new jobs and employment opportunities. Success in setting up new business is underpinned by entrepreneurs having a comprehensive set of skills and competencies.

Developing Local Skills in Australia

More recently, in 2019, the OECD produced a report on Engaging Employers and Developing Skills at the Local Level in Australia.This report looks at how local vocational education and training programmes serve as a valuable educational pathway to improve the transition from school to work. Within the vocational education and training (VET) system, quality apprenticeship programmes can provide employers with a skilled workforce that is more agile in a rapidly evolving global economy while also supporting new employment opportunities for disadvantaged groups.

The report focuses on how to better engage employers in apprenticeship and other work-based skills development programmes aligned with growing sectors of the local economy. A key part of this report was the implementation of an employer-based survey, which gathered information from over 300 Australian employers about their skills needs and barriers to apprenticeship participation. The report also provides information on four case studies, including Sydney Metro and STEMship in New South Wales, Collective Education in Tasmania, and the Dream, Believe, Achieve programme in Queensland. The case studies demonstrate how local organisations are building stronger business-education partnerships.

Follow this link to the report.

Also, the OECD (2016) Global Competency for an Inclusive World report is worth a look. You can link to it here.

Cities of Learning (United Kingdom) – the promise of place-based and socially inclusive lifelong learning

This topic is gaining momentum in the UK too. Recently, The RSA launched its Cities of Learning initiative. This is a new approach for activating a ‘grassroots, city- based, mass-engagement movement around learning and skills.’ It seeks to close gaps in opportunity and empower places to promote lifelong learning as core to their cultural and civic identity.

It seeks to be a ‘galvanising force for bringing people together with a city’s economic and social aspirations.’

The initiative promotes a ‘skills spine’ for skills development. This is a framework
that articulates the knowledge, skills and character attributes that cities will seek to build as they develop the learning experiences, digital credentials, learning pathways, and opportunities. Each city will have a locally tailored dimension of their skills spine, linked to
their own priorities, needs and target groups.

Local skills spine

The structure of the skills spine includes four layers:

  1. Universal core. This is the fundamental building blocks of modern learning, contained
    in the OECD’s 2030 Framework. This links knowledge, skills and values to the development of competencies which in turn help people engage with and act in the world.
  2. City of Learning layer. This is the capacities and capabilities that characterise what it means to be a learning citizen and a learning place. It includes knowledge, skills and character attributes that are: (a) Interpersonal, social and emotional; (b) civic and global; (c) creative and entrepreneurial; (d) demonstrate ethic of craft and business awareness; and (e) digital.
  3. City-specific layer: This is the local learning and skills priorities. This includes key: domains (i.e., thematic areas of focus such as STEM or health and wellbeing), knowledge and skills, and dispositions (i.e., locally important character and behaviour traits, such as resilience and confidence).
  4. Strategic layer. This is the formal local, regional and national priorities and frameworks. Incorporating this layer will help participating cities to create links between informal learning and formal opportunities around work and education.

Follow this link to the RSA report.

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