Service sector SMEs and essential skill provision in the 16–25 year old labour market: Evidence from Northern Ireland

Abstract

This paper uses an employer survey of Northern Ireland (NI) service sector small and medium-sized enterprise (SMEs) to assess the nature and extent of labour market shortages arising from a lack of basic skills among the 16–25 year old workforce. Relative to literacy and numeracy skills, employers were found to place a slightly heavier weight on the more generic skills of attitude, communication and motivation. The rate of skills related to unfilled vacancies among service sector SMEs was found to exceed that of high-tech/ high value-added sectors which have traditionally been the focus of policy makers; it was also found that in instances where such skill shortages were due to a lack of basic literacy/ numeracy skills they exerted a negative impact on productivity performance. While employers were found to be highly supportive of existing delivery frameworks they were also open to alternative methods of basic skill acquisition based around the interests of young people and delivered outside the traditional qualifications framework. Finally, the lack of awareness among employers of a number of basic skills accreditation schemes and awarding bodies raises serious questions with respect to the effectiveness of such programmes.

Keywords:

• SME
• skill shortages
• productivity
• service sector

Notes

1. Twenty-seven percent of enrolments on essential skills courses in NI are aged 16–25 and 40% are in employment.

2. Basic skills are officially defined as ‘the ability to read, write and speak in English, and to use mathematics at a level necessary to progress at work and in society in general’ (Basic Skills Agency).

3. The sample included firms employing between three and 50 workers. Firms employing less than three were excluded on the grounds that they were unlikely to have actively recruited.

4. In actual fact, 33 firms stated that they had experienced unfilled vacancies as a result of a lack of basic skills, however nine firms did not provide any details on the number of vacancies, therefore the rate of basic skill shortage is likely to be an underestimate.

5. The unfilled vacancy rate was calculated as (unfilled vacancies / (total employment + unfilled vacancies)*100).

6. Indeed from a practical perspective a model cannot be estimated due to the lack of a significant stage one probit.