South West Regional Skills Enterprise and Employment Analysis 2007/2008

Final Report

4.9 Higher Level Skills

4.9.2 High Value Added Companies

Skills in England 2005 highlights that there is now convincing evidence which demonstrates that operating or shifting into higher value markets with increased profit margins requires relatively higher level skills amongst the workforce. However, this is not a sufficient condition. Employers also need access to, for instance, capital. The major issue is how to persuade employers to move into higher value markets and increase their demand for higher level skills, when they are currently returning a reasonable profit. Research suggests that, for many organisations, if they do not begin to make that shift when they are profitable, they may find their markets beginning to disappear at a later date.

Skill demand results from product market strategy. Workforce skill levels tend to be higher where the product market strategy is a high-value one. Further evidence in relation to High Performing Workplaces points to the need for a range of technical and practical skills in combination, relating to:

• Innovation;
• Expertise in research and development;
• Bringing new products to market.

Skills in England 2005 further highlights that emerging economies are capturing increasing shares of high value-added industries and activities. While this need not be at the expense of UK jobs, it increases the need for the UK to have a world-class skills base.

In order to develop high quality, internationally competitive products and services and adopt new and innovative technology and production processes, companies require access to a highly skilled workforce. The ‘knowledge economy’ is not just about science and technology; it is about highly skilled individuals adding value to all industries. For such knowledge-based companies, talent and education become the most valuable assets, and the decisions they make on the location of knowledge-intensive activities are likely to be increasingly linked to the pool of highly-qualified workers into which they can tap. At the same time, however, knowledge is becoming a more ‘tradable’ commodity and knowledge intensive companies are increasingly accessing higher level skills on a national and international basis.