The Future of Work and The Earn While You Learn Revolution
Speech to Work Foundation
Rt Hon Liam Byrne MP
Monday 3rd March 2014
It’s a huge pleasure to kick off National Apprenticeship Week with a keynote speech to welcome your report on the future of work.
For us in the Labour party, this is an important week in an important year.
We’re hugely proud of our record rescuing the apprenticeship system from the state in which we found it.
We’re very proud of the work of the National Apprenticeship Service, which we created.
And we’re proud of National Apprenticeship Week, which we began.
This week is a chance for all of us to celebrate the extraordinary job of our apprentices – and former apprentices – like Sarish Jabeen in my Hodge Hill team serving my constituents with such skill and commitment week in, week out.
This week is a chance for us all to say that we’re determined to do more to support apprentices, like Sarish, in the years to come.
And that’s what I’ve come here to say this morning.
Our starting point
Now, I am very glad that you’ve called your conference the future of work.
I’m glad because this year we celebrate a very important anniversary in the history of our party.
It’s the 70th anniversary of the famous white paper on full employment.
It was seventy years ago this year that Ernie Bevin stood up in the Commons to present that famous paper, replete with its famous first paragraph that henceforth:
“The government accept as one of their primary aims and responsibilities the maintenance of a high and stable level of employment after the war”.
The Labour party has is and always will be the party of work. We believe work is fundamental to your flourishing as an individual; we believe in the transformative power of the pride and dignity of a job.
And that is why we are determined to put jobs at the heart of our manifesto for 2015.
The government would like you to believe that everything in the labour market is rosy.
There’s a lot more jobs to go round they say.
Well, look: as someone who started work behind a fry station in McDonalds, I believe that any job is better than no job.
But I know too that a good job is better than a bad one, and right now, there aren’t enough good jobs to go round.
It was Ronald Reagan who said; ‘it’s true that hard work didn’t kill anyone but I figure why take the chance’.
The president was of course being charming.
But the truth is that the lack of good jobs today, means that it is harder than ever to make a living by working hard.
- Nearly 80pc of the jobs created since the election are in low skilled sectors.
- Average earnings are now £1,600 lower per year than they were at the last election.
- The average family has to work two hours extra each week, just to make what they did four years ago.
- The great wage crash is now almost proving as damaging to workers’ livelihoods as the global financial crisis caused by the banks.
I think it should be pretty clear that this is not the kind of country we want to live in.
A low pay, low skilled, low value added economy, out-paced and out-boxed by new powers, rising around the world and old nations who, unlike us, have got their act together.
We can’t go on like this. We have to change course. And this morning I want to sketch out how.
The Future of Work
Let me start with where you start; the future of work.
It’s no secret that there are some big forces at play.
Technology has now automated huge numbers of what were once, reasonably skilled, reasonably paid jobs. And sometimes it feels like what technology hasn’t killed, trade has moved to those parts of the world where workers are cheaper.
In America, economists Autor & Dorn are amongst many who’ve reported:
there’s been massive substitution of those ‘low skill workers performing routine tasks – such as book-keeping, clerical work and repetitive production and monitoring activities - which are readily computerized because they follow precise, well-defined procedures’.
It's created what some call the hour-glass; high skill jobs, and low skill jobs and very little in between.
This is exactly what is happening here in the UK.
Indeed, the Resolution Foundation tells us that jobs in sectors with a high concentration of routine tasks fell by 5% between 2007 and 2012.
But guess what: there may be an awful lot worse to come.
A book that a lot of people are reading right now is the Second Machine Age.
It's a positive book and its argument is simple:
Our ability to combine technology – processing power, cheap sensors, robotics, networks, social media, big data, means we’re now at an inflection point in our ability to combine and recombine technologies to do new things, revolutionising technology from Google’s driverless cars to better diagnosis of diseases.
- There’s now enough technology in a Nissan LEAF to render the car a fly-by-wire robot, the kind of technology that could revolutionise the logistics industry.
- GE already makes robots that can climb and repair wind turbines.
- Future Advisor already uses Artificial Intelligence that’s strong enough to offer personalised financial advice.
- Algorithms are taking on tasks once performed by para-legals, contract and patent lawyers.
- Oncologists at Memorial Sloan-Kettering Cancer Care use IBM’s Watson computer to provide chronic care and cancer treatment diagnostics.
What’s does this mean for jobs?
Well, academics at the Oxford Martin School now estimate that as many of 47 per cent of the jobs in our economy today may be automated.
First it was the blue collar jobs. Now it's the white collar jobs as well.
So what do we do?
Well, economists have worried about this kind of problem since JM Keynes flagged the issue of ‘technological unemployment’ back in 1930.
And as Keynes argued then, this can be a ‘temporary phase of maladjustment’ but only, I believe if we now get three things right.
First, we have to grow our knowledge-intensive industries; those firms in sectors like – computer programming and consultancy, pharmaceuticals and telecommunications - with a lot of intellectual property that they want to keep closely guarded.
Right now, those firms make up 1/3 of output, 1/3 of businesses but just one in five jobs.
Now if it was 1/3 of jobs, then we'd have 2.4 million more jobs in knowledge intensive industries.
Those jobs pay an awful lot more than average - £161 a week more – and that's why other countries are working so hard to put science and innovation at the heart of their growth plans. We should do the same.
Second, we have to foster enterprise, new business and start-ups like never before.
It’s why we’re determined to be the party of small business and enterprise.
But, third, you have to build a great escalator to these new well-paid jobs for people, no matter where they started in life.
Right now, for many people, that escalator is broken.
Now, we do well at getting young people on an academic track into university.
The changes we made in office have created one of the strongest higher education systems in the world.
But, we our vocational system is not world class.
In fact, it’s a long way from world-class.
Here’s what the OECD said about our country last year:
'England has too little vocational provision at post secondary level in comparison with many other countries, and relative to potential demand'. OECD P7
Just 10 per cent of the post secondary cohort is in vocational education and training - when many OECD countries have three times as many.
Neither our young people, or our employers think this is good.
McKinsey found that just 40% of UK young people believe that post-secondary education improves their employment prospects – that’s the lowest figure in the OECD.
Over two-thirds say that academic paths are more valued by society than vocational alternatives;
A third of employers now say that the lack of skills is the reason for entry-level vacancies and thanks to the destruction of our careers service, many young people are terribly informed about post-secondary choices.
So: what are the changes we need to make?
First, we have to create a gold standard technical qualification route for young people, with strong English and Maths, studies up to the age of 18
Today, Tristram Hunt is saying more about how we will create an aspirational new ‘National Baccalaureate’ for all school leavers which includes rigorous, stretching and labour-market responsive academic and vocational qualifications and skills;
How we will tackle the scandal of the more than 1 million young people not in education, employment or training by requiring schools to ensure their pupils progress post-16 – and use existing funding to support a radically transformed careers guidance system;
And how we will confront England’s international standing in maths and English by ensuring all young people continue to study assessed maths and English to 18.
Second, we have to at least double the number of apprenticeships on offer.
When it is harder to get an apprenticeship with Jaguar Land Rover than it is to get into an Oxford college, then I think it’s pretty obvious we need more.
In fact, there's a strong case for saying we need to double the numbers of high quality apprenticeships.
Right now, we have 140,000 young people who are not in education or training.
Surely most of these young people should be on an apprenticeship.
So we’ve said that we will set up a something-for-something deal with employers – giving industry much more control over skills spending and standards, and in return asking that they increase the number of high quality apprenticeships in their sectors and supply chains.
We’re also studying hard the reforms pioneered in Manchester, which has been testing a UCAS style system for apprentices – long before Nick Clegg announced it.
And we like the look of the extraordinary pioneered in Leeds, where the City’s new Apprenticeship Hub, has doubled the number of apprentices in the city especially amongst SMEs, which as we know are creating jobs much faster than big business.
Third, we need to show young people and their parents that apprenticeships are a route the top.
For many aspirational families, they worry that apprenticeship are a cul-de-sac and not a fast-track to greater things.
The evidence shows they're right.
I say: there should be no limits on how far an apprentice can go.
But that means revolutionising the number of apprentices who study university level qualifications.
Overwhelmingly, degree level education is the dominant course of post-secondary education.
There are 10 times as many people studying bachelor’s degrees as foundation degrees.
But the OECD found (in 2009) that the progression rate for apprentices at level 3 into higher education is just 6pc in the UK, slightly better than one in twenty.
'The weak articulation between level 4 and 6 programmes and university bachelor programmes is a serious problem'
That is simply not sustainable in the world that is coming.
If we’re to solve this, I think we are going to need a far imaginative reform for higher education than simply abolishing student number controls for universities.
We’re going to need real action to create student choice.
Over the next few weeks, I’m afraid you’re going to see the Conservative party go into election mode.
The story they’ll tell is simple.
The problems we face today can only be solved if we set out a bold plan for less government.
In the words of the authors of Britannia Unchained, they’ll say “the siren call of the statists’ must be resisted and the “deadwood from the public sector” cut back.
Well, I’ll share a secret.
It wasn’t too much government that caused the financial crash. And it wasn’t too much government that caused the wage crash either.
What we need today is some-one to fix the market, with a different kind of government. A smarter government, determined to act to help our country grow and create a society where no matter who you are or where you’re from, if you work hard, you’ll succeed.
That’s the country I want for my children and my constituents.
I’m some-one who has been very fortunate in life.
I went from behind a fry station in McDonalds in Harlow, to the Harvard Business School to start a business, to represent Hodge Hill with a seat in the Cabinet.
Today, my young constituents are denied those kinds of chances. More than one in five is unemployed and two thirds don’t get to go university.
I am in politics to change that.
I am in politics to restore the kind of social mobility that once upon a time we had in this country.
And I believe we can do it, but only if we change course.
I know the size of the task.
But with your help, I believe it can be done.
Thank you very much.
 Autor and Dorn, Services and Polarisation, American Economic Review, 2013.
 McKinsey, p.18.
 In Scotland the ratio isn't 10 to 1, it's 2 to 1.
 OECD, p45
 OECD, 46