Make skills pay

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Visitors to the Commercial Vehicle Show at the NEC last month will have seen Skills for Logistics campaigning hard to persuade companies to take up public funds for training.

Skills for Logistics reckons UK logistics employers need £280 million to train 230,000 staff if the sector is to punch its weight in comparable sectors such as construction and engineering, contributing to the government’s target of 79 per cent of people qualified to Level 2 by 2011.

Logistics is the UK’s fifth largest industry employing more than two million people yet it and freight transport and distribution services are worth some £75 billion and growing.

But, while there is obviously a big task facing the industry, the US sub-prime crisis is casting dark clouds over the UK economy and the evidence is growing that companies in the logistics sector are reining in their development plans.

Manpower’s employment trends survey for the second quarter of 2008 points out that, once seasonal adjustments are applied to the data, employers in Transport and Communications are reporting the sector’s weakest outlook since the fourth quarter of 2005, with a net employment outlook of +5 per cent (the difference between those expecting to employ more and those expecting to employ fewer staff.

The Transport sub-sector, with a net outlook of -2 per cent, shows a considerable decline in hiring intentions for both the quarter-on-quarter and year-on-year comparisons – down 11 and 13 percentage points, respectively.

And the evidence from the major sectors served by the logistics industry is mixed at best. According to the CBI’s Distributive Trades Survey for March, retail activity remained subdued with high street stores reporting flat year-on-year sales. The survey said wholesalers also saw a fall in sales volumes on a year ago, but volumes were still higher than expectations. However they were expecting a further decline in sales in April.

While retailers are finding things tougher, life has eased for manufacturers owing to the strength of the euro against the pound. The CBI’s Industrial Trends Survey for March reports that healthy overseas demand helped manufacturers fill their order books and kept the sector growing despite the wider economic slowdown. However its March Industrial Trends Survey also showed that an increasing proportion of firms expect to put up prices soon, which will add to inflationary pressure in the economy.

These conflicting pressures on the industry are likely to put pressure on budgets at the time when the need to develop skills is growing. The National Employer Skills Survey 2005 for England showed that 16 per cent of logistics businesses had at least one vacancy while seven per cent had at least one vacancy that is hard to fill and five per cent had a skills shortage vacancy.

The main reasons for these gaps are low numbers of applicants and not enough people interested in the work. Some 15 per cent of employers identified an incidence of a skills gap within their employees and 20 per cent of these skills gaps were within managerial occupations.

The Skills Pay campaign, which is backed by the Chartered Institute of Logistics and Transport, the Freight Transport Association, the Road Haulage Association, the United Road Transport Union, and Business in the Community, highlights the poor uptake of logistics employers for training funds for public qualifications such as NVQs and Skills for Life. Skills for Logistics operations director Mick Jackson, pointed out that training staff is proven to reduce staff turnover and improve productivity, which in turn has a positive effect on the bottom line.

The logistics sector contains far more people with qualifications below NVQ Level 2, or with no qualifications, than the rest of the UK economy – some 45 per cent of the workforce.

At management levels, the sector is polarised. Some 29 per cent hold qualifications at or above Level 4 but 32 per cent have qualifications below level 2 or no qualifications at all.

Skills for Logistics has been working on developing its professional development stairway and as part of that has been consulting on proposals for logistics foundation degrees. The consultation document highlighted the fact that road transport and freight forwarding are the fastest growing areas of logistics, reflecting an increased reliance on third and fourth party logistics providers to facilitate the movement of goods on a global basis.

Skills for Logistics reckons that there will be little significant change in the size of the sector to 2014. However, replacement demand will be substantial, (a third of the current workforce) mainly due to the aging LGV driver workforce.

The document also notes that the sector is dominated by a male workforce with only 27 per cent of the workforce being female. For key occupations such as LGV driving the figure is less than one per cent. In terms of age groups, only 11 per cent of the workforce is between 16 and 24 years old while 41 per cent are over 45 years or age. Some eight per cent of the workforce is black and minority ethnic.

This points to new opportunities for recruitment and professional development in the logistics industry. While efforts to recruit staff from traditional sources are not meeting the demand, this suggests that there are real opportunities to draw in people from these relatively untapped demographics. And with government money going begging – it would be perverse not to take the Queen’s shilling.

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