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Digital skills as an increasingly important component of the skills mix

City-REDI, University of Birmingham

This blog post has been produced for the Greater Birmingham Chambers of Commerce to provide insight on the findings of the Birmingham Economic Review.

The Birmingham Economic Review 2019 is produced by the University of Birmingham’s City-REDI and the Greater Birmingham Chambers of Commerce, with contributions from the West Midlands Growth Company. It is an in-depth exploration of the economy of England’s second city and is a high quality resource for organisations seeking to understand Birmingham to inform research, policy or investment decisions.

This post is featured in the full Birmingham Economic Review 2019 and the Summary Review. These are available here.

Over the last twenty years there has been concern about the ‘digital divide’ and associated inequalities in access to opportunities, knowledge, goods and services. People who do not engage effectively with the digital world are at risk of exclusion, both socially and economically. Digital engagement is about: (1) access to computers, smartphones and an internet connection; (2) digital skills to use such devices; and (3) how people deploy those skills in a positive and effective way.

As the number of non-users of the internet has declined over time concerns over access have diminished. In the West Midlands 22 per cent of adults were defined by the Office for National Statistics in 2012 as non-internet users. This proportion had declined to 11 per cent in 2018. Yet as access to digital devices has becomes ever more integrated into everyday living these people remain at risk of exclusion.

There is increasing policy interest in ensuring that the population is equipped with at least basic digital skills. These comprise managing information (e.g. using a website to search for information), communicating (e.g. sending a message via email), transacting online (e.g. buying services from a website), problem solving (e.g. verifying sources of information online or solving a problem with a device or digital service using online help), and creating content (e.g. completing an online application form). Importantly these skills are not only concerned with technical aspects of using devices, but also about filtering, using and generating information. Acquisition of basic digital skills people can provide a gateway to benefits (in an era of ‘digital by default’ services), e-learning, careers information, job vacancies, employment and higher earnings. Recent research shows that overall roles requiring digital skills pay 29 per cent more than roles that do not, with the differential being greatest at higher skill levels. This earnings differential is indicative of digital skills being one of three key skills contributing most to skills gaps in the UK according to the 2017 Employer Skills Survey, at a time when digital skills are increasing only slowly.  In the West Midlands, the proportion of the population with the five basic digital skills in 2018 was 76 per cent compared with the UK average of 79 per cent.

Beyond this threshold level of basic digital skills the Industrial Strategy identified Artificial Intelligence (AI) and data. They are transforming business models across many sectors and are also seen as new industries in their own right. As a result there are likely to be job losses in occupations where digital skills are used to undertake routine tasks. Conversely there is a projected increase in occupations where digital skills are used creatively, to foster innovation and raise productivity and to solve problems.

Business surveys highlight the ever increasing speed of technological change. This means digital skills requirements will change over time, making it difficult to make a clear distinction between essential and specialised digital skills, especially as the latter may be context-specific. It also highlights the importance of ongoing reskilling, which will increasingly involve e-learning – in turn requiring possession of a threshold of digital skills. In the West Midlands the Digital Skills Partnership, bringing together tech firms, businesses, universities, colleges and training providers is working to improve local people’s skills and qualifications.

Overall, the picture is one of firms in many sectors facing difficulties in recruiting people with digital, analytical and programming skills, especially in combination with a range of other skills: it is not digital skills in isolation that are important, but the way the way that they are an integral component of a broader skills mix. Evidence suggests that a mix of digital skills in combination with managerial and leadership skills will be increasingly important. This in turn has implications for innovation, which is intertwined with a growing need for digital skills. In some instances recruitment difficulties are due to national skill shortages. Retention is an issue too. Research with firms in the Professional and Business Services sector in Birmingham highlights difficulties in retaining sought-after skills, with poaching from inside and outside the sector. This reflects the mobility of ‘top talent’ across sectors and underscores the importance of the ‘total employment offer’ and quality of life in Birmingham in attracting and retaining such workers.

Professor Anne Green (pictured) and Dr Abigail Taylor
City-REDI, University of Birmingham