British employers blamed for £754bn brain drain

Concerns raised as employers use smaller proportion of nation’s natural human talent and skills

Whitehall Editor

British employers are using a smaller proportion of the nation’s natural human talent and skills than at any time since statisticians first started measuring the trend, it emerged yesterday.

The Office for National Statistics has revealed that the “talent deficit” is now costing the UK economy £754bn a year, as well-educated graduates find it hard to get skilled work after leaving university. The figures could go some way to explain why – even when GDP is growing – UK productivity remains stubbornly low.

For the last 10 years the ONS has been attempting to measure what it describes as “human capital” – effectively the knowledge, skills and competencies that workers bring to the economy.

In the years between 2004 and 2007 it found the value of the UK’s human capital stock increased steadily, at an average of 3.1 per cent a year. This increase was driven by a growth in employed working-age people and an increase in the skills level of the population.

But the recession has led to falling employment rates and lower earnings resulting in a significant diminution of the natural skills used. In 2012 the value of the UK’s employed human capital was £17.15trn; £68bn lower than in 2011. At the same time the gap between the UK’s full human capital and employed human capital was the largest since estimates began in 2004 at £754bn.

Economic studies have shown that countries with higher levels of human capital have greater potential output and income in the future. Controversially, the ONS weights younger workers higher than older workers – suggesting they are more productive, innovative and skilled than those nearing retirement.

The total value of women’s human capital was around 59 per cent of men’s, reflecting the shorter average time they spend in paid employment and their lower average labour market earnings. Ruth Spellman, chief executive of the Workers’ Education Association, told the BBC that Britain was failing to invest in continuing workplace education.

“Productivity has been falling and will continue to fall if we continue to take a short-term view [towards education],” she said. “If you look at statistics in other countries, 60 per cent of adults carry on learning throughout their lives while in this country the figure is 20 per cent.”

Neil Carberry, CBI director of employment and skills, said it was well aware that the UK’s workforce was “critical to economic success”. “That’s why the CBI is campaigning for more effective schooling, better apprenticeships and a more flexible system of work-based further and higher education that will help people gain new skills throughout their working life,” he said.

But TUC general secretary Frances O’Grady said: “Employers need to recognise their responsibilities to train their staff. While the last few years have seen employers making more effort to hold on to staff than in previous recessions, job losses mean the economy has still lost a trillion pounds worth of skills and talent since the crash.”

Capital idea: Defining human value

The ONS describes human capital as a measurement of a person’s competencies, knowledge, social attributes, personality and health, including creativity.

All of these factors enable a person to work and therefore produce something of economic value.

The technical definition adopted by ONS is provided by the Organisation for Economic Co-operation and Development (OECD). It identifies four main ways that human capital can be developed:

* Learning within the family and in an early childcare setting.

* Formal education and training.

* Workplace training.

* Informal learning (for example through daily living, civic participation and on-the-job training).

Start your day with The Independent, sign up for daily news emails
Life and Style
Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
Life and Style
Arts and Entertainment
The sight of a bucking bronco in the shape of a pink penis was too much for Hollywood actor and gay rights supporter Martin Sheen, prompting him to boycott a scene in the TV series Grace and Frankie
Have you tried new the Independent Digital Edition apps?
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Lena Headey as Cersei Lannister
TVSPOILER ALERT: It's all coming together as series returns to form
footballShirt then goes on sale on Gumtree
Terry Sue-Patt as Benny in the BBC children’s soap ‘Grange Hill’
voicesGrace Dent on Grange Hill and Terry Sue-Patt
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
Arts and Entertainment
Twin Peaks stars Joan Chen, Michael Ontkean, Kyle Maclachlan and Piper Laurie
tvName confirmed for third series
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Guru Careers: Graduate Editor / Editorial Assistant

£16 - 20k: Guru Careers: A Graduate Editor / Editorial Assistant is needed to ...

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine