Introduction: The case for level 3

The West Midlands region has enormous economic potential. Prior to the pandemic, we experienced unprecedented growth exceeding the rest of the UK, with rising productivity, jobs and employment. But this potential is also accompanied by a number of long-standing challenges, including around low pay, skills shortages and limited social mobility.

Although qualification levels are improving, they remain lower than the national average. Around 1 in 10 adults in the WMCA area have no formal qualifications. Just over half (54.9%) are qualified at level 3 or above, compared with 61.5% nationally. As a result, employers face persistent skills shortages, with around 1 in 4 vacancies classed as ‘hard to fill’, particularly in roles that require advanced and/or higher skills.

This qualifications gap is important for individuals. Research shows that people with a level 3 qualification are more likely to be employed, earn more when employed and less likely to claim out of work benefits than those qualified at level 2 or below. On average, level 3 qualifications result in a 16% earnings return and a 4% increase in the likelihood of being employed. People with higher level qualifications and who develop higher level skills throughout their working lives are more resilient to labour market change. An analysis of WMCA job postings over the past 12 months shows that, on average, vacancies requiring a level 3 qualification have an advertised salary nearly £4k higher than those requiring a level 2 qualification.

It is important for businesses and the wider economy too. There is a positive link between the number of high skilled workers in an area and both the generation of new ideas and the ability of firms to convert new ideas into higher output and productivity. There are similar links between a firm’s absorptive capacity to make the most of innovations and the workforce’s overall skills levels. Improving the region’s economic growth and tackling poor levels of productivity, relies in part on boosting the skills of the workforce.

Taken together, this evidence points to the value of strengthening our support for adults to achieve either a first level 3 qualification and/or to engage in training that further develops their skills at this level – for the purposes of developing new skills, improving performance in their current role, supporting progression at work, increasing income, changing career, meeting employers’ skills needs etc.

And the benefits are not all economic. Research shows that engaging in adult learning or training and improving qualifications is associated with improvements to physical and mental health, improved educational achievement and health of children, higher levels of social connection and community engagement, and greater tolerance of diversity and higher levels of trust.