In recent years, Northern Ireland has made significant progress in strengthening its skills and economic performance. Skills of youth have been improving and are now above the OECD average in reading, mathematics and science, and the share of the labour force with a tertiary education has risen. Moreover, Northern Ireland’s economic output has been steadily increasing, and other areas continue to see progress, with education, jobs, health and accessibility to services all improving over the past two decades since the Good Friday Agreement.

The COVID‑19 pandemic will likely reverse much of this positive performance. While the public health crisis requires the most immediate policy focus, large-scale policy responses will be required to provide immediate support to those affected, as well as to promote economic recovery once containment measures are lifted. Skills policies are an essential component of any exit strategy. Skills can have a positive impact on the economic recovery, and a resilient and adaptable skills system can help to mitigate economic and social shocks in the future and could help to prepare for challenges posed by megatrends, such as digitalisation and technological change, an ageing population, and climate change.

Other persistent and future challenges remain. Northern Ireland continues to experience high rates of economic inactivity, its labour productivity rate is 17% below the United Kingdom (UK) average and, despite improvements, the economy is still characterised by several large, low value-added sectors. Furthermore, current and projected skills imbalances present challenges for skills systems and the labour market, skill levels of adults are below those of many other OECD countries, and employees are not using their skills to their full potential in workplaces. Moreover, many of these skills challenges are rooted in poor governance arrangements across policy areas and levels of government.

Northern Ireland has already implemented a range of strategies and reforms to create a skills architecture capable of addressing many of these challenges. Building on a tradition of skills strategies, including the 2011-2020 overarching strategy Success through Skills - Transforming Futures, Northern Ireland is currently developing a new skills strategy. To support this process, the OECD and the government of Northern Ireland identified four priority areas for improving Northern Ireland’s skills performance, which are the focus of this report. The key findings and main recommendations are summarised below.

Skills imbalances can negatively affect economic growth through their effects on increased labour costs; lower labour productivity growth; and slower adoption of new technologies. Reducing skills imbalances could therefore help Northern Ireland to enjoy significant economic and social benefits. To reduce skills imbalances, Northern Ireland should: enhance the provision of career guidance; strengthen the responsiveness and flexibility of the tertiary education and VET systems; reduce economic inactivity to minimise skills shortages; and improve labour mobility to meet skills demand.

The main recommendations are:

• Complement recent strategic reforms to career guidance provision across all providers, by developing clear, common, transparent and accountable quality standards.

• Introduce funding model reforms to ensure a proportion of grant funding is conditional on graduate employment outcomes.

• Better meet Northern Ireland’s skills needs through a more regional approach to attracting skilled migrants, including through broadening the remit of the current cross-departmental migration strategy group to examine labour mobility.

A culture of lifelong learning can be defined as the shared set of beliefs, values and attitudes, and resulting behaviours, which are favourable towards learning across the life course. Creating a culture of lifelong learning is crucial to ensuring that individuals actively participate in adult learning after leaving the compulsory education system. To create a culture of lifelong learning, Northern Ireland should: start the development of a culture of lifelong learning early in life; increase motivation of adults to learn; and remove barriers to access adult learning opportunities for individuals and employers.

The main recommendations are:

• Publish a single, comprehensive strategy setting out a holistic vision for adult learning across different cohorts of learners.

• Establish a ring-fenced skills fund to subsidise the provision of training opportunities and apprenticeships.

• Extend the offering of blended (i.e. including an online component) approaches in further education (FE) colleges, by developing a common online learning platform.

The effective use of skills in workplaces has potential benefits for employers, employees and society as it can help raise productivity and innovation in businesses, and help increase wages and job satisfaction for employees. Public policy makers can work with employers to help create the conditions or provide direct support for strengthening skills use in workplaces. To this end, Northern Ireland should: strengthen management and leadership capabilities; develop engaging and empowering workplaces; and strengthen support structures for businesses.

The main recommendations are:

• Develop a new strategy for management and leadership capabilities to raise awareness of the challenge, provide a co-ordinated approach and set out a direction for action.

• Ensure sufficient provision of management and leadership programmes for micro and small businesses by introducing new programmes or expanding existing ones.

• Improve information on business support programmes for growth and innovation, especially for micro and small businesses, including by raising the profile of nibusinessinfo.co.uk and launching diagnostic tools.

Effective governance arrangements are essential to support Northern Ireland’s performance in developing and using people’s skills. The success of skills policies typically depends on the responses and actions of a wide range of actors (e.g. government, educators, workers, employers). To strengthen the governance of skills policies, Northern Ireland should: effect sustainable funding arrangements and commitment for an overarching strategy for the skills system; increase co‑ordination and information distribution across the whole of government; and improve employer engagement in the governance of skills policies.

The main recommendations are:

• Commit all relevant decision makers and ministers (including the first minister and deputy first minister) to guarantee support and sustainable financial resources to achieve strategic goals as part of a binding, cross‑departmental Skills Strategy for Northern Ireland.

• Increase co‑ordination in skills policy (e.g. to implement the proposed skills strategy) by introducing a central oversight body with representatives from all relevant departments and arms‑length bodies.

• As a result of mergers of high‑level employer engagement bodies, implement a central skills needs advisory body to advise government on skills policy.