It’s time for schools (and other public services) to start engaging with microbusinesses

It goes without saying, but it’s worth reiterating: the health of our economy and society depends upon a skilled and capable workforce. The question is, who’s responsible for making it happen?

We’ve all heard the familiar complaint that young people emerge from education lacking work readiness. According to a survey undertaken by UKCES, close to 40 per cent of employers say that 16 year old school leavers are poorly or very poorly prepared for the world of work. And this view is shared by young people themselves. The most recent CBI/Pearson Education and Skills survey shows that a third of those about to embark on their working lives are not confident they have the necessary skills to do so.

The response in recent years has been for schools to engage more closely with employers, offering students everything from work experience to careers advice to one-on-one mentoring. And in theory everyone benefits from these arrangements: schools see improved attainment rates, employers have a chance to shape their future workforce, and students themselves leave education with the skills they need to make their way in life. A growing body of research reveals just as much. According to one interesting study, for every employer contact that students make at school they can gain as much as a 4.5 per cent wage premium in later life.

It is little wonder then that business engagement with schools has been increasing. The same CBI/Pearson survey finds that 67 per cent of businesses now have connections with secondary schools, up from 57 per cent in 2012. Links with primary schools are also growing, up from 20 per cent in 2012 to 36 per cent this year. To have such a sharp expansion in such a short space of time is clearly promising – even if short-term work experience continues to make up the vast bulk of opportunities available to students.

But the concern here is not how many employers are engaging with schools – we are reaching record levels. Rather it is about the type of employers. While large businesses dominate these arrangements, microbusinesses (firms with 0-9 employees) are few and far between. According to a revealing survey undertaken by YouGov in partnership with EDGE, less than a third of microbusinesses are currently involved with work-related learning in schools, compared to three quarters of large businesses (see graph below).

The reason this is problematic is because microbusinesses are the backbone of the UK economy. According to BIS they make up close to 95 per cent of all businesses, a third of all employment and a fifth of total turnover. They are also the biggest source of jobs for the unemployed in particular. A recent Federation of Small Businesses report indicated that around 40 per cent of all unemployed people moving into the private sector do so through finding work in microbusinesses (this includes self-employment).

We can safely assume then that microbusinesses are one of the largest employers of school leavers. So why is that they don’t engage with schools to shape their future workforce in the way others do? Time and resources must be one barrier. Poor awareness of opportunities is probably another. But it feels to me as though we need to flip the question: why is that schools don't engage with microbusinesses?

My sense is that the lack of microbusiness-school partnerships are indicative of a much wider bias towards larger firms in the UK. Whether it is public services, local authorities or the media, most of us simply don't acknowledge or understand the real scale of the microbusiness community. These firms are the hidden (and growing) force that make our society and economy function as it does, yet we continue to ignore their presence.

Benedict Dellot is a Senior Researcher in the RSA's Enterprise team. You can follow him on Twitter @BenedictDel