ANNEX A LANGUAGES, BUSINESS AND EMPLOYABILITY
1. The Working Group was aware of a range of research evidence that highlighted the importance of the link between performance in languages and business and the economy. It also heard anecdotal evidence that a lack of language skills among young Scots could disadvantage them when it came to employment opportunities. Scottish Government commissioned an internal consultant to conduct a literature review of recent research evidence and to talk to representatives from a range of Scottish businesses. The Working Group's recommendations draw on the consultant's report Talking the talk, so that Scotland can walk the walk: A rapid review of the evidence of impact on Scottish business of a monolingual workforce' which is available as an appendix to the overall findings of the group on the Government's website. This report references several recent UK-wide studies and seeks to extrapolate the findings from these studies into a Scottish context.
What does research tell us?
2. The 'Talking the talk' report draws on the 2007 report Costing Babel: the contribution of language skills to exporting and productivity' produced by economist James Foreman-Peck. This report compares levels of investment in language skills in the UK with those of our competitors and suggests that raising British standards of language competence to the rest of the world average would translate to a between a 3.5% and a 7% point 'tax' reduction on British trade. Taking account of the global financial downturn, in 2011 Foreman Peck suggested that this language 'tax' represented figures of between £7-17 billion. The central thread of this argument has not been challenged and while Professor Foreman-Peck acknowledges that he has not looked specifically at the Scottish situation, he has suggested that because the Scottish economy is more reliant on small and medium sized enterprises, the arguments could be more relevant here than for elsewhere in the UK. Taking the revised figure for 2011 and calculating it pro rata the minimum effect of a language 'tax' for Scotland would be over £0.5 billion.
3. Talking the talk also lists a number of studies from business organisations that regularly survey their members about demand for languages. Foremost amongst these is the regular CBI survey of their members on education and skills. For a number of years this survey has recorded concern by employers at the lack of language skills. They have identified that while a lack of language skills may not often lead to a direct loss, it dissuades businesses from entering into new global markets. It suggests that export businesses who place a high value on language skills achieve on average 45% more in sales. The CBI 2011 survey indicated that 76% of employers are not satisfied with young people's language skills, while 61% perceived shortfalls in international cultural awareness among school and college leavers.
4. In April 2011, the CBI's Making the UK the best place to invest set out a vision for the UK and listed the English language as a strength, but pointed out that "the UK is attractive to overseas business looking to enter the European market, but is struggling with the barrier of working in multiple languages"'. In November 2011 the CBI, in association with Ernst and Young produced Winning overseas: boosting business export performance, a report which seeks to demonstrate in a five point plan how UK business could hold its own on the global stage. This reported concern that the UK's skill base does not support export growth, commenting "Employers who can communicate in two or more languages - combined with an understanding of local cultures - can make all the difference in the conduct of business, consolidating relationships with existing suppliers and customers and opening the way to new contracts''.
5. The 2011 Education and Employers Task Force report highlighted the importance of languages to international trade at the level of individual enterprises, as a determinant of exporting success and to the nation, by underpinning growth. Demonstrating the growing awareness of this barrier at EU level, they quote a 2006 survey; in which 11% of SMEs acknowledged that they had lost business as a result of a lack of language skills and at a UK level. But this is also supported by Scottish evidence in research by Scottish Enterprise in 2010. More than 6% of exporting companies identified lack of language skills as a barrier; ahead of export finance, tariffs or trained staff more generally.
6. Talking the talk reports on views based on 15 interviews with representatives of businesses in Scotland. These companies or organisations included technology, engineering, food and drink exporters, hospitality and the petrochemical industry. They ranged in size from multinational companies and trade organisations to independent SMEs exporting a small range of products. These interviews confirmed that the business decisions taken in their organisations were influenced by the level of language skills available. Several felt that they are more cautious about approaching new non-English speaking markets and instead established strategies for coping with the skills gap - these varied from meeting the gap by employing foreign nationals; to avoiding more difficult markets altogether. Most companies were frustrated by the lack of skills of young people coming out of education.
7. The cost to Scotland of the lack of language skills was illustrated by a major petrochemical company, which cited a lack of language speakers as inhibiting their ability to bid for European sales jobs. The company also explained how employees were unable to take the opportunity of furthering their careers at the highest levels at European headquarters due to their lack of language skills.
8. More generally, the Universities Council of Modern Languages ( UCML) commission has demonstrated that international experience is a definite advantage in the jobs market, yet the number of UK graduates with languages and international experience is falling, hampering their ability to compete on the international jobs market.
Email: Pam Semple
Phone: 0300 244 4000 – Central Enquiry Unit
The Scottish Government
St Andrew's House