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Why the public sector must embrace digital tech to stimulate economic development

23 May 2023

The future of work in the UK in 2023 is a topic of great interest and concern for many individuals and organisations, especially when viewed through the three-pronged lens of social, environmental and economic impacts and as we head out of the COVID pandemic.

With the rapid advancement of technology and the increasing pace of change, the nature of work is changing, and new skills and capabilities are required to remain competitive. The recent arrival of Chat GPT has even further accelerated this shift and there are serious concerns that governance, law and democracy cannot keep pace with the paradigm changes evolving in the fourth industrial revolution.

I want to highlight a couple of key trends and challenges that seem most pressing – especially in terms of economic development and how these may implicate both positive and negative outcomes in the wider public sector. There are also major opportunities, particularly for how digital technology and AI can stimulate economic development and help address skills gaps.

One of the most pressing challenges facing the UK is the skills gap. According to a recent report from the Confederation of British Industry (CBI), around 42% of employers are struggling to fill vacancies due to a lack of skills among applicants. This is particularly true in the tech sector, where demand for digital skills such as coding and data analysis is outstripping supply. The impact of this skills gap is felt across the economy, as businesses struggle to innovate and remain competitive. This is especially acute in the public sector where wage stagnation and austerity has crippled many areas, particularly those that are not considered to be ‘essential’ in delivering statutory public services.

To address this challenge, there is a clearly a need for greater investment in training and education, and also more medium and long-term planning for skills and less political volatility and false starts. This translates from central right down to local where councils operating at the coal face of demand are not only the most depleted in terms of skills for the future, but also at a low bar in terms of digital and technological maturity (whereby the use of modern tools could free up workforces to re-skill in more important areas allowing automation and digital/AI to manage repetitive or standardised skills).

Initiatives such as apprenticeships, lifelong learning, and upskilling programmes, which can help individuals to acquire the skills they need to succeed in the digital economy, have helped in many areas. However, the public sector has not had sufficient investment to manage the status quo whilst developing its workforce through proper public sector reform which embeds technology as a key enabler and builds new skills that can utilise this rather than butt up against it. It also requires a broader cultural shift, where organisations and individuals alike are committed to continuous learning and development with a more systems view of the return on investment this may provide, rather than hardline approach to traditional ‘efficiencies’ which are almost always siloed and at the expense of positive change.

In addition to addressing the skills gap, digital technology has the potential to stimulate economic development in a number of ways. One key area is through the creation of new jobs and industries. For example, the rise of AI and robotics is likely to create new roles in areas such as machine learning, data analysis, and automation engineering. This also helps to understand human workforce role and skills that can use these areas as a platform to accelerate rather than be fearful of the impacts they may have on job loss. This has the potential to improve the quality of work and the wellbeing of employees and ensure we move with the inevitable technological change, and can be a force for good in creating more meaningful and purpose-driven roles and careers.

The future of work will be complex, dynamic and often but also presents many opportunities for growth and development and, dare I say it, paradigm shift in public service provision which in turn can catalyse economic prosperity. By investing properly and effectively across public, private and third sectors we can address skills gaps, create new jobs and industries, improve productivity and efficiency, and enhance the wellbeing of our workforce. By doing so, we can build a more prosperous and inclusive economy that benefits all individuals and organisations.

Paul Frainer is a Director of the Institute of Economic Development. He is a Partner Local Government at TPXimpact.