Agenda item 4: The Skill Shift: preparing for an AI-driven economy

Social Partnership Council (SPC) members are asked to: 

• Note the update on the challenges of developing AI skills and capabilities in both the current and future workforce.
• Discuss and agree whether there is an appetite to undertake work on the skills and capabilities associated with AI of the current workforce. If agreed, to consider how this work should be progressed. 

1. To provide an update to the Social Partnership Council (SPC) on the importance of developing an AI literate and skilled workforce, and how this might impact Wales’s strategic ambitions for AI.
    
2. The SPC is asked to consider this paper – which builds on similar work undertaken by the Workforce Partnership Council (WPC) - and decide if the Council would like to explore the issue in greater detail.  

3. The Digital Strategy for Wales, a Programme for Government commitment, sets out how the Welsh Government aims to harness the power of digital and data for the good of people and businesses in Wales. Mission 3 of the Strategy – Digital Skills – commits to “Create a workforce that has the digital skills, capability and confidence to excel in the workplace and in everyday life.”
    
4. From a specific AI standpoint, the Welsh Government’s strategic aims for AI adoption are to:

• Act as a catalyst for economic growth.
• Enable improved public service delivery.
• Benefit the lives of everyone in Wales.

5. The WPC has already acknowledged the disruption being created by AI and developed and published its guidance on the likely impacts on the public sector workforce in Wales.
    
6. At a previous SPC meeting in December, there was a consensus on the importance of AI implications for the workforce, the need for further consideration by the SPC, and agreement to avoid duplication of the WPC work already undertaken.  
    
7. Officials have therefore developed this paper outlining the importance of developing and sustaining an AI literate and skilled workforce - both now and in the future – along with some of the potential barriers in doing so.

8. Economically, estimates indicate the potential for GDP growth by 5 to 10%, and productivity gains of as much as 25% over the next decade resulting from AI adoption alone.
    
9. A study by the International Monetary Fund (IMF) also suggests around 40% of global employment will be affected by generative AI, 85 million jobs will be impacted by 2030 and millions of new jobs created that don’t currently exist. We need to plan for the labour market changes which are ahead, through having workforce strategies in place to minimise job losses (and the impact of any which do occur), to identify those jobs which will be created and ensuring we are upskilling our existing workforce to meet the challenges and opportunities ahead.
    
10. AI will lead to different skills requirements, fuelling demand for currently scarce skills such as prompt engineering, data science and/or coding/developers, all of which have a high market premium.
     
11. To fully capitalise on AI’s potential, we must also respond to rapidly changing labour market needs by creating – and sustaining – a workforce that is AI literate and understands the opportunities, risks, potential and limitations of the technologies across a variety of different sectors and contexts.
     
12. The adoption of AI at scale is a multi-faceted challenge. We will need to influence the right conditions to be created and coalesce, which will include high-quality data, AI infrastructure but also the capacity and capability of our people to enable the technologies to make a real difference.
     
13. AI literacy and skills will both enable people to thrive in the digital economy and ensure they can use and engage with AI technologies in a responsible, ethical, and informed way (aligned with the WPC’s own work in this space). As AI technologies rapidly become an integral part of society, these skills will become essential for everyone, including our workforce, and a key enabler for “A Prosperous Wales” goal of the Wellbeing of Future Generations Act.

14. In January, the UKG published their AI Opportunities Action Plan which has a significant  focus on the development, retention and attraction of a robust AI talent pool. Its initiatives include:
    •  Scaling AI expertise - training tens of thousands of additional AI professionals by 2030, aligning with the projected demand for skilled workers.
    •  Addressing diversity in AI - the plan advocates interventions like hackathons and competitions aimed at underrepresented groups and expanded AI conversion courses.
    •  Alternative Education Pathways - promote apprenticeships, employer-led upskilling, and self-learning opportunities to make AI careers more accessible.
    •  Attracting Global Talent - Efforts to streamline visa processes and create scholarship programmes (e.g., a flagship undergraduate and master’s AI scholarship) will attract top-tier international talent to the UK, alongside head-hunting elite AI professionals to high priority R & D roles.
    •  Lifelong Learning and Workforce Adaptation - AI will augment many jobs while replacing others, necessitating reskilling programmes to help workers transition to AI-enabled roles. Inspired by models from Singapore and South Korea, the UK will integrate AI skills and digital literacy into its education and training systems.
     
15. Recommendation 14 of the Action Plan proposes to “accurately assess the size of the skills gap.” The UKGs response will involve DSIT, the Industrial Strategy Council and Skills England working together to develop an assessment of the AI skills need in England only.
     
16. Officials are already in discussions with DSIT to ensure Wales benefits from the delivery of the Action Plan, and the related investment. However, as skills is a devolved matter the skills gap mapping will not be undertaken for Wales. SPC may therefore believe that we should take forward our own assessment of the skills gap.

17. The Economy, Trade and Rural Affairs Committee recently completed a short exploratory inquiry into AI and the Welsh economy. Skills emerged as a clear barrier for AI adoption for businesses in Wales with the Federation of Small Businesses Wales citing that:

• 46 per cent of all small businesses say that they are concerned that they lack the knowledge and/or skills or that their workforce needs to utilise AI successfully.
• 20 per cent of small businesses are concerned that their workforce lacks sufficient skills to utilise AI.

18. Artificial Intelligence (AI) is already a global disruptor with the potential to transform the way we live, work and do business.
     
19. As part of Welsh Government’s Economic Mission, the Cabinet Secretary for Economy, Energy and Planning is undertaking an AI short-term review. The review is considering the impact AI has on business and the economy, including on the workforce.
     
20. The criticality of skills and talent to make the most of AI technologies has been raised as part of the review, particularly from industry. 

21. Back in 2021, the Centre for Digital Public Services (CDPS) commissioned a review of HE/FE skills pathways across Wales. The report noted that public sector organisations lack the right skills in place to adapt to digital transformation, highlighting apprenticeships as a means of helping address this shortage.  
     
22. In health and care, an AI Commission has been established to identify, develop, and promote the use of AI in a safe and ethical regulatory environment in Health and Social Care in Wales. Skills is a specific workstream that the Commission is exploring.

23. AI is arguably already introducing generational change, with our youngest citizens almost certain to grow up in a world dominated by the technologies.
     
24. We must also be cognisant of a variety of different factors which may come in to play in addressing the challenge of AI skills and literacy:

• How does the public sector in Wales attract and retain the talent required for the scale of digital transformation needed?
• Is there sufficient school workforce capacity in digital/computer science?
• To what extent are we able influence universities to extend the opportunities in the AI/Data Science space?
• Should there be a specific focus on vocational routes for AI skills, training and qualification?
• What might the impact be of the loss of the only AI Centre for Doctoral Training in Wales, based in Swansea University?
• If and how should the issue of highly skilled graduates opting to leave Wales to enter the labour market elsewhere be addressed?
• How might we begin to tackle the significant and sustained investment that will likely be required to support large-scale workforce upskilling/re-skilling?
• To what extent will the relatively short remaining Government term be a limiting factor on any proposed interventions?
• How can AI literacy be promoted as a whole-society challenge?

25. The SPC is asked to note the content of this paper and consider whether there is a need for the SPC to further develop work on AI literacy and skills and, if so, how.
     
26. Options to progress the work could include:

• A digital/AI skills gap analysis be undertaken alongside the UKG’s planned activity for England, in direct response to the AI Opportunities Action Plan.
• A refresh of previous HE/FE skills assessment work, looking at the extent of our current AI post-16 provision in Wales.
• Commission more formal research to create a baseline of evidence across pre-16 education, qualifications, careers, further and higher education, private, public and third sectors to inform the Council’s next steps.

27. SPC members are asked to consider if there is an appetite to undertake more detailed work in this area and, if so, how this work should be progressed. 

• There is potential for differential impacts across different groups of people, depending on how jobs are impacted by AI technologies
• There is a need to ensure the development of diverse pipelines of future skills to maximise equity of opportunities for everyone.