SCOTTISH firms face a major challenge to improve skills in the workplace as the prospect of population decline, alongside the Brexit-sparked fall in EU immigration, threatens economic growth.

The warning, from David Coyne of the Centre for Work-based Learning, comes on the heels of official figures which show the birth rate in Scotland fell behind the death rate in the final quarter of 2018.

There were 12,580 births in Scotland between October 1 and December 31, the lowest quarter four total since civil registration began in 1855, while there were 14,484 registered deaths over the period, according to National Records of Scotland.

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Mr Coyne said the challenge brought by the falling birth rate is all the more acute in light of disruption caused by technological change, including artificial intelligence, and Brexit.

“In economic terms, that is particularly challenging, because the population is getting older,” he added. “The working age population – 16 to 64 year olds – as a percentage of the total population is shrinking, and that has obvious implications, because we are all going to need cared for, we are all going to need housing provided etcetera.

“With a shrinking working age population that is incredibly challenging.”

Mr Coyne observed that the UK’s departure from the EU will be especially felt by firms in rural areas with low populations, including hotels, if it does stop people moving freely from the bloc to live and work in the UK. EU immigration has fallen steadily since 2016, the year of the Brexit vote, and is at its lowest level since 2013, according the Office for National Statistics.

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The Centre for Work-based Learning, an offshoot of the publicly-funded Skills Development Scotland, has published a report examining how different countries have adapted to similar population challenges.

Singapore “jumped out” as a similarly small and forward-thinking economy, which has embraced work-based learning for people of all ages – not just those at the start of their careers. Its government formed a programme to fund this commitment to continuous learning in 2016.

“People are going to be working for 40 years, and if they are not systemically acquiring new skills during that time, then productivity in the workplace stagnates,” Mr Coyne said. “Companies aren’t able to adopt new technologies because they don’t have people who can work it, and it is incredibly expensive for companies to address the challenges of all the automation, the artificial intelligence, [and] the big data that we see.

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"There are companies like Amazon and Airbnb who make a competitive leap over others. But the vast majority of companies can’t afford the investment in skills. That’s why the Singaporean model is really quite interesting, because it is a state-backed lifelong learning approach.”

Mr Coyne added: “This idea of work-based learning throughout your career, throughout your working life, is a really effective way of companies and the economy remaining competitive.”

Mr Coyne said there are some good examples of work-based learning offered by companies across Scotland.

But he warned: “The challenge for a country like Scotland is getting more activity in the middle ground. Everybody goes through a company’s mandatory first aid or fire evacuation course.

“And often you will get top managers being put through MBAs (master of business administration). But to actually get more activity in the middle ground, that’s where people will step up and do the job above them [and] you get the productivity gains.

“You get innovation gains as well. There are companies like Bosch Power Tools in Stuttgart, where they take their apprentices and put them in an R&D lab with some of the old hands. Some of the innovations have come from the apprentices just coming in and saying, why don’t we try attaching this bit to that bit?”