There is a rising interest in both skills policy and industrial policy in OECD countries following the economic downturn. But how can skills policy best support industrial growth? In the UK, the coalition government is arguing for an industrial policy which is bottom-up, supporting networks of employers and helping to build productive local supply chains. There is simultaneous investment in a more 'employer-led' skills policy, in order to better tackle skills shortages and gaps. But is an employer-led skills policy the best way of boosting industrial growth in all UK regions? Are there potential market failures in employer-led policies of which the public sector should be aware? This article warns against taking an overly simplistic approach to skills development, arguing that while skills policies should be flexible to the needs of employers, there is still justification for investing in a broad educational curriculum at the local level. Further, policy-makers may need proactively to help employers to better use skills in some regions in order to boost productivity and growth.
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