A LANDMARK report which lays bare how Scotland's education system is failing half its youngsters, and the economy that needs them, has been hailed by business leaders as potentially "transformational" for Scotland.

The final report of Sir Ian Wood's Commission for Developing Scotland's Young Workforce, which received scant attention on publication last week, warned that the system is too focused on the 50 per cent of youngsters with academic aspirations. Its scathing conclusion was that the other half are given "fill-in things to do" until they leave school, and that "we are simply not preparing or equipping these young people for the world of work".

The skills gap, following public procurement, is the second key area in The Herald's SME-SOS campaign highlighting the roadblocks preventing Scotland's vital small business sector from helping drive economic growth.

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The commission's 39 recommendations include enabling SMEs to engage with schools and colleges to shape the vocational training they need, but are not getting, and subsidising apprenticeships in micro and small businesses as well as in schools.

They emphasise the need for quality work experience and for colleges to step up to help develop the workforce.

Liz Cameron, chief executive of Scottish Chambers of Commerce, said: "This report from Sir Ian Wood's commission is a landmark moment for the way in which Scottish business, the Scottish education system and the Scottish Government engage in terms of our young people and the end result has the potential to be transformational in terms of placing careers outcomes and business need at the very heart of the learning experience.

"For too long there has been a lack of recognition and support at a school level of those young people who wish to pursue vocational training and education."

Ms Cameron said schools, colleges and universities all had to allow for formal, structured careers guidance, delivered in conjunction with real local businesses. "That means that businesses must step up to the plate and that the public sector must embrace true partnership working that delivers directly both for young people and for the future needs of business and our economy. Things must change fundamentally - more of the same is not an option."

Ross Martin, chief executive of SCDI, said: "Scotland has a long tradition of educational excellence, where the ingenuity of Scots and the quality of our institutions have become known throughout the world.

"Yet many employers report that they cannot find the skills, experience and attitudes they need to grow, while significant numbers of our young people struggle to access the labour market to find meaningful ways in which to apply their energy and express their talents.

"This disconnect must be addressed if Scotland is to maintain its competitiveness in the dynamic world economy of the 21st century."

The SCDI said its research with employers had shown that the majority of businesses were committed to getting more involved in education and helping prepare young people for work. SCDI's national network of over 900 Young Engineers and Science Clubs in schools across Scotland was already channelling industry support and resources from many partners for key STEM (science, technology, engineering and maths) skills.

"There are many positive initiatives already underway, but employers and educationalists want a joined-up approach and greater simplicity," Mr Martin said. The report's recommendations around industry-led Regional Invest in Youth groups provided an opportunity to increase the impact of support already available, while creating a "single point of contact" to facilitate engagement between employers and education.

The Federation of Small Businesses said the report was "a timely and comprehensive intervention and one we urge the Scottish Government to take seriously".

Colin Borland, head of external affairs, said: "At its core, the primary purpose of education at all levels is to prepare people for work. The report makes it clear that our education system is not adequately preparing young people for the workplace and more needs to be done, views that very much chime with those of our members."

He added: "For many years, the vocational education system and the life chances of school and college leavers have been marginalised, playing second fiddle to universities and the graduates they produce. The FSB has argued that schools and colleges need to better engage with their local business community. Despite the time and cost pressures facing small businesses, one in five of Scotland's small firms are already active in their schools and colleges, and around a third would get more involved if institutions made increased efforts to build relationships with them."

Mr Borland said the FSB warmly welcomed the recommendations to begin apprenticeships in schools and provide additional support and subsides for micro and small businesses interested in taking on an apprentice.

"These moves will go some way to address the monetary and time costs small firms face when recruiting from the Modern Apprenticeship scheme," he said.

The FSB, however, has concerns that selective adoption of the report could lead to "a proliferation of groups that become bureaucratic, dominated by big business".