THE Scottish Government will today respond to the report on developing the nation's young workforce which business leaders have welcomed as potentially "transformational" for the Scottish economy.

Minister Angela Constance will set out the government's initial reaction to the work of the commission headed by Sir Ian Wood, which earlier this month warned Scotland's education system was failing 50 per cent of its pupils by ignoring their vocational needs, at cost to the economy.

The Herald's SME-SOS campaign aims to highlight the unlocking of small business potential in three key policy areas, including the SME dimension in the skills debate.

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The Wood Report uncovered evidence that less than 30 per cent of Scottish businesses have contact of any kind with education. Only 27 per cent of employers offer work experience opportunities, only 29 per cent recruit directly from education, while a mere 13 per cent have Modern Apprentices.

Among its 39 recommendations, are that businesses across Scotland should be encouraged and supported to enter into three to five year partnerships with secondary schools. It recommends: "Every secondary school in Scotland and its feeder primaries should be supported by at least one business in a long-term partnership."

The commission also urges the creation of "regional industry-led Invest in Youth groups", partnerships between colleges and national industry sector groups and leading companies, Skills Investment Plans and Regional Skills Assessments, and an 'Invest in Youth' accolade to raise standards.

Colin Borland, head of external affairs at the Federation of Small Businesses, said: "The FSB has consistently 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.

"We welcome moves to make it easier for our members and the wider small business community to get involved in the education system, or indeed take the lead. However, we need to be careful that the proposed approach does not see a proliferation of groups that become bureaucratic, dominated by big business and duplicate existing initiatives."

The FSB hopes that colleges will not see a partnership with a big firm, to deliver a set number of work placements, as job done. Mr Borland said: "If there is a mandatory format for relationships, it will favour large companies."

Sir Ian Wood, commenting on his report, stressed the need to upgrade apprenticeships, at "level 3 and above", to restore them as one of Scotland's main training pathways. Allowing some to be started in the final year at school would hopefully unlock demand from young people - providing the demand was there from employers.

Sir Ian admitted: "There has been consistent concern about the difficulty many young people face in accessing a Modern Apprenticeship. It shouldn't be difficult to set up a relevant service to aid young people seeking an apprenticeship and to help employers looking to recruit."

For SMEs and micro businesses, in a recommendation welcomed by the FSB, the commission says: "A package of support should be offered to small businesses to encourage and equip them to recruit young Modern Apprentices."

This should include training support for employer and apprentice, and "a clear and simple recruitment incentive to reduce the cost".

Meanwhile the Scottish Building Federation has said increasing number of companies are looking to take on apprentices over this year. But managing director Vaughan Hart said: "At the same time, an overwhelming majority of employers are concerned that we aren't taking on enough apprentices to meet current demands."