Skills and qualifications are needed more than ever and at every level. The number of jobs needing no qualifications fell from 28% in 2006 to 23% in 2012; jobs requiring a degree rose from 20% to 26%. These trends are accelerating, driven by accelerating technological change, globalisation and the impact of the financial crisis.

It is essential that we invest in the right skills which will be used and developed at work. This is not just about meeting the needs of young people, urgent though it is to meet the challenge of youth unemployment. It is equally important to help those already in the labour market to upskill.

Employers are not standing still, they are upskilling to survive. These changes are the fastest shifts in the history of the Skills and Employment Survey since 1986. Contrary to speculation that employers are trading up to more readily available graduates, three quarters of graduates said their degree was needed to do their job.

Crucially, the premium which employers pay for graduates has not declined despite a doubling of graduate numbers. The number of jobs in the bottom third of the occupational hierarchy has been steadily declining and all the evidence is it will continue to do so. The number in the middle third is broadly stable and the number in the top third is growing.

Of course, within these bands there is much change. Competitor nations such as Germany or the USA are upskilling much faster. There are many sectors, such as retail, hospitality or social care where training is poor, stuck in low pay low skills equilibrium.

While many large employers train well, there is a long tail of SMEs who do no training. But the broad picture is that the economy is changing, albeit more slowly than our competitors. There are many good employers leading the way – but we need far more.

The priority is upskilling the excluded, particularly (but not exclusively) young people. Already there are almost no entry level jobs which, in practice, do not require level 2 skills in English, Maths and computer literacy. Most previously "unskilled" jobs such as labouring on building sites or working in shops or cafes now require basic entry qualifications.

The million young people looking for work include a rising number unable to meet the rising threshold for entry to work; alongside many over fifties who are similarly excluded. The labour market will no longer absorb the unskilled and unqualified. The welfare state cannot afford to do so. Helping them gain essential skills, and helping the system support all employers to be as good as the best, must be the priorities.