A radical change in the way young people and adults are trained is needed to plug the skills gap and stop Britain lagging behind, a key report has said.
Five million adults have no qualifications at all
In the government-commissioned review, Lord Leitch recommends making full or part-time education or training compulsory up until the age of 18.
He wants 95% of British adults to have basic numeracy and literacy by 2020.
Employers should have more say over training and a new careers service should be created in England, he adds.
He also warned there were too many vocational qualifications, many with few benefits.
The report warns that even if current targets are met, skills in the UK will still lag behind comparable countries in 2020.
Lord Leitch said: "Without increased skills, we would condemn ourselves to a lingering decline in competitiveness, diminishing economic growth and a bleaker future for all. The case for action is compelling and urgent."
The report makes clear that in the light of the huge challenge from growing economies such as China and India, the UK cannot afford to stand still.
He says that despite progress, parts of the UK's skills base remain weaker than those of other developed nations.
The report points out that five million adults lack functional literacy and more than 17 million have difficulties with numbers.
More than one in six youngsters leave school unable to read, write or add up properly, it adds.
The report urges ministers to commit to a "compelling new vision" and to become a world leader in skills by 2020.
By this date Lord Leitch wants to see:
The prize for this achievement is huge, the report says.
- 95% of adults gain basic skills in literacy and numeracy, with the government primarily responsible for funding
- More than 90% of adults with GCSEs or vocational equivalents with funding shared between the government and employers
- Apprenticeships boosted to 500,000 a year
- More than 40% of adults with degrees or higher level qualifications, mostly funded by employers or individuals
Not only will society become more prosperous and productive, with lower unemployment and levels of poverty and inequality, but there will be a net financial benefit of £80bn over three years, it adds.
But, he said, it will come at a cost.
He wants government spending on higher education - currently at 1.1% of the GDP - brought in line with the US, South Korea and Australia, all of which spend at least 2% of their GDPs on it.
Employers too should increase their investment, currently estimated at £33bn, he said. One third of employers provide no training at all.
The CBI said companies will wholeheartedly endorse Lord Leitch's central tenet that the skills needs of employers - and their employees - should be put at the heart of the UK's adult training system.
The Association of Colleges, which represents 400 further education institutions, backed the plan to extend education and training for everyone up to the age of 18.
It was a disgrace that 200,000 young people were out of work or in jobs with no training, it said.
AoC chief executive Dr John Brennan added: "If Leitch is right, and a dramatic expansion in the nation's skills base is required, this should not be at the expense of individuals' opportunities, but a radical rethink of how everyone - employers, the state and individuals themselves, should invest."
Mark Fisher, chief executive of the Sector Skills Development Agency, said the report recognised that employers must be "in the driving seat of workforce development".
But TUC General Secretary Brendan Barber responded: "The clock is ticking for the one in three employers who fail to train."
He added that Lord Leitch's call on employers to publicly pledge their commitment to increase skills sent a strong message to those employers who short change staff, and the UK economy, by refusing to train.
Deputy general secretary of the Association of School and College Leaders Martin Ward said employability was a very important aspect of the education.
Soft skills such as team working and good communications skills were also wanted by employers but the exams system often worked against efforts to give students these.
A coalition of 32 organisations from across adult learning have written to Gordon Brown warning that the failure to fund adult learning for all will have serious economic consequences.