Why are skills important?
It doesn’t matter how good your product or service is, it’s your people that invent and adopt the new technologies and materials to make them even better, your people that build relationships with customers and your people that ultimately drive the competitiveness and profitability of your business.
When the people with the skills and experience your business needs aren’t available in the numbers you need, the repercussions can be serious and include:
Apply a skills shortage to a whole sector and the impact can be wide-ranging. ‘Failing to address the skills gap in the highways sector will hold the industry back and put at risk the essential infrastructure the UK needs.’ Christina Brown, HR Director at Balfour Beatty Highways, Investments, Plant & Fleet Services & Homes³
Earlier this year the Association of the British Pharmaceutical Industry (ABPI) warned the UK is falling behind Europe and the rest of the world in terms of numbers of students studying many STEM subjects vital for discovering the advanced treatments and technologies of the future.⁴ The result of not addressing the skills shortages could negatively impact the UK’s status as a world-leading R&D hub and the movement of highly skilled jobs abroad. Bad news for the UK economy in general and NHS patients in particular.
Why is there a shortage?
The lack of talent coming through in the UK’s manufacturing and technologies sector is a particular concern; at the moment, approximately 186,000 new engineers and manufacturers are needed every year until 2024, but we’re currently facing a deficit of 20,000 graduates annually⁶
The advance of technology means the skills employers need now are very different to even just 10 years ago.
Brexit: the impending end of free movement of labour is already being felt in specific sectors, like construction, and is expected to worsen when Britain actually leaves.
Full Employment: Britain’s economy is the closest it has been to full employment since the early 1970s. With the jobless rate at 4%, companies are finding it harder to hire the right workers.
Historic: The reality is that the skills shortage existed prior to the referendum in 2016.
Ageing workforce: An ageing workforce is causing problems in specific sectors – such as in construction.
Failure to attract young people: in their 2019 Annual Manufacturing Report, Hennik Research found that 57% of UK manufacturers believe the education system is disastrous for the industry and needs a total overhaul.⁶
Where are we now?
According to a new report commissioned by The Open University¹, the majority of organisations in the UK (91%) had struggled to find workers with the right skills over the 12 months prior to the study.
It estimates that the talent shortfall is costing a £6.33 billion a year in recruitment fees, inflated salaries, temporary staff and training for workers recruited with a lower level of skills than were needed for the post.
But it’s not just the additional expense involved in finding the right people, it’s the length of time the process takes and the impact that has on a business – for example preventing it from being as responsive and agile as it would like to be.
Having the right people in place is especially important to navigate through periods of change so given the current, changeable geopolitical and economic landscape, it is a real concern for business leaders.
Worryingly more than half of those surveyed by the OU expect the situation to deteriorate over the next 12 months
What can employers do?
Clearly the government and educational instructions will be instrumental in addressing the skills gap but employers can do their part too.
¹ The Open University Business Barometer 2018
² Transport Infrastructure Skills Strategy, Two years on. A report by the Strategic Transport Apprenticeship Taskforce July 2018