How Severe is The Skills Shortage in The UK and Why Does it Exist?

The results of the UK Employer Skills Survey 2015, a nationwide survey of employers published on 28th January 2016, reveal an increasingly severe skills shortage in the UK.

It is tempting to look at the rate of UK unemployment, at its lowest (5.2%) in nearly 10 years, and view it as a sign that the economy is improving; however, it does mask a wider and very serious problem, the skills shortage.   

Of the 91,000 employers surveyed 19% of them reported at least one vacancy in 2015.  Of these 928,000 vacancies, a third were classified as “hard to fill”; of these vacancies 69%, 209,400, were labelled a “skills shortage vacancy”.  In short, over 1 in 5 vacancies in the UK are difficult to fill as a result of a shortage of skills. 

 84% of the employers with skills shortage vacancies cited increased workload for other staff as an issue.  Perhaps more seriously 49% cited the skills shortage as a reason for failing to meet customer services objectives and 40% blamed it for a delay in developing new products or services.  The full 243 page survey can be seen here. 

This applies a huge break on the UK economy, whose productivity (measured as GDP per hour worked) lags on average 20% behind the other G7 countries.  We are 33% less productive per hour than our German friends!

Every day we see companies that are desperate to hire people in various sectors that just cannot find the people they need to help their business grow.  So whilst unemployment is down and the economy is moving in the right direction it is clear growth is being impacted by the skills shortage.

Why has this happened?

The BBC asks, “Is Education in the UK to blame?” but the results of the survey show this is unlikely.  The top 3 technical and practical skills lacking among applicants were:

• Specialist skills or knowledge – 64% (of applicants)
• Solving complex problems – 39%
• Knowledge of products and services offered – 37%

With the greatest respect to the education system they cannot be expected to provide students with specialist skills and knowledge of products and services in a particular industry.  Even a student studying a degree or course specifically linked to an industry will lack practical knowledge until they have actually done the job. 

Instead the skills shortage is directly linked to the economic crash of 2007 and subsequent recession from which we have only recently begun to emerge. 

As a result of the recession capital was scarce, banks stopped lending, growth was negative and companies, indeed industries, stopped hiring people.  The serious impact of lost jobs was felt immediately but we are now experiencing a secondary impact of this period, the skills shortage.

The employment market started to improve at the beginning of 2014 but prior to that we had 6 full years where a large percentage of UK companies were not hiring new staff.

That is 6 years where entire industries did not employ and train new staff, 6 years of University graduates and School leavers having to accept jobs that were not in their chosen field and 6 years of people losing their jobs and being unable to re-enter employment in the same field.  The current skills shortage is the result.

Unfortunately there is no quick fix for this.  In order for your company to find someone with 2 years’ experience you may well need to train them for, well, 2 years!  The reality is that everyone, companies and employees, will need to take responsibility for this if the UK is to thrive again.  

Thank you for reading.  Please leave us a comment if you have been personally affected by the skills shortage.