The UK Skills Crisis
Executives within mid-size UK businesses are aware they need to address the talent gap to grow
Ask any senior executive in the UK what is the biggest obstacle to business growth, and they will likely reply, “Finding the right people.” A skills shortage is leaving many vacancies unfilled, often in the most critical positions, and inhibiting a company’s ability to expand. New orders become difficult to fulfil and innovation is held back because technological expertise is so hard to find.
Poor productivity affects job creation and also leads to higher prices. A recent report by the Local Government Association1 estimated that the skills shortage will cost the UK £90 billion a year by 2024 unless urgent action is taken. Meanwhile, the CBI has called for a major overhaul of training provision in the UK,2 with a focus on higher skills.
Concerns raised by both organisations are reflected in Allied Irish Bank (GB)’s own business survey. This reveals that the shortage of experienced or qualified staff has a negative impact across all sectors, affecting the ability to recruit and retain personnel at many levels. Of all respondents, 79 per cent agreed or strongly agreed that the skills gap affected recruitment and retention. Healthcare and manufacturing feel the impact acutely, with 61 per cent saying they agreed that a skills gap affected their ability to recruit and retain employees. In healthcare, 33 per cent said they strongly agreed with this, while 25 per cent strongly agreed in manufacturing. In professional services 62 per cent agreed, while 13 per cent strongly agreed.
Across all sectors, 21 per cent disagreed that the skills gap was affecting recruitment. The highest proportion of respondents who disagreed was in the hotels sector (47 per cent), followed by professional services (26 per cent).
If our survey paints an alarming picture, the reality is that the UK skills gap is not a new problem. Successive governments have sought solutions to a shortage of qualified and experienced personnel in the UK for many years, as part of broad inquiries into poor productivity and a lack of competitiveness compared to other major economies. But a new sense of urgency surrounds the debate about skills as a consequence of Brexit which, at the very least, is likely to curtail numbers of skilled workers from Europe who are willing and able to come to work in the UK.
With this in mind, the government has reaffirmed its commitment to creating three million apprentices by 2020. With many employers making a financial contribution for the first time via the Apprenticeship Levy, there are hopes that the initiative will gain greater acceptance and attract the most talented apprentices to well-funded higher-level schemes.
But apprenticeships will only ever be part of the solution to the skills gap, and will take several years.
A “79 per cent agreed the skills gap affected recruitment and retention”
Executives within mid-size UK businesses are aware they need to address the talent gap to grow. The UK skills crisis to make an impact. The UK faces another significant problem in terms of skills, concerning changing demographics. The workforce is getting older, with many more people currently due to retire than are likely to enter the workforce for the first time. Employers are having to reassess their recruitment practices, focusing greater resources on the recruitment and retention of older workers.
This means investing in retraining for middle-aged employees to ensure that their skills are refreshed for new technology and working practices. It also requires reasonable adjustment in the workplace to allow workers to stay in full-time employment for longer. There are a number of benefits from an employer’s perspective, including the retention of a loyal and committed member of staff whose skills may be difficult to replace, and who may have strong relationships with valued clients. An older, experienced employee can also play an important role in mentoring and training younger staff. Contrary to popular belief, older workers are also likely to have a better attendance record at work than their younger colleagues.
In an era of skills shortages, age is not the only barrier that must be challenged. Male-dominated sectors of industry are failing to take full advantage of the skills and qualifications of female candidates. Not only is discrimination illegal; it also makes no business sense to turn away a talented candidate on the basis of their gender. Men and women can do physically demanding jobs equally well, but more needs to be done to encourage recruiting more women, particularly in sectors like manufacturing and construction.
Retaining the most talented employees can also be a challenge, and it is not always about remuneration. Employees want to feel that they are respected as members of a team, and that their views and concerns are taken seriously. A good working environment is important. Employees are more likely to be loyal if they are given the tools and training they need to do their job well. Responsible employers also understand the benefit of flexible working, to help employees achieve a better work–life balance.
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