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Addressing the skills shortage in the UK

Steve Jebson

04-07-24

Skilled Workforce at work

The most common issue facing our clients today is people.

Recruiting, retaining and getting the most from their teams is a theme which we hear every day.  The good news is,  there are things you can do to address this challenge.

“Employer investment in skills declined 19% per employee between 2011 and 2022 as far back as 2016.” Source New Economics.Org

The UK is grappling with a significant skills shortage. This issue is not just a buzzword but a real challenge that’s impacting various sectors and it’s probably affecting your business too.

The talent gap is wide and growing from tech to healthcare, construction to education.

It’s a problem that’s affecting businesses, the economy, and individuals alike.

But what exactly is the ‘skills shortage’? And why is it such a pressing issue in the UK?

In this article, we delve into the complexities of the skills shortage. We’ll explore its causes, its impact, and provide you with some potential solutions.

Hopefully, this overview will provide some valuable insights on how you can address the skills challenge by upskilling, attracting new talent and retaining the talent you already have.

Understanding the skills shortage 

A skills shortage occurs when there is a shortage of qualified professionals in certain sectors. This gap between supply and demand can hinder business growth and economic development.

The skills shortage is particularly pronounced in the UK, where many industries are struggling to find the talent, they need to thrive.

The shortage can be due to various factors, including demographic changes, educational mismatches, and shifts in the job market.

The Impact of skills shortage on UK industries

“EU data identified the UK as a nation with particularly acute unmet training demand compared to its European counterparts.” Source: Source New Economics.Org

The skills shortage in the UK is a common issue that affects different sectors in different ways.For instance, the tech industry faces a severe lack of digital skills, which could hamper innovation and competitiveness in the future.

The shortage of nurses and doctors in the healthcare sector is putting immense pressure on the NHS, which in turn impacts the quality of care provided to patients.

The construction industry is also feeling the pinch. A need for more skilled workers is slowing down infrastructure projects.

Here are some of the industries most affected by the current skills shortage:

  • Technology and digital
  • Healthcare
  • Construction
  • Engineering
  • Education

Each of these sectors faces unique challenges and require tailored solutions to overcome the skills gap.

The Impact of skills shortage on UK businesses

If you are struggling to find employees with the right skills, you may be experiencing one or more of the following:

  • Poor quality of work
  • Increased employee turnover
  • Reduced productivity
  • Loss of revenue
  • Inability to grow your business
  • Low staff morale

When you are unable to fill vacancies with skilled workers, it may impact your ability to serve your customers adequately, and your competitors may gain an advantage.

Root causes of the talent shortage in the UK

The skills shortage in the UK is a complex issue resulting from a combination of factors, including demographic changes, policy decisions, and economic shifts.

Brexit, for instance, has had a significant impact. It has led to a decrease in the number of EU workers in the UK.

The COVID-19 pandemic has also played a role. It has disrupted the labour market and accelerated the need for digital skills.

Demographic challenges, such as an ageing workforce, further exacerbate the problem.

Brexit and its consequences

Brexit has profoundly impacted the UK’s labour market, resulting in a decrease in the number of EU workers.

The lack of labour is more noticeable in sectors like agriculture and hospitality, which traditionally rely more on EU workers.

Brexit’s uncertainty has also deterred some skilled workers from choosing the UK, further impacting the skills gap.

The COVID-19 pandemic’s effect

The COVID-19 pandemic has disrupted the labour market, leading to job losses in some sectors and increased demand in others.

For instance, the demand for digital skills has skyrocketed as we have experienced a direct shift towards remote work and digital services.

The pandemic has also highlighted the need for resilience and adaptability in the workforce.

Demographic challenges

Demographic factors also contribute to the skills shortage. The UK has an ageing workforce.

Older workers take their skills and experience with them as they retire, and younger workers often lack the skills needed for specific roles, particularly in the manufacturing and engineering sectors.

These demographic challenges require strategic workforce planning and investment in training.

Addressing the skills gap

Research suggests that around 40% of current workers in the UK don’t have the right qualifications for their job.

 An estimated 20% of the workforce will be significantly under skilled for their jobs by 2030 (this could amount to around 6.5 million people) Source: OxfordCollege.ac

Education and training

Education and training play a crucial role in addressing the skills shortage and can help equip your workers with the skills they need.

Beware of the mismatch between educational outputs and industry needs which is more apparent in sectors like technology and engineering.

Up-skilling existing workforce

Up-skilling your existing workforce is another key strategy to help your workers adapt to changing job requirements and is likely to increase their job satisfaction and productivity.

However, up-skilling requires investment, its useful to see it as a long-term investment rather than a short-term cost.

Government support is available, in the form of funding or tax incentives, check out the Gov.UK for more information. https://www.apprenticeships.gov.uk/employers/upskilling-your-workforce

Take on an apprentice

Apprenticeships offer a practical solution to the skills shortage by combining on-the-job training with classroom learning. They allow apprentices to gain industry-specific skills while earning a wage.

Apprenticeships could also benefit you, as workers can be trained to meet your specific needs.

Embrace technology and automation

Technology and automation can both cause and solve the skills shortage. On the one hand, they can displace jobs; on the other hand, they can create new jobs requiring new skills.

Technology can help your businesses become more efficient. For instance, artificial intelligence can predict future skills needs, helping you plan your workforce development.

Six ways to attracting and retaining talent

Employer Branding

Finding the right people for your business takes a long time and can be costly; there’s the recruitment process plus the investment in the induction and training process. However, if you don’t continue to invest in your workforce, they may decide to leave and go elsewhere.

Today, more than ever, it is important to adopt a personalised and supportive approach that meets each person’s needs individually.  Only by listening and supporting can an organisation respond to the different needs of each person and each generation. A supportive, positive work culture built on trust, respect and a genuine interest in the person, not just the employee, will pay dividends.

We’ve put together six ways to attract talent to your business and help you keep them.

  1. Implement innovative solutions. A great example of this is offering flexible working arrangements.
  2. Employer branding can also help you to attract skilled workers to your business, if you have a strong brand, you will be more attractive to potential employees.
  3. Investing in continuous learning and development for your workforce is another strategy and will help your business to keep up with changing skills needs.
  4. Offering clear career progression paths can attract ambitious workers and can you help retain them in the long term.
  5. Employee autonomy can increase job satisfaction and make employees more likely to stay with you.
  6. Build strong relationships with your employees when you create an environment demonstrating trust and visibility.

More information on retaining your key talent can be found in our previous article The Evolving Workforce

Conclusion: Working towards a skilled future

Addressing the skills shortage in the UK requires a collaborative effort with businesses, educators, and policymakers working together to develop a skilled workforce and close the skills gap.

If you are experiencing challenges with your workforce and would like some help, please don’t hesitate to get in touch with us.

References: https://neweconomics.org/uploads/files/NEF_Solving-the-UKs-skills-shortage.pdf

 

Author: Steve Jebson

Driven and energetic, Steve is passionate about helping SMEs achieve a better future for themselves and their businesses.

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