Yawning skills gaps pose ‘a real challenge’

When the UK’s farming ministry was struggling to find new specialist workers, with skills in cloud computing and cyber security, it decided to take matters into its own hands.

In partnership with recruitment group Hays, the Department for Environment, Food & Rural Affairs launched the Cloud and Security Academy — a bespoke programme to train prospective employees in digital skills, and then place them in hard-to-fill roles. Nearly 1,400 people from a wide variety of backgrounds applied — 500 per cent more than would, typically, for similar jobs.

Such recruitment challenges are not unique to government, though. Employers across the UK are struggling with yawning gaps in workforce skills, as the need for staff — in sectors from health and social care to technology — accelerates more quickly than workers are gaining the skills and experience to fill them.

“It’s really hard to narrow down because it’s right across the board,” says Barney Ely, managing director for south-east England at Hays. “There’s not enough people in the job market, which is a problem in itself. And there’s not enough people who are upskilled . . . The best way to describe it is structural; it’s a real challenge, and it’s been a challenge for a decade.”

There are not enough people in the job market. And not enough people who are upskilled

As the UK grapples with the aftermath of Covid, Brexit, high inflation, and cuts to education spending, the problem is growing more serious. According to the government’s Employer Skills Survey, a poll of more than 70,000 employers published last month, skills shortages are particularly acute in construction, IT, manufacturing, and social work.

The research found that 23 per cent of workplaces had at least one vacancy last year, and 10 per cent reported at least one vacancy because of skills shortages. That was up from 20 per cent and 6 per cent, respectively, in 2017. When all of the 2022 UK vacancies are counted, 36 per cent of them were because of skills shortages — up from 22 per cent in 2017.

Tera Allas, director of research and economics at consultancy McKinsey, says some roles, in sectors such as hospitality or care, are difficult to fill because they offer poor pay and conditions. Even when they are skilled jobs, those poor incentives mean people are less likely to want to apply, or to train in the skills such jobs require.

“The demand for care workers continues to grow, but the supply of them isn’t growing at the same speed,” says Allas. “It’s more of an issue of education and training.”

In digital roles, the need for more technical skills means employers pay more. Yet shortages remain, often because the needs of industry evolve more quickly than education.

“There’s always been a puzzle in the UK as to why there’s been a shortage of computer scientists,” Allas notes. “The anecdotal answer is that what the universities teach is not always what the employers need . . . demand is growing faster than supply; it doesn’t matter that it pays well.”

It is a problem for employers, says Antony Walker, deputy chief executive of trade association TechUK. “Competition is really high for the most in-demand skills.”

This is also an issue for existing staff. Some 15 per cent of workplaces had at least one employee who was not fully proficient in their role, according to the UK Employer Skills Survey, and 5.7 per cent of the total workforce lacked the required skills, up from 4.4 per cent in 2017.

Finding people with the “right combination” of technical knowhow, such as AI prompt engineering or coding, and so-called soft skills, such as teamwork, is often the most challenging aspect of hiring, says Walker.

Since the Covid pandemic, which deprived people of in-person workplace experience, those shortages have become more profound, especially among young workers, says Kirstie Mackey, head of life skills at UK bank Barclays.

As a result, applicants are often blind to the transferable abilities they do have, she points out. “Confidence is at an all-time low,” she says. “It’s really sad when I talk to young people now — often they say they don’t have any skills. But it’s not true.”

A decline in support for life-long learning has made finding skilled workers harder. In the past decade, UK government investment in adult education has halved, and workplace spending on training has fallen 28 per cent since 2005, according to data from the Learning and Work Institute, a think-tank.

“It’s a perfect storm,” says Stephen Evans, LWI chief executive. “We’ve got falling investment in employer training, and the government is spending less on adult education. That’s coupled with slow economic growth and political and policy instability.”

Employer responses to the problem differ. McKinsey’s Allas says some are “quite passive” or adopt “short-term” approaches, such as better pay or perks, to attract skilled workers. But “enlightened employers — those who have the resources and the foresight to say, ‘we can’t just rely on the market here’ — they are doing a lot”. That might include in-house retraining: companies identifying workers who could be hired in entry-level roles and then coached in areas of demand. For example, a call centre operator could be retrained to be a software engineer.

Workers are also eager to upskill, which means employers that offer retraining opportunities may find it easier to attract talent, as well as nurture it in house. “People who work in these areas understand . . . so they’re really interested in employers that will help them update those skills,” says Walker. “I think recruiters are much better at that, and I think that’s percolating through to companies.”