Skills Shortage Is Costing Britain

Every job in Britain requires certain skills, whether they take years to perfect or can be picked up quickly be new employees. This often means though that only people who have the required skills for the role can be used for the job; after all it would be damaging to employ someone for a role such as web designer if they have no experience or knowledge.

Unfortunately for businesses, new research by the Open University found that Britain is currently suffering a skills shortage with workers. The survey of 400 firms reported a startlingly high majority (90%) are suffering difficulties in recruiting workers with the skills that they required in the past year.

Shortage Has A High Cost

This shortage is not only detrimental to businesses in terms of workload and unfulfilled work, but it also comes with a high price tag as well. The Open University estimates that companies have to spend over £2 billion to cover this shortfall including recruiting costs and employing temporary staff until a role is filled.

Included in this cost is the fact that many employers have to inflate the salaries of their job vacancies to try and fill roles. This often ends up being above the market rate, resulting in firms spending £527 million on high salaries.

In line with this, 56% of businesses surveyed in April and May said that they had increased their salary to try and employ someone with the skills needed. While this may result in the job being filled, it often means that businesses may be paying far more than they should.

Why Is There A Skills Shortage?

While there are many reasons for the lack of available prospective employees with the required skills, there are two reasons in particular that stand out. The first is that Britain is currently experiencing the highest rates of employment since 1971 according to the Office for National Statistics.

As of April 2017, 74.8% of people aged 16 to 64 were in employment, working out at 31.95 million people. In turn, the unemployment rate had fallen 4.6% which is also the lowest rate of unemployment since 1975. This is obviously good news for Britain as a whole, however it also means that there are fewer people available for new roles.

When searching for people with a particular skill, the available pool will become even smaller. On top of this, the current uncertainty surrounding Brexit is only adding to firms woes. Aside from being unsure as to what the status of EU citizens currently living in the UK will be once Brexit is completed, there is also the problem of skilled EU workers choosing to leave the UK.

A survey by Baker McKenzie found that 56% of EU-27 skilled workers who are currently employed by FTSE 250 (or with revenue over £50 million) have said they are likely to leave once Brexit negotiations are confirmed. An industry that will be particularly worried about this will be healthcare as 84% of respondents said they were likely to leave. Combined with the recent news from the BBC that more nurses and midwives are leaving than joining, it can be seen that there will be a severe skills shortage here.

What Can Companies Do?

Unfortunately for many companies, positions cannot be kept open indefinitely if they cannot find the exact skills required. To combat this, firms should consider employing someone who does not possess all the skills they require and instead train them up so that they eventually do gain the skills needed.

This is echoed by the Open University who is advising firms to train staff internally via apprenticeships to help combat the skill shortage. Steve Hill, external engagement director said, “Now faced with a shrinking talent pool, exacerbated by the uncertainties of Brexit, it is more important that employers invest in developing their workforce.”