For the first time, the number of vacancies outstrips the number of unemployed. The ONS (Office for National Statistics) reported 1.3 million jobs being advertised in Q2 of this year, an increase of 20,000 on Q1. That’s just over half a million more than pre-pandemic levels and it’s seriously affecting some industries more than others.
No-one can have missed the staff shortage crises that have recently been reported in the press, not to mention the vacancies filling the job columns. But interestingly, high up on the list of roles that need filling is in professional services – marketing executives, communications officers, PR executives, to name but a few. In fact, some of these types of jobs that once attracted multiple skilled applicants – employers were literally spoilt for choice – like agency account managers, are now some of the hardest to fill due to the huge gap in skills and experience.
If we look a bit more closely at this increasing problem, it’s less to do with the number of jobs available and more to do with the level of jobs available. At a time when global uncertainty is not going away, coupled with rising inflation and the cost of living crisis, mainly due to the ongoing legacy of lockdowns; it is all contributing to the growing threat of a significant shortage of talent. Indeed, a bi-annual survey by BDO of 500,000 businesses in the UK revealed that for 26%, their biggest headache is finding the right talent.
Why is there a growing skills shortage?
There is no one specific reason but there are several strong contenders. The first being the significant push by businesses towards digitalisation; there just aren’t enough IT skilled people for the demand in jobs.
The increase in automation, artificial intelligence (AI), Internet of Things (IoT) and other technological processes has led to an increase in demand for highly skilled workers adept at using digital technology. In fact, McKinsey recently reported that the requirement for people to fill these types of roles is likely to increase by 30% by 2030.
The problem is that fewer students are studying digital technology and there aren’t many programmes in the UK that deal with the shortage of digital skills in the UK. That said, companies like Microsoft and Morgan Chase, are supporting initiatives from The Prince’s Trust, the DWP, Generation UK and Skills Development Scotland to address digital skills shortages.
Another key reason is the pandemic. Over the past couple of years, businesses stopped hiring entry level and junior staff. The thought behind this decision was that it became hard enough to try to cope with swathes of people working from home; figuring out how to train and mentor junior members of staff remotely was just a step too far.
Companies wanted experienced, talented people that would hit the ground running and get on with the job without any hand-holding. However, two years down the line, there is a large gap in people with two years’ experience under their belts!
The struggle to find talent
According to Monster’s Flexible Future: UK Hiring Outlook 2022 report, 90% of organisations are planning on recruiting new staff this year but the competition to find the best talent is at an all-time high. This isn’t surprising considering the skills gap has increased to 51%, a rise of 17% on 2021.
If we consider the 1.3 million jobs available, these two reasons alone highlight the major challenge businesses are having today. However, the problem is a double-edged sword. Companies are emerging from the pandemic keen to maximise opportunities and grow their business. To do that they want to recruit talented people without having to spend the time nurturing and training them in their roles; and it’s a battle.
A recent Parliamentary report found that businesses are putting recruitment ahead of training to fill the skills gaps, rather than investing in training their existing staff. Indeed, they are offering a multitude of benefits to attract the best of the best – annual bonuses, complementary healthcare and exclusive memberships. It’s also driving the growth of a hybrid workspace – a combination of office and home working – which is becoming a particularly popular option.
Some recruiters are seeing a shift in talented, experienced people wanting to change roles being in the driving seat. There have been some situations where the candidate is making the demands. They know there is a skills shortage, they know their skills are in demand and they can literally name their terms when looking for the perfect work-life balance.
However, there are a growing number of workers that want to learn and have the opportunities to upskill. So much so that 78% are prepared to study and learn in their own time, in any location. They are ready to sacrifice their work-life balance to plug their own skills gaps. Adult learning is at a 23-year low, says the government, but it’s not because people don’t want to learn, they do.
Reversing the skills gap
The bad news is that it looks like the skills shortage is likely to get worse before it gets better. This is because 52% of large businesses, as well as 47% of SMEs, in the UK are only just planning more investment in staff training over the next year, says a report by the British Chambers of Commerce. It’s going to take time to make up the skills gap deficit between junior and entry level staff and experienced employees.
The good news is that there is a distinctive shift in companies starting to re-focus their investments, not so much on recruitment but over to training. Employers are starting to address their skills shortage problems by creating long-term strategies that will address the skills gaps. With an abundance of learning opportunities available together with a growing keenness from workers wanting to learn and upskill, it’s time businesses take a different approach to their skills shortages.
Business growth is crucial for the UK’s recovering economy and although it has just been reported that the economy grew 0.5% in May, there’s still a lot that needs to be done to address the skills shortage.