Brexit: Skills Shortage Leads to Training Drive

Employers, Hiring / 12 July 2019

Brexit woes strike again. The lack of any clear way forward on the issue is continuing to have an impact on the employment sector, despite record levels of employment (the highest since 1971). An ever decreasing talent pool, caused by these high rates of employment, along with a slow down in job mobility and hiring, is hitting firms across the country hard.

Data collected by the Open University’s Business Barometer 2019 shows that 68% of UK employers have had difficulties finding qualified staff in the last year. The report also found that 63% of UK organisations are in the middle of a skills shortage.

digital technology skills and algorithms represented as a virtual human

Lack of Suitable Candidates

Employers have reported a number of problems when it comes to finding the right candidates for available roles in the last 12 months. Some of the key findings from the Business Barometer are as follows:

Almost half of the 68% of employers unable to find suitable staff said management positions were the hardest to hire for.
Managerial skills are the most lacking in applicants, closely followed by both IT and leadership skills.
In the last 12 months, it’s taken employers around two months longer than usual to find employees that had the skills required for the role.
A quarter of employers that were hiring in the last 12 months have left roles open as they were unable to find candidates.
Around half of employers had to hire temporary staff to fill open roles.
Almost half of employers ended up spending more on recruitment than they initially intended.

These shortages have affected some areas more than others, with the South West, East of England, and Yorkshire having the largest lack of available skilled workers. In terms of sectors, the mining, energy and water supply industry is struggling the most, with business services, manufacturing, and health all making the top ten.

Missing Skill Sets

By far the most in demand skills are those at the management level. Of the organisations polled, management, from junior to senior level, have been the hardest roles to hire for. Of these openings, managing director positions and above, along with intermediate managers, have been the most difficult to source recruits for in particular.

The hiring problems stem from the fact that applicants aren’t equipped with the skills needed to fill these roles. The Business Barometer found that the lack of management and IT skills has created a real issue for employers, as they can’t get the leadership and businesses agility needed to adapt to an increasingly tech focused business environment.

Turning to Training

So, what can be done? There a number of ways that organisations have attempted to address the hiring problem so far, including the use of temporary workers while vacancies remain open. The most prominent solution in most cases, however, has been to focus on training up the existing workforce, to fill any skill gaps from within.

In the last 12 months, just over half of the employers participating in the report stated they had increased their training budget, generally by around 10%. Of those polled, 73% of senior business leaders also thought training would lead to higher job satisfaction and improved company loyalty.

Most of the training that employers have implemented so far has been workplace based rather than seminar or lecture orientated, and this has proven to be effective so far. Many businesses plan to make use of the apprenticeship scheme in order to fund additional training as a result.

While this is certainly a positive step, the apprenticeship scheme itself is not without problems, especially where smaller businesses are concerned. Those without large funding reserves can generally not afford to train employees to the higher qualification levels that are needed to fill management and technical skill gaps.

The Cost

The cost of the skills gap is already around £4.4 billion. Half of the employers approached for the Business Barometer cited Brexit as the leading cause of the problem. An increase in competition was the second highest issue, according to business leaders. Just under 60% of these business leaders also expect the skills shortage will get worse if the UK leaves the EU.

In terms of figures, the spending to alleviate the problem per sector was:

£570.1 million – Manufacturing sector.
£436.6 million – Professional services sector.
£371.6 million – Administrative support services sector.
£354.7 million – Construction sector.
£328.7 million – Hospitality sector.
£280.1 million – Health and social care sector.
£218.7 million – Information and communication sector.
£194.7 million – Motor vehicle wholesale, retail and repair sector.
£187.1 million – Transport and storage sector.
£161.6 million – STEM (science, technology, engineering and mathematics) sector.
£161.1 million – Education sector.
£138.3 million – Financial and insurance sector.
£87.8 million – Agriculture, forestry and fishing sector.
£73.5 million – Arts and recreation sector.
£55.6 million – Real estate sector.
£30.7 million – Public admin and defence sector.
£18.8 million – Tourism sector.
£7.0 million – Mining and quarrying sector.

The Road Ahead

One of the major concerns employers have, despite investing more in training, is that the skill gap will only get worse over the next 12 months. While this does have a silver lining for the recruitment industry, as employers expect to spend more on recruitment and sourcing, it isn’t good news in the long term.

The more difficult it is for employers to find talent, the more businesses will suffer financially. Almost 60% of employers stated that they are expecting financial impacts on their businesses as a direct result of the skills shortage. An additional problem, according to the companies that participated in the Open University study, is that they didn’t feel as adaptable as they needed to be – a key concern when technology is changing the workplace and wider culture so rapidly.

Overall, there is a chance that measures taken by employers, in conjunction with the current apprenticeship scheme, will offset some of these concerns. Even if this is the case however, sourcing the right candidates could still be a challenge until Brexit is resolved, one way or the other.