Why Is There A National Skills Shortage In The UK, And What Does It Mean For Businesses?

​From engineering and manufacturing to business and finance, the UK national skills shortage has been impacting just about every sector over the past few years. 90% of employers are currently struggling to recruit and retain staff with the skills and experiences needed to make their business run smoothly, and it’s estimated that 20% of the workforce will be significantly underskilled by 2030. Without action, it’s thought that the cost to the UK economy could be as high as £120bn over the course of the next decade.

What is the UK skills gap?

The skills gap refers to the mismatch between the skills that employers require and the skills that jobseekers and employees possess. This gap leads to a shortage of skilled workers in certain sectors, lower productivity, increased unemployment, and limiting the potential for businesses to compete globally. Addressing the skills gap is a crucial challenge for the UK government, employers, and education providers to maintain economic growth and increase innovation.

In this blog, we’ll look at some of the reasons behind the skills gap in the UK, the impacts the shortage is having on businesses, and what employers can do to become more resilient.

Why is there a skills shortage in the UK?

1. The impact of Covid-19

The rise of economic inactivity caused by the pandemic had a significant effect on the UK workforce that’s still lingering today. Many moved away from high-risk sectors, while lockdown gave people time to evaluate their work-life balance, with some deciding they could survive on less money or to go back to education. As a result, the number of people in and entering the job market reduced and while the economy has opened back up, meaning the demand for labour cannot be met.

2. Brexit

Leaving the EU ended freedom of movement and made the rules for foreign workers coming to the UK a lot tougher. It’s now significantly harder for UK employers to recruit talent for both high-skilled and low-skilled jobs from abroad. In fact, researchers have estimated that Brexit has led to a labour shortage of approximately 33,000 people.

3. A smaller workforce

According to reports from the IFS, there’s been a significant rise in economic inactivity among people in their 50s and 60s. This is as a result of a number of factors, from furlough prompting early retirement, to poor health due to Covid and long Covid. On top of this, record numbers of young people are now attending university, delaying their entry into the labour market.

4. Advancements in tech and the demand for digital skills

The rapid adoption of tech and automation by many businesses across Britain has meant that most jobs now require candidates to have digital skills. Unfortunately, the UK workforce has so far been unable to keep up with this demand and as a result, a huge gap in digital skills exists. Government-funded programmes have been put in place to provide extra training, and more businesses are being encouraged to provide internal digital training to help upskill the workforce in these areas.

What can organisations do during a skills shortage?

It’s not all doom and gloom, a company can still grow during a skills shortage. However, having effective recruitment, employer branding and internal development strategies in place becomes more important than ever.

Here are some key things employers should do to minimise the impacts of a skills shortage on their business.

Invest in internal training

Research shows that organisations are increasingly creating their own training and professional development plans. Those that are able to identify the skills required for their future roles and map with the competencies their existing employees possess will be best placed to support employee development and avoid future skills shortages. Since 81% of organisations are currently experiencing a negative impact due to lack of digital skills, many choose to focus on providing education in these areas. This can be advanced as investing in courses on data analytics and programming to providing training on more basic skills like using excel or navigating online communication tools like Microsoft teams and Slack. ​​

Switch up your recruitment strategy

According to the latest figures, four in five businesses are struggling with their recruitment strategy, with some of the biggest challenges being attracting suitable qualified candidates, and understanding shifting workforce priorities. This is where partnering with a trusted recruiter can make all the difference. A consultant experienced in your sector will know where and how to source candidates, how to create a compelling job ad, help you understand what’s most important to them in an employer, and be able to conduct pre-screenings prior to interview. This could significantly reduce the time it takes to hire skilled staff, as well as improve the quality of candidates your organisation ultimately employs.

Review employee benefits

As competition for highly skilled talent intensifies, ensuring your organisation has a strong employer brand is paramount. This means considering employees’ financial and non-financial needs. Although 65% of workerssay salary is their top priority when considering a new role amidst the cost-of-living crisis, the option for hybrid and flexible working is also of key importance for many. In addition to this, employees want to be provided with opportunities for career growth and development and be recognised and rewarded by the business for their hard work. A company that can tick all these boxes will not only be the top choice for potential candidates but will also be able to retain talent for a lot longer.

Don’t let the national skills shortage take you down!There’s no denying the fact that the UK is facing a national skills shortage and while it can pose risks to the growth of a businesses, there are things employers can do to make their organisation more resilient. Invest in upskilling your current staff, provide internal training opportunities, and offer attractive employee benefits that meet both the financial and social needs of the current workforce. If you’re struggling to find your way as a business during the national skills shortage, consider working with a recruiter that specialises within your industry. They will have expert knowledge about the talent shortage within the sector and be able to find the right candidates for your business.

Looking to fill a skills gap in your company? You’re in the right place. We specialise in recruiting for just about every industry and sector, from accounting and finance and IT, to human resources and marketing. You can search all our divisions here, or leave us a message and we’ll get back to you as soon as possible.​​​