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Skills Gaps in the UK:  How Bad Are They and What Can We Do About It?

We know that skills gaps exist, and more importantly have massive implications for the UK economy. A national action plan built on collaboration between government, industry, learners and learning providers is needed to build talent pools with skills relevant to today’s business needs.

We know there are skill gaps. We know they hurt. A recent study estimates that not meeting the skills needs of employers in the UK could lead to a loss of £120 billion in economic output by the end of the next decade. Let’s take a look at a few recent, sobering statistics:

The demand outweighs supply for low to medium skills jobs.

6 million people in England are at risk of being without a job or in work they are overqualified for by 2030

5.1 million low-skilled people are chasing 2 million low-skilled jobs

12.7 million people with intermediate skills are chasing 9.5 million jobs

Yet, for high skills jobs, employers can’t find enough workers.

There are 17.4 million high-skilled jobs but only 14.8 million high-skilled workers

Regardless of job level, employers say there are gaps around basic literacy, numeracy and IT skills – yet there is not enough being done to push upskilling.

Only 24% of UK workers took part in reskilling/upskilling programmes over the past two years.

Funding for adult learning and apprenticeships has fallen by 45% in real terms since 2009-10.

What does this skills gap mean for businesses?

More than two-thirds (68%) of UK employers struggled to find skilled workers this year, with Brexit uncertainty making talent scarcer. UK employers spent £4.4 billion on temporary staff, recruitment fees and increased salaries over the past 12 months because of difficulties finding employees with the right qualifications and experience. As well as increasing operating costs, skill gaps increase workload for other staff, leads to loss of business to competitors and stifles innovation.  SMEs suffer the most; for them the impact on productivity is felt more acutely than bigger businesses. In terms of pure financial impact – skill shortages cost SMEs on average £145,000 a year.

 So what do we do now?

Identifying skill gaps and pains is a lot easier than working out how to fix them. One thing is for sure – no one company can launch enough apprentices, reskilling and upskilling programmes to solve the UK’s skill challenges. What we need is a national action plan that is built on and driven by strong collaboration between government, industry, learners and learning providers.

Some examples of what is being done
The launch last year of the first phase of the National Retraining Scheme (NRS) which is focusing on retraining those who are at the highest risk of automation, marks the beginning of a new collaborative approach. This is good news, but is still way behind the curve to countries like Singapore where its national SkillsFuture movement launched in 2015 is driving the growth and transformation of the Singaporean economy for the future. This national programme enables all Singaporeans to master new skills across their schooling, early, mid and later careers, and spans schools, higher education and the adult learning.Through the programme, all employees and students receive $5,000 annually to spend on their learning. Whilst much of the reskilling and upskilling opportunities are tipped in favour of practical learning, it’s not a traditional two-track system, with an academic path and a vocational path, but a multi-path system.

There is much we can learn from the SkillsFuture movement, particularly in shaping the  NRS which is arguably still piecemeal in its approach. Best practice sharing is particularly, presient, as government-led schemes like this do not have a great track record for delivery. Previous schemes have paid for training that people did not need, or trained people with skills that employers did not want.

Employers want less talk and more action
We know from Pearson’s research with employers that there is no appetite for another raft of short-term initiatives. We also know that employers recognise the role they play in the investment of skills and shaping a more coherent national strategy, but they need support from learning providers to fill the skills gaps in their organisations today and build talent pools with skills relevant to the digital age of tomorrow.

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