The true cost of the UK skills gap

We can all delight in the news that according to data from the Office for National Statistics, employment hit a record high in March and unemployment fell to its lowest level since 1975. Whilst obviously positive, unfortunately it has a knock on effect and considerably reduces available talent when recruiting. Combine this with uncertainty over Brexit resulting in people choosing not to change their current role and a lack of EU nationals looking to work in the UK, there is a real problem.

The end product is a skills gap that is, according to the latest research from the Open University₁, costing UK businesses more than £2 billion a year in higher salaries, recruitment costs and temporary staffing. The Open University Business Barometer’s role is to monitor the skills landscape of the UK and their recent study has found that 90 per cent of employers have found it difficult to recruit workers with the required skills in the last 12 months. Some have even had to inflate salaries above industry standards, finding it essential to attract talented workers with strong skills, resulting in an extra cost of at least £527 million.

The impact of the skills gap hasn’t ended there, with 75% of employers reporting it takes an average of one month and 24 days more than expected to recruit. Again extra costs have had to be incurred, to cover additional recruitment and temporary workers costs, an estimated £1.7 billion.

The study has also highlighted a number of other trends, including:

  • Managerial roles are proving particularly difficult to fill, with one in five struggling to hire both senior managers (21%) and mid-level managers (19%)
  • More than 43% of employers are finding candidates lack management skills
  • Around 47% of employers say that they are struggling to attract talent with the right IT and digital skills
  • 53% of employers were unable to find a candidate with the required skill set and chose to hire at a lower level as a result
  • 53% of employers are using training to boost these new employees’ skills and to bring them up to the level required for the role
  • 69% of businesses believe they will struggle to hire people with the right skills in the next 12 months
  • 58% of employers saying the skills shortage has damaged their organisation

However, it’s not all doom and gloom, as over the next year, employers are planning to change the type of training they offer to their staff. The number of organisations in England offering apprenticeships is expected to nearly double from 31 per cent, to 59 per cent. The

new apprenticeship levy, introduced in April, is being touted as the reason for this. With over half (52%) of employers in England expecting the levy to reduce the skills gap in the next year, it is no surprise that three in five (62%) are seeing it as an opportunity for their organisation.

₁https://fenews.co.uk/press-releases/14293- the-2- 2-billion- cost-of- the-skills- gap

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