It may sound like just another overused sound bite, but the skills gap is one of the most important issues affecting UK businesses today. With party conference season well underway, speeches about reducing the deficit and accelerating the UK’s economic recovery have been in plentiful supply. Yet while all eyes have been on Jeremy Corbyn’s performance and the Conservatives’ first party conference since their victory in May, it is the skills gap that should be at the top of the agenda.
A skilled workforce is a fundamental backbone to our economy, helping businesses grow smarter, better and faster. Unfortunately, the current lack of skilled workers is seriously threatening future growth.
Our latest annual report, the Hays Global Skills Index, assesses the health of labour markets across 31 countries. It shows that the UK’s talent mismatch has worsened for the fourth consecutive year and remains among the worst in Europe, alongside Ireland, Spain and Portugal.
The lack of Stem candidates – science, technology, engineering and maths – has been well-documented as businesses struggle to find engineers, coders, programmers, developers, technicians and other high-skilled professionals. The issue is getting all the more evident as the economy recovers, hiring picks up, and projects get back on track. As a global recruiter, reviewing over 1.5m CVs and placing over 200,000 people in jobs every year, we have seen first-hand the strain that businesses are under when trying to find the candidates they need.
This is having a knock-on effect on wages, as companies are forced to pay even higher premiums for the right people. Our report shows that the UK’s wage pressure score has jumped by 65 per cent in the last year. We are seeing a similar story in Europe’s other economies, including France, Germany, Spain and Italy.
The impact on productivity also needs to be understood. While economic growth has resumed strongly and employment has surged, productivity has stalled. UK workers already produce 30 per cent less per hour than their counterparts in Germany, the US and France. This is only set to get worse as the skills gap means people are either under or over qualified for their jobs.
Clearly, we need to address these issues before they get worse. In the short term, this means setting aside political sensitivities and embracing skilled migration, looking beyond our own borders to ensure that we find the best talent for British businesses.
Although immigration is a political hot potato, as evidenced by Theresa May’s comments yesterday, it is vital that the government makes a clear distinction between mass immigration and the movement of skilled workers from abroad. We can’t expect to build world-class companies without attracting world-class talent. This means fast-tracking visas for roles that can’t be filled by local workers and showing public support for the mobility of skilled labour.
We also need to see more investment in training and skills development. Positive steps have already been made, particularly around apprenticeships and vocational training. But more needs to be done – including proper investment in technology, upskilling existing employees, and closer collaboration between businesses and education – for companies to see a real difference.
Without addressing these issues, the UK’s productivity puzzle will remain and the widening skills gap will create an even bigger barrier to our continued economic recovery.