Monday 8 July 2019 11:00 am

Skills gap is costing UK business £4.4bn each year


David Willett is corporate director at the Open University.

David Willett is corporate director at the Open University.

The UK’s skills shortage is having a significant impact on many employers’ productivity and competitiveness. In fact, the impact on productivity is so severe that the government has put addressing the skills shortage front and centre in its industrial strategy.  

For most businesses, buying skills in seems the easiest way to tackle shortages, but this approach becomes increasingly expensive when the required skill sets are not readily available in the labour market. 

According to the Open University Business Barometer 2019 report, which launches today, more than two thirds of UK employers have struggled to find workers with the right skills in the past year.

Read more: The real cost of the skills shortage


To counter this issue, employers are spending more than £4.4bn a year on recruitment fees, increased salaries, and temporary staff.

But these solutions only yield a short-term result. There is still a dearth of the skills that are most needed – management, digital, and leadership. 

Ultimately, employers will have to keep paying out as their skill needs change. But this is not sustainable. 

Changing times

The working environment is changing all the time, particularly when it comes to new technologies – and our skills need to change and evolve so that we are not left behind. We need to move to a model of lifelong learning, where employees are constantly up-skilling and retraining, and becoming more agile as a result.

More than half of employers have increased their training budget in the past year, by an average of 10 per cent. However, many of the businesses that we speak to tell us that they are worried about investing in case their employees move on, leaving them in the same position as before. 

We often have the conversation where they ask: “what if I train them and they move on?” We say: “what if you don’t and they stay?” 

The opportunities for continuous professional development actually breed loyalty; they provide a brilliant tool for retention. 


There are also plenty of funding options available – so you may be able to dramatically reduce the amount that you spend on accessing skills, particularly if you are currently paying out to buy them in. 

There are a range of educational training grants in place, either available directly or through your local enterprise partnership – and of course, there is also funding from the apprenticeship levy in England. 

How to fix the skills gap

Paying for training is one thing, but will it actually deliver results? It is important to consider what you need from a training provider, and choose one with a proven track record, whose delivery methods and approach to training fit with your organisation. 

If you are understandably worried about the disruption that employees travelling to lectures could cause, you may find that a provider with a more flexible, technology-enabled delivery method works better for you. 

We find that this allows employees to fit their learning around personal and work commitments, making it less disruptive. 

Investing in education is the only real, long-term solution to the current skills shortage in the UK. Employers certainly cannot continue to pay to bring skills in as they have been doing, especially as it may not be as easy to access talent from abroad after Brexit. 

Three in five organisations agree that they will have to focus on building talent from within if they want to guarantee access to the skills that they need. 

And with the right training provider and financial support, organisations can also increase productivity, loyalty and engagement – leaving them more agile and better prepared for the future.

Main image credit: Matt Cardy/Getty Images

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