The UK labor market continues to be plagued by chronic skills shortages, especially in IT and engineering. According to the Office for National Statistics (ONS), there is currently more than 1.3 Million open vacancies in the economy. This is a record.
Complex reasons could be cited for this shortage. However, an exodus of European talent post Brexit, coupled with the fact that many individuals retrained – or simply dropped out of the workforce altogether – at the height of the pandemic when opportunities were thin on the ground, contributed greatly. Older workers, in particular, seem to have left the workforce early – taking their skills and experience with them. Official figures show that 250,000 more people over 50 are economically inactive than before the pandemic.
The Chambers of Commerce released data earlier this year that showed that 79% of businesses are having difficulty recruiting new staff. This is due to a lack of foreign applicants, which was cited as a major problem. Needless to say, the impact of the current situation on economic growth is significant – and skills and training are key to getting back on track.
Flexible, pragmatic training initiatives must be designed by government to maximise access across the workforce from school leavers to mid-life ‘lane changers’ if it is to equip the UK labour market with the skills, experience, and expertise in demand by employers now – and for decades to come.
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The government seems to be aware of this fact. In the Levelling up whitepaper, the Education Secretary announced that a new Future Skills Unit will be established to analyze data and evidence about where skills gaps exist in which industries. T Levels, the Skills Accelerator Programme and other initiatives that foster new partnerships with industry and business are supported by us. The lack of a national strategy for talent development has led to a fragmented approach to training and development that is inefficient.
Government is supporting SMEs to gain the skills they need to succeed, with the government subsidising the cost of high-quality training through its ‘Help to Grow: Management’ initiative. The scheme offers businesses 12 weeks of world class leadership training through the UK’s top business schools, with government covering 90 per cent of the cost. Too often, though worthwhile and valuable, these initiatives are not well-publicized to encourage participation.
APSCo recommends the creation of a national strategy similar to that in the Levelling Up paper for education. This strategy recognizes urban hubs with strengths in particular industries and skills. For example, Newcastle or Sheffield where APSCo research in 2021 tech found that the top sector for job vacancies is there. We can create centres of excellence through local government funding for training to combat the shortage of technical and digital skills.
In this year’s Spring Statement, the Chancellor also announced that there will be an assessment as to whether or not the apprenticeship levy is ‘doing enough’. APSCo welcomes this announcement. We have previously stressed to the government that the parameters of the existing scheme are too restrictive – and, as such, the levy is an underutilised resource. Many of the largest recruitment consultancies that we represent have large agency worker payrolls, which means they have huge levy pots that they cannot spend. The scheme should be broadened to cover administrative costs and ‘bench’ salaries to facilitate a commercial, workable ‘flexi’ scheme. This will allow us to support the professional development and placement of agency workers.
We should prioritize making it easier for people to come to the UK to learn, in addition to upskilling UK-based talents. A year on from Brexit we’re still seeing the ramifications of the UK’s exit from the EU – with skills and resources being hard hit. APSCo has been advocating for a better visa route to the UK for self-employed and independent contractors to ensure that the economy has the international skills it needs in a highly competitive and uncertain environment. Although the new Global Business Visa, which was introduced in April, is a good step in the right direction to make Britain more attractive to European workers, there are some limitations in the visa that will reduce its impact. For those who are flexible, this visa route is less feasible because of the sponsorship requirement.
We are also concerned that there’s no joined-up approach across Europe when it comes to engaging STEM contractors and self-employed professionals. The requirements vary from one country to the next, and, as in Belgium, between regions. A globally mobile, dynamic and flexible workforce supports skills development – particularly in labour-short areas such as technology. Economies will reap the benefits of being able to not only import international resources but also send talent to other countries to gain global experience, intelligence, and insight.
Positive signs show that the government is seeing the benefits of both attracting expertise from abroad and growing its own talent. The Spending Review 2021 increased total government spending on skills in England by £3.8 billion by 2024-25, while the recent Spring Statement highlighted how “around half the UK’s fastest growing businesses have at least one non-UK-born co-founder…That is why the government is focused on creating a visa regime that will attract highly skilled and entrepreneurial individuals from across the world.” However, more needs to be done, and the widely anticipated absence of the Employment Bill in the upcoming Queen’s speech raises concerns that the skills agenda has slipped down the list of priorities.
It is critical that we continue to borrow and build vital skills, even as the UK economy struggles post-Covid. Only then can we create an agile, flexible, future-proof labour force with enough skilled workers to allow the country to rebuild after the pandemic.