The UK is facing a significant challenge known as the skills gap — the mismatch between the skills possessed by the workforce and those demanded by employers. Learn how it’s affecting businesses across the UK.
The work landscape is undergoing rapid transformation driven by emerging technologies like artificial intelligence and automation and disruptive forces like Brexit and ageing workforces. The precise impact of these changes remains uncertain, but one thing is clear: the skills employers prioritise and depend on are evolving. Consequently, a significant “skills gap” has emerged, posing challenges for employers to find suitably trained and qualified workers.
Nearly every sector in the UK economy is having difficulty finding talent with the right skills. But according to a skills survey published by the Department for Education in 2020, vacancies are highest in construction and manufacturing, where 36% of open jobs aren’t filled due to applications not having sufficient experience, qualifications and appropriate skills.
Related Reading: Tackling the Skills Shortage in Construction
What Is The Skills Gap?
A skills gap refers to a disparity or mismatch between the skills employers require to meet the evolving demands of the job market and the skills the available workforce possesses. The skills gap arises from factors such as technological advancements, changing job requirements, and a lag in education and training programs, ultimately hindering economic growth, productivity, and the ability of organisations to fill critical positions with appropriately-skilled individuals.
5 Ways The Skills Gap Is Affecting Businesses
The skills gap presents a critical policy challenge to the economy, and businesses are bearing the brunt of this skilled worker shortage.
1. Higher Wages And Inflated Training Budgets
The biggest effect of an employee’s market is increased competition for talent. For employers, that often means having to spend more on pay packages. In construction, wages between April and June 2022 rose by 6.3% — about the same as in the finance sector. This was also the second-highest increase among all industries, next only to wholesaling, retail and hospitality.
Skilled worker shortages can also inflate your training costs. The candidates you initially hire may jump from one employer to another in pursuit of better pay offers. This high turnover rate means you invest valuable time and money in training new hires, only to see them leave once they find more lucrative compensation elsewhere. It forces you to continuously recruit and train new workers, further driving up costs.
CHAS Tip: Now is the time to invest in employee engagement. Pay is the biggest factor employees care about. But they’ll also be more likely to stick with you if you have a positive work culture, support flexible working options and show that you truly care about their welfare.
Related Reading: What Trades Are In Demand In The UK?
2. Increased Pressure To Maintain Health And Safety
A shortage of skilled workers can have a significant impact on health and safety within a business in the following ways:
- Increased risk of accidents: Skilled workers are typically more knowledgeable about safety protocols, procedures, and best practices. A shortage of such workers may lead to inadequate adherence to safety guidelines, resulting in a higher risk of accidents and injuries in the workplace.
- Ineffective hazard identification and mitigation: Skilled workers often possess the expertise to identify potential hazards and implement appropriate measures to mitigate them. With a shortage of skilled workers, there may be a diminished ability to promptly identify and address workplace hazards, leading to an increased likelihood of accidents and occupational health risks.
- Lack of specialised knowledge and expertise: Skilled workers often have specialised knowledge and training in handling complex tasks or operating technical equipment. When there is a shortage, businesses may have to rely on less experienced or untrained workers, increasing the likelihood of errors, equipment malfunctions, or improper handling of hazardous materials.
CHAS Tip: Businesses facing a skilled worker shortage should prioritise comprehensive training programs, invest in upskilling existing employees, implement robust safety protocols, and consider partnering with external resources or contractors to fill critical skill gaps and ensure adequate health and safety expertise within the organisation.
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3. Inefficient Productivity
Skills shortages invariably drive declines in productivity. Accomplishing tasks successfully, efficiently, and within set timelines becomes challenging for a company that requires more experienced personnel.
For example, if there is a shortage of qualified heavy machinery operators, an organisation may struggle to meet project deadlines, resulting in delays and financial losses.
Moreover, the lack of necessary skills can lead to a decrease in output quality. Employees who are underqualified or lack experience are at risk of producing substandard work or making mistakes, which can negatively impact the overall calibre of your company’s output.
CHAS Tip: Engage in industry collaborations: Collaborate with industry associations, trade unions, and professional bodies to address the skills gap collectively. Work together to identify common challenges, develop industry-wide training programs, and advocate for government support in addressing the skills shortage.
4. Reduced Employee Morale
A skills gap doesn’t just affect employers, but it can also impact employees themselves.
During a skilled labour shortage, existing employees often find themselves shouldering additional duties and responsibilities. This increased workload can lead to elevated stress levels and burnout in the workforce. Consequently, burnt-out employees may experience reduced motivation and job dissatisfaction, negatively impacting overall productivity.
And in industries where skilled workers are in demand, businesses may encounter difficulties in offering career advancement opportunities to their current staff. Your people may feel their professional growth is hindered, leading to feelings of unease and concerns about job security. This sense of uncertainty can contribute to a general decline in morale within the organisation.
CHAS Tip: Resist the urge to saddle workers with more work than they can handle, even if it’s only temporary. You may need to make the difficult decision to turn down clients or contracts if you lack the bandwidth to deliver work at your current workforce’s levels.
5. Reduced Innovation And Growth
Skill shortages can stifle innovation and hinder business growth. Skilled professionals bring fresh perspectives, specialised knowledge, and creative problem-solving abilities to organisations.
When talent is scarce, businesses may struggle to develop and implement new ideas, technologies, and strategies. This lack of innovation can hinder competitiveness and hamper growth opportunities, ultimately impacting the long-term sustainability and success of the business.
CHAS Tip: Consider looking at equality, diversity and inclusion as a net benefit to your business. Encouraging participation from underrepresented groups, including women, minorities, and individuals from diverse backgrounds, enables you to tap into a larger talent pool. It can also introduce fresh perspectives and ideas that drive growth.
The numbers back this up too. According to McKinsey, organisations in the top quartile for gender, racial and ethnic diversity are “more likely to have financial returns above their national industry medians.” In other words, diverse companies are more profitable.
Related Reading: The Ultimate CHAS Guide To Managing The UK’s Skills Shortage Problem
Get more insights on managing the impact of skills gaps on your business by following the CHAS blog. If you need help finding prequalified talent NOW, consider becoming a CHAS Client, and we’ll help you connect with a network of 32,500+ prequalified contractors and suppliers with Verified Suplier, SSIP, or Common Assessment Standard accreditation.
