Question

Case study

Companies struggle to fill quarter of skilled jobs vacancies

Britain’s companies say it has become harder to find skilled workers than at any other time in a decade. About 209,000 job vacancies – or one in every four – are proving hard to fill because of a shortage of candidates with the right skills. This is the highest proportion since 2005, according to a biennial survey of about 90,000 companies.

The survey by the UK Commission for Employment and Skills, a government quango, shows the proportion of “skill shortage vacancies” has increased steadily from a low of 15 per cent of total vacancies in 2011. Skill shortages have increased as the economy has recovered after the financial crisis and unemployment has dropped. Joblessness is now just 5.1 per cent, the lowest since 2006, which means there is a smaller pool of available workers that employers can tap.

The shortage is most acute in the electricity, gas, water, construction, transport and manufacturing sectors. Lesley Giles, deputy director of the UKCES, said the survey showed Britain needed to boost the skill level of its workforce to make meaningful improvements to productivity, which has languished since the crisis.

Adam Marshall, policy director at the British Chambers of Commerce, said the shortage of skilled workers was ‘preventing businesses from reaching their full potential and hurting productivity’. The government has criticised employers for not doing enough to train workers. Last year, it announced a levy on all large employers to pay for 3m apprenticeships by 2020. However, employers fear the government will prioritise quantity over quality in pursuit of this target. Mr Marshall also seized on the survey to criticise a proposal from the Migration Advisory Committee to charge employers who hire from abroad. ‘Now is not the time to introduce an Immigrant Skills Charge’, he said. ‘Businesses are currently experiencing acute skills shortages and we shouldn’t further handicap them by increasing the cost of recruiting the talent they need’.

The Bank of England’s Monetary Policy Committee, which sets interest rates, is likely to pay close attention to the survey. They are looking for signs of inflationary pressure, and skill shortages are usually an early indicator because they prompt employers to compete for scarce workers by offering higher salaries. However, average wage growth has been slowing rather than accelerating. This could be because the shortage is limited to specific types of workers in specific sectors, said David Page, an economist at Axa Investment Managers. There is evidence that pay is shooting up for some sorts of workers such as bricklayers, but these instances might be too isolated to affect average wages overall. Alternatively, Mr Page said wages could be weak because employees do not feel secure enough to ‘shop around and cash in on’ their scarcity value.

Some economists were sceptical that skill shortages were a growing problem at all. Mark Beatson, chief economist at the Chartered Institute of Personnel and Development, said there was ‘quite a bit of hype and special pleading’ from businesses over the issue. ‘To a certain extent, skill shortages will always be with us, no matter how much money is pumped into the system to boost supply’, he said. ‘If you look at the types of jobs on this skill shortage list, they’re not very different from what they were 10 years ago’.

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Required Questions:

1 - Why do you think the skills shortages referred to in the case are reportedly most acute in the electricity, gas, water, construction, transport and manufacturing sectors?

2 - To what extent do you think it is fair for the government to criticise employers for not doing enough to train workers and so lay some of the blame for skills shortages at their door?

3 - Do you genuinely think there is a skills shortage in the UK? What evidence do you have to support your views?

Answer 1

Ans 1. Some of the sectors require highly skilled workers due to specialization and precision required to get the job done. Some of these sectors include Electricity, Gas, Water, Construction, Transport, Manufacturing etc. For example let us take an example of the construction sector and try to understand this issue. Construction sector is further drilled down to the kind of construction to be done, like a person specialized in Railways would not be able to contribute significantly in the construction of a cyber park. Also, a bus driver would not be able to run a train if we talk about the transport sector. So, a high amount of skills are required and they can't be compromised. Also, experience is more important in these fields as with experience only the efficiency increases. So these sectors actually need skilled people with experience so that they can contribute as required. That is why it it quite appropriate to say that skills shortages are mostly acute in the above mentioned sectors.While in the sectors like food, hospitality, IT etc. the skills can be learnt quickly and can be transferred easily. Here even a person who is novice can learn quickly and get the job done,highly specialized skills are not required.

Ans 2. Yes to a certain extent it is fair for the Government to criticise the employers for not doing enough to train workers and lay some of the blame for skills shortages at their door. Because, it is the easiest for the employer to develop the skills of the employees through training and other activities than an employee doing that himself. In the core sectors like manufacturing, construction etc. the employers make the work repetitive so the employees becomes master of one trade, but in this dynamic world one has to become jacks of all trades. The employees need to be trained in various aspects and fields so that they become cross functional and in case of shortages or emergencies, the employers would have back ups. If employees becomes proficient in multiple skills, that would help the business society as whole because then the specific skills which are required will it be a n issues because the talent pool for the employers would increase. It will also benefit the employees because they would not get fed up of their jobs and they would have the access to switch as per their requirements. This would be a win-win situation for all. So, it is the prime responsibility of the employers to upgrade the skills of their employees and finish this issue of skills shortages to the maximum extent.

Ans 3. Yes, to some extent there is a shortage of skills in the UK. The numbers are self explanatory, having 209,000 vacancies is a huge number which means that there are lot of opportunities available to the employees to grab but due to lack of skills expertise they are unable to grab them. The kind of issues the employers are facing is another explanation of this fact, the joblessness have increased significantly to 5.1% from past years which is the lowest since 2006. Another fact is that employers are bound to pay the highly skilled people very high because they are unable to find their replacements and they can't afford to take the risk of loosing these employees. Also, the Government blaming the employers for the skills shortages shows evidently that the shortage actually exists in UK.