Closing the UK's skills gap

Employers and business groups have been issuing warnings about the UK's skills shortage for some time now, but the gap between the skills needed to fill vacancies and those possessed by applicants has widened still further during the coronavirus (COVID-19) lockdown. Despite the rise in unemployment and the flood of applications for each vacancy, many recruiters are unable to find the employees they need.

It is a problem that will require both government and employers to look beyond the short-term and focus on future investment in skills. Here, we look at the areas where the issue is most acute and consider some of the solutions being proposed.

Under-skilled workforce

Prior to the pandemic, a 2019 report by the Industrial Strategy Council estimated that 20% of the workforce will be significantly under-skilled for their jobs by 2030.

According to the Quarterly Recruitment Outlook for the second quarter of 2020 published by the British Chambers of Commerce (BCC), of the firms that have still been attempting to recruit during the pandemic, 65% faced recruitment difficulties, particularly for skilled manual/technical or managerial roles.

Brittle workforce

The COVID-19 recession is doing significant damage to the UK labour market and unemployment is rising. This is also being accompanied by a slump in the number of self-employed individuals as freelancers fall through the cracks of the government's support schemes. The situation has led to fears of a 'brittle' and 'rigid' UK workforce that lacks the vital skills the economy requires in order to forge a recovery.

Upskilling

The BCC urged the government to take further action to support, upskill and reskill employees as businesses adapt to change. The Chartered Institute of Management Accountants (CIMA) says that while the government must tackle immediate issues such as restoring jobs and increasing consumer spending, it must also put greater emphasis on creating long-term recovery, including boosting social mobility.

The CIMA believes investing in education and skills development in sectors such as digital technology, education technology, healthcare, financial services, engineering and construction will be critical.

Targeted support

Funding boosts are needed for vocational and technical education, for apprenticeships and for incentives to help more employers provide high-quality job-related training.

To address the ongoing challenges that the economy faces, the Chancellor of the Exchequer, Rishi Sunak, announced a large-scale plan to support people in finding jobs in his July Summer Economic Update. The Chancellor made funds available to enable jobseekers to gain the skills they need to get jobs and provide targeted help for young people to get into work.

The Kickstart Scheme

One of the main announcements in the Update was the introduction of a new Kickstart Scheme designed to 'fund the direct creation of high-quality jobs for young people at the highest risk of long-term unemployment'.

This is a £2 billion fund aimed at creating hundreds of thousands of high-quality, six-month work placements for those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment. Funding available for each job will cover 100% of the relevant National Minimum Wage (NMW) for 25 hours a week, plus the associated employer national insurance contributions (NICs) and employer minimum automatic enrolment contributions.

Training and apprenticeships

The government is also funding high-quality traineeships for young people by paying employers who provide trainees with work experience £1,000 per trainee. 

Additionally, there is now a payment of £2,000 to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over. This applies from 1 August 2020 to 31 January 2021.

Providing opportunities

Many businesses are still suffering from a cash crunch and reduced demand despite the welcome interventions made in the Summer Economic Update. Those looking to the future must invest wisely, using the available government support, to develop a skilled and motivated workforce.

We are happy to advise in detail on the best approach to suit your circumstances. Please contact us for more information.

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