UK: Survey suggests skills shortages may limit, halt growth

Findings from the UK Employer Skills Survey 2013 highlights a sharp rise in skills shortages. The report argues this could hold back the UK’s economic recovery. Although the number of vacancies had returned to pre-recession levels, employers were increasingly finding some were difficult to fill.

Background

The Employer Skills Survey (ESS), undertaken by the UK Commission for Employment and Skills (UKCES), is the UK’s principal source of intelligence on employer investment in skills. The survey was first conducted on a UK-wide basis in 2011, although surveys had been undertaken throughout the 1990s and 2000s in each of the nations of the UK. The ESS 2013 is the second UK-wide survey. It covers topics relating to the skill levels of employees and applicants for jobs, the type and extent of training provided by employers and the inter-relationships between skills, training and business strategy. The results of the research were published in January 2014.

The research was carried out by a team from IFF Research and guided by a steering group comprising representatives of the Department for Business Innovation and Skills, the Department for Work and Pensions, Department for Education, the devolved governments of Scotland, Wales and Northern Ireland, the Skills Funding Agency (SFA) and UKCES.

Methodology

As with previous surveys, there were two parts to the ESS 2013, both conducted by telephone:

  • a core survey of UK employers;
  • the ‘Investment in Training Survey’ – a follow-up survey of workplaces that had provided training for employees in the previous 12 months.

The sample was compiled using Inter-Departmental Business Register (IDBR) data for March 2012. Establishments across the whole of the UK, in all sectors of the economy, with at least two staff were sampled. Sole traders and establishments with just one employee and no working proprietors were excluded from the population. 

Core survey fieldwork comprised over 91,000 interviews undertaken between March and July 2013. A response rate of 44% was achieved (up from 39% in 2011). The response rate was highest in Scotland (51%) and lowest in England (43%). For the purposes of comparability, questions largely followed the 2011 survey. Some questions were dropped to keep the size of the questionnaire manageable and new questions relating to areas of particular policy interest were introduced. The net result of these changes reduced the average length of the survey by two minutes (bringing it to 22 minutes in length). 

Findings from the core survey are weighted (by size, sector and region) to represent the total population of UK establishments in which at least two people work. Weights allow reporting by establishment and by employees covered. 

Discussion of results

The survey produced the following findings.

Vacancies

In England, vacancy numbers had recovered to pre-recession levels. Employers reported a total of 559,600 job vacancies, 45% up on the 2009 figure. The proportion of employers reporting vacancies in Northern Ireland remained unchanged at 10% between 2011 and 2013, suggesting that the recovery there is lagging behind the rest of the UK. 

‘Skills shortage vacancies’ – where businesses cannot find recruits with the required skills for the position – were found to have increased from 16% of all vacancies in 2011 to 22% in 2013. Overall, nearly 3 in 10 vacancies are reported as being hard to fill, with skills shortages being the main reason for this.

Skills shortages

Skills shortages are most common in Scotland. A quarter of all vacancies are reported to be hard to fill because of skills shortages, an increase of 10% since 2011. Data from England, which are available for a longer time period, show a near doubling in skills shortages since 2009, increasing from 63,100 to 124,800. 

Skilled trades roles continue to be the jobs that employers report the greatest difficulty in filling due to skills shortages. Greater proportions of employers than in 2011 reported that applicants lacked core generic skills such as oral and written communication, literacy and numeracy skills.

Employee skills gaps and skill mismatches

The majority of employers report that their staff are fully proficient at the jobs they are employed to do. The number of employers reporting that the staff are not fully proficient has decreased marginally, with 15% of employers reporting in 2013 that some staff are not fully proficient compared with 17% in 2011. The proportion of employees thought to be affected has remained unchanged between the two surveys at 5%. Proficiency issues affect a larger proportion of employees in Scotland, Wales and Northern Ireland than in 2011, whereas in England the proportion has decreased. Employers report in three-quarters of these cases that the skill gaps are due to employees being new in their roles and still undergoing training; thus the issue is ‘transient’.

Employers are found to typically face either the issue of struggling to find applicants with the correct skills for vacant positions or having skills issues within their workforce. It is rare for employers to respond that they are struggling with both of these issues. Some 1% of employers report both skills shortage vacancies and skills gaps.

Nearly half (48%) of employers reported the under-utilisation of skills, while 4.3 million workers (or 16% of the UK workforce) are reported as being over-skilled for the jobs in which they are currently employed. Employers in England were least likely to say that any of their staff were over-qualified and over-skilled. Over-skilling is most common in hotels and restaurants and least common in public administration and manufacturing.

Training

Most employers fund or arrange training for staff; this is unchanged since 2011. The ESS 2013 showed 66% had done so over the preceding 12 months, compared with 65% for 2011. The most common reason that employers report for not giving training is that they believe that their staff are already fully trained for their roles. Although the proportion of employers arranging training for staff has been stable since 2011, the average amount of training received by each employee over the previous 12 months had decreased from 7.8 days in 2011 to 6.7 days in 2013. Overall, the number of training days provided by employers over the previous 12 months had decreased from 115 million to 113 million days. Total employer investment in training decreased by 5% between 2011 and 2013. There was evidence, however, of training being offered more widely across the workforce: the proportion of staff trained rose from 55% to 62%.

High-performance working

High-performance working (HPW) is defined by UKCES as ‘a general approach to managing organisations that aims to stimulate more effective employee involvement and commitment in order to achieve high levels of performance’. It was found to apply to 12% of workplaces. HPW employers are twice as likely to report a vacancy compared with non-HPW employers (29% compared with 13%). HPW employers are more likely to report skills gaps (23% compared with 14% for non-HPW employers), though the proportion of employees affected is the same (5%) for both HPW and non-HPW employers. On the other hand, HPW employers report lower levels of hard-to-fill vacancies compared with non-HPW employers.

Commentary

The picture that emerges from the ESS 2013 supports the lay and academic view that the UK is emerging from the recession with higher numbers of vacancies being reported by employers. There may be some potential for skills shortages to limit this growth or to stop businesses reaching their full potential. There is some evidence that employers are reducing the amount of training provided, suggesting that proficiency issues (that is, individual skills gaps) are perhaps less important to employers than skills shortages. 

 

 

 

 

 

 

 

 

 

 

 

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