UK Skills Shortage Costing Organisations £6.3 Billion
The UK Skills Shortage
Audit and Assurance Leaders face challenging questions : where to secure the skills to support the business and will Brexit impact talent? How to increase business resilience through diversity? This is where GAP Talent can support : innovative solutions delivered today to secure leaders of tomorrow.
Ian Woodthorpe / Managing Director - GAP Talent
The majority of organisations in the UK (91%) struggled to find workers with the right skills over the past 12 months, according to a new report commissioned by The Open University. This skills shortage is costing UK organisations £6.3 billion per annum.
The Open University Business Barometer, which monitors the skills landscape of the UK, reveals that three in five senior business leaders surveyed (61%) report the skills shortage has worsened over the past year. Employers are paying a high price to ensure their organisations have the skills required to remain productive, with the shortfall now costing an extra £6.33 billion a year in recruitment fees, inflated salaries, temporary staff and training for workers hired at a lower level than intended.
With skills in short supply, many senior business leaders (70%) find that the recruitment process is taking longer - by an average of one month and 22 days. As a result, nearly two in three (64%) report spending more on recruitment, with costs increasing by 49 per cent or £1.23 billion in total.
While the process is taking longer, when identified, talented workers with in-demand skillsets are able to take advantage of their strong position, driving employers to spend an additional £2.16 billion on salaries. Two thirds (67%) were obliged to increase the salary on offer last year, typically on four occasions by an average of £3,400 each time.
Many organisations have been forced to give up on finding appropriate talent, choosing either to hire at a lower level than intended (63%) or to leave the role vacant (51%). To address the gaps left by doing this, employers spent £1.45 billion on training to bring workers up to the level required and a further £1.49 billion in temporary staffing.
The financial impact is not the only drawback of the skills shortage. Around half of organisations (47%) say they are not as agile as they need to be due to a lack of skills, and in a changeable political, economic and technological climate adaptability and flexibility are essential. Management and leadership skills are particularly important for navigating change smoothly, yet nearly three quarters of employers (73%) have experienced difficulty in hiring for these roles in the past 12 months, which is cause for concern.
More concerning still is that more than half of senior business leaders surveyed (53%) expect the situation to deteriorate over the next 12 months. More than two in five (44%) expect their organisation to struggle financially in the next year, indicating that the issue needs to be urgently addressed.
Heightening the focus on work-based training could help to increase the skills available in the workforce. Despite some teething issues, more than three in five business leaders (61%) agree that the apprenticeship levy – introduced by the UK government to encourage greater investment in work-based training – should help to reduce the skills shortage in the next five years.
Employers are spending more than £6 billion a year on the skills shortage, predominantly through recruitment activities, but buying skills and not building them is a short-term approach, which ultimately won't pay dividends. It is crucial that organisations take a more sustainable approach, using training to address their skills gaps from within and reducing their spend in the long-term.
Investing in work-based training, which allows workers to earn while they learn, will help organisations to bridge the divide between the skills available in the labour market and the skills they need, allowing them to focus on stability and growth in the future. Simply put, better training and development will result in more agile, loyal, motivated and productive workforces that are fully equipped to rise to new challenges and drive organisations forward.
David Willett, Corporate Director at The Open University
Source: The Open University