Skills shortage still preoccupying UK business

While inflation and an increase in interest rates have dominated headlines in the UK of late, it has been the tight labour market and growing skills shortages that have been preoccupying the minds of many industry leaders.

Skills shortage still preoccupying UK business

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In a report last week, specialist recruitment firm Robert Half warned that the current situation - when there is a low jobless rate, a record employment rate and more than a million job vacancies - could fuel a deeper wage/price spiral, adding to inflation.The report called for new approaches to upskilling, reskilling, access to employment, diversifying the talent pool, levelling up the economy and further policy changes.

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Matt Weston, senior managing director for UK & Ireland at Robert Half, said: “While the current economic climate has been influenced by a myriad of unprecedented events over the last few years, the tight UK labour market, squeezed by chronic skills shortages, is substantially adding to inflationary pressures.“Our latest Jobs Confidence Index (JCI) has seen encouraging results in Q1 of 2023, as more people re-entered the labour market. The bigger problem, though, is the industries-wide skills gap. We’ve already seen a brain drain of talent from the country post-Brexit and our recent JCI signals poor figures for labour productivity growth across comparable occupations.“There simply isn’t enough talent to fill the over one million vacancies in the UK. This needs the participation of industry, academia and government to solve.”In the wake of the Bank of England's decision to raised the base by half a percentage point to five per cent, the British Chambers of Commerce (BCC), which has repeatedly called for a relaxation of immigration rules in a bid to overcome the skills shortage, said the government must act to tackle the problem.David Bharier, head of research at the BCC, said that while stubbornly high inflation remained the top concern for businesses, interest rate rises were increasingly worrying for a rapidly growing number of firms facing soaring borrowing costs.“There are several drivers of inflation which could be eased by a policy response. For instance, unprecedented tightness in the labour market is causing firms to bid up salaries, and trade barriers with the EU are driving up costs," Mr Bharier added.“The BCC has been urging the government to act on these issues for over a year and is ready to work in partnership with it to ease labour shortages and reduce trade barriers."Meanwhile, the construction industry's trade body has published a report saying the sector's worsening talent shortage has mainly been caused by firms' lack of engagement with the points-based, post-Brexit immigration policy.According to a survey conducted by the Construction Industry Training Board (CITB), only half of employers had knowledge of policy, with only seven per cent registered as licensed sponsors.James Butcher, chair of the Construction Leadership Council’s Movement of People Working Group, said: “It’s important that awareness issues and barriers to how employers use the points-based system are overcome.”Mr Butcher emphasised the necessity of companies accessing the Skilled Visa Route and the benefits of skills listed on the Shortage Occupation List.Last week, the government hosted the 'Business Connect - Skills for Growth' conference at which some of he largest British and international companies discussed how the UK could create a workforce fit for the future and could address the urgent recruitment needs of businesses.Opening the conference, Education Secretary Gillian Keegan said: "I know from my years in business that organisations drive innovation and create opportunities, but without skilled workers, it often feels like you’re driving with the handbrake on."Alexia Pedersen, EMEA vice-president at technology and business training firm O’Reilly, commented: "As the demand for jobs increases, so will the need for digital skills in order to meet the growing demand. However, our research shows that demand for digitally skilled workers in the UK is out-growing the level of digital skills available. “To minimise the growing skills gap, organisations must invest in creating a highly skilled workforce to meet the growing availability of staff."At the same time, employees should prioritise L&D (learning and development) to make themselves an invaluable asset to their company – proactively identifying training opportunities with a quality L&D partner, particularly one that aligns with their unique learning style and objectives. “While there is no cookie-cutter approach to upskilling, individuals should be granted access to a range of learning opportunities as part of a defined path of individual development and wider organisational culture of personal development.”  The skills shortage in the tech industry was also on the agenda when that trade body, techUK, hosted the first ever 'International Telecoms Conference', part of London Tech Week held in June.During the panel discussion, experts urged the government to take greater action in areas such as the promotion of skills through apprenticeships, 'returnerships', lifelong learning and degree qualifications.In a statement, techUK said: "The panel concluded that if the UK government can work with the increasingly complex telecoms ecosystem to foster innovation, ensure a sufficient pipeline of high-class talent, and place the UK on a sure footing in terms of international standards, then the UK is poised to take full advantage of the opportunities offered by future telecoms."One piece of good news to emerge from London Tech Week was a £54 million investment by the government to support the UK’s AI and data science workforce and "develop trustworthy and secure AI"Secretary of State for Science, Innovation and Technology Chloe Smith, said: “Despite our size as a small island nation, the UK is a technology powerhouse. Last year, the UK became just the third country in the world to have a tech sector valued at $1 trillion. It is the biggest in Europe by some distance and behind only the US and China globally.“The technology landscape, though, is constantly evolving, and we need a tech ecosystem which can respond to those shifting sands, harness its opportunities, and address emerging challenges. The measures unveiled today will do exactly that.” Reacting to the announcement, Sridhar Iyengar, managing director of Zoho Europe, described the development of trustworthy AI as critical."It is great to see the UK making investment to create a safe and ethical playing field for AI bringing together expertise across academia, business and the wider public to drive this forward," he said.“AI offers huge potential for business and the economy, as a tool to improve efficiencies and provide enhanced customer service capabilities via the use of customer service assistants, data analysis, forecasting and more.“As the debate around the future of this emerging and fast-moving technology continues, this collaboration can help to ensure best practice in providing guidance and regulation which sees AI applied to aid ethical and secure adoption and which can help the UK continue its ambition to take the lead in these industry developments. Further education from all parties will only work to increase trust and reduce fears.”

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