Reference no: EM132306936

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’.

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?