How Skills Shortages Are a Surprisingly Wider Global Issue

How Skills Shortages Are a Surprisingly Wider Global Issue


A shortage of skills across science, tech and engineering is threatening the ambitions of many companies. Exciting technologies such as artificial intelligence and virtual reality offer new possibilities to a wide range of industries but employers are struggling to recruit in these areas.

There are also skills shortfalls in critical areas such as cyber security and data science.

These shortages don’t just affect the UK and other developed countries. In fast-growing economies such as India, Brazil and Turkey, the supply of skilled and qualified workers just isn’t sufficient to meet the needs of fast-expanding industries such as tech and IT.

Perhaps the problem is caused by technology moving too quickly for educational institutions to keep up with demand.

Even where candidates do have the formal qualifications in their subject area, they frequently don’t have practical experience working in their field. This could be one of the reasons explaining the very puzzling employment delays experienced by computer science graduates in the UK.

Although it’s claimed there are 20,000 UK graduate vacancies each year and only 7,500 domestic graduates to fill them over 11% of IT graduates are still unemployed 6 months after leaving university.

It seems that employers need more than formal qualifications – new graduates aren’t immediately segueing into the roles that employers claim need filling.

From the perspective of universities and other educational institutions, it’s almost pointless to teach the skills that are of immediate use to employers – because these will be probably obsolete on graduation.

It’s also very hard to keep a curriculum up-to-date when the industry evolves so quickly. It makes more sense to equip students with more general key skills and competencies, helping them adapt to the needs of the industry.

Finding solutions to the skills shortage

So what’s the solution? Firms probably need to take a longer-term approach to tackling the skills shortage – particularly as the Brexit negotiations get underway.

There’s evidence that foreign workers are already being put off coming to the UK as uncertainty about freedom of movement continues, and it’s not impossible that it could be taken away completely as part of the Brexit outcome.

In the absence of external candidates to fill roles, some companies are choosing instead to fill their own requirements by training internal workers to fill roles. Many organizations are put off by the cost of this, and also by the fear that the worker will depart, taking the skills and knowledge they’ve gained with them.

It’s difficult to overcome this mentality in some senior management teams. It can also be hard to get the appropriate training by external providers. But ultimately, firms are going to have to start taking a different approach if the skills shortfall is ever going to be addressed.

Apprenticeships and internal training are a very long-term approach to filling requirements. Organizations need to start planning further ahead for the skills they are likely to require in the future, rather than expecting the skills to be available in the labor market whenever they need them.

Seeing the bigger picture

Of course, when employers talk about skill shortages what they really mean is a shortage of qualified workers available at the rate they are prepared to pay to employ them. Paying a higher salary is one solution to the skills shortage but it ultimately results in a wage arms race against other employers.

It’s also a short-sighted approach. Workers don’t only consider salary when they plan their careers, so it’s important to consider the bigger picture.

Although salary is important, candidates can also be wooed into roles by non-financial benefits, including a well-defined and structured career path with development opportunities. Employers can also make themselves look more attractive by offering flexible working arrangements, which may make all the difference to some workers.

Once workers are brought on board it’s important to consider retention. Workers will leave if the next stage of their career isn’t going to happen with their current employer, so your organization needs to offer a structured career path or development opportunities.

An article in Forbes magazine argued that the role of the manager was critical to retention, claiming, “People leave managers, not companies”.

The skills shortage doesn’t seem to affect all markets to the same extent. According to OECD data, firms in Japan are most affected by skills shortages and an estimated 81% of Japanese firms face the problem.

Japan’s an unusual country: there’s a low birthrate meaning few people enter the workforce, and low immigration so foreign workers aren’t able to fill the gaps. In 2015 an astonishing 96.7% of Japanese graduates went straight into work.

But it’s not surprising these graduates are snapped up – only 1.25m entered the workforce in 2015 compared to 2m in the mid-90s.

Japan’s cautiously extending the numbers of foreign workers it admits but there’s a language barrier that makes it harder to recruit from overseas. Some Japanese firms have switched to using English internally in order to surmount the skills shortage and bring in workers from abroad.

The UK’s fortunate that English is relatively widely spoken around the world, which opens up the economy to a wider pool of talent.

In fact, the UK fares relatively well compared to other countries when it comes to skills shortfalls. The US and Australia both have higher skills shortages, despite also speaking English.

The free movement of labor within the EU may have advantaged the UK when it comes to acquiring skilled workers – a position that may change if it withdraws from this agreement as part of the Brexit negotiations.

It doesn’t seem that the world’s skill shortage issue is going to be solved anytime soon. If the speed of technological development is the root cause of the issue, then we may face a future where skills shortages become the norm – assuming the pace of technological change doesn’t slow down.

Firms may need to take a long-term approach and invest in worker development to meet skill requirements. There may also be other solutions such as working alongside educational institutions in order to train workers in emerging technologies or work with students to prepare them for the workplace.

Organizations that crack the skills shortage problem may ultimately emerge with a competitive edge that advantages them in the marketplace.

Related posts

Subscribe to our newsletter