Higher-skilled roles rise as skills gaps widen – new report

More than three-quarters (79%) of UK businesses expect to increase the number of higher-skilled roles over the coming years. Yet two-thirds (66%) fear that there will be a lack of sufficiently skilled people to fill vacancies. That’s according to the 2018 Education and Skills Annual Report by the Confederation of British Industry (CBI) in partnership with Pearson.

The report represents 28,000 businesses and reveals that 85% of firms are expecting to maintain or increase investment in training in their workforce. Currently UK employers spend £44.2 billion on training expenditure each year.

When asked about the impact of the apprenticeship levy, the report highlighted a drop in the number of firms offering apprenticeship programmes (from 83% in 2017 to 70% in 2018). Worryingly, 59% of those firms that offer such programmes have experienced difficulty in recruiting apprentices or expect to do so in the next three years. And over a quarter (26%) have taken the decision to absorb the levy as an added cost of doing business.

Business engagement with young people in education reduced from 81% in 2017 to 75% in 2018. Encouragingly, two-thirds of respondents (65%) want to play a greater role in supporting schools and colleges.

“Room for optimism”

John Cope, CBI Head of Education and Skills Policy, said: “This year’s survey shows the scale of the challenge to address skills gaps, with two-thirds of businesses deeply worried that there aren’t enough sufficiently skilled people to fill vacancies.

“Yet there’s room for optimism. The vast majority of firms do expect to maintain or even increase their investment in staff training, as well as increase the number of higher-skilled roles over the coming years. This is the first time since 2014 that these numbers have been so positive.

“Policymakers, business, the education sector and the CBI all have their role to play, in helping the two-thirds of companies wanting to support schools and colleges.”

Qualifications are just one part of the mix

Rod Bristow, Pearson’s President, UK and Core Markets, said: “It is impossible to ignore the primary trend in this report – the gap between what is learned in schools, colleges and universities and what is valued by employers. Qualifications are one part of the mix, as indicators of achievement and ability, but nurturing the right attitudes, behaviours and skills as young people progress through the education system is just as important.”

Key points from the report

1. Technical education is highly valued by firms, but requires urgent improvement

Businesses are committed to making the apprenticeship levy and T-levels work. Ongoing reform of the levy announced at Budget 2018, as well as collaboration with companies on T-levels and retraining, reflects long-standing business advice and will help people adapt to the fast-changing world of work.

Firms look forward to working with the Government in the lead up to the Spending Review to agree how the apprenticeship levy can evolve into a more flexible “skills levy”.

Key apprenticeship levy survey findings:

  • The apprenticeship levy must be reformed to include:
    • allowing use of funds to cover a wider range of costs for training (59%)
    • greater flexibility in spending levy funds, including their transfer and pooling (51%)
    • less bureaucracy to make the system more responsive and more user-friendly (47%).

Key T-level survey findings:

  • 41% of employers think T-levels are important as part of developing technical qualifications fit for the future.
  • Given their early stage, it is unsurprising that 42% of companies were unaware of T-levels, demonstrating the importance of better communication of these reforms to employers.
  • Nearly two-thirds (64%) of businesses are largely or wholly unaware of the 45-day work placement element of T-levels.

2. Links between business and education remain strong, but progress is stalling

Effective business-school and college partnerships have a key role to play in raising levels of academic attainment and helping young people develop their careers.

Survey results show:

  • The top three ways in which businesses currently engage include visiting schools (83%), offering information about apprenticeships and traineeships (70%), and giving careers advice and talks (68%).
  • The top two reasons why firms struggle to engage with schools include:
    • 48% of firms say that there is too little guidance/support on how to make encounters worthwhile for young people
    • 47% find processes difficult and time consuming (including DBS checks and health and safety requirements).
  • 81% of employers indicated that readiness for work is one of their three most important considerations when recruiting school and college leavers.

3. Higher education must meet the UK’s future skills needs critical for global competitiveness

A successful post-18 education system must prepare all our young people, regardless of background, for the changing world of work. It must also provide the opportunity for those already in work to retrain and upskill.

Survey findings show:

  • 87% of businesses that employ graduates have maintained or increased their levels of graduate recruitment over the last year.
  • 54% of those firms with ties to higher education have increased their engagement over the past year, with just 6% cutting back.

4. There’s fresh impetus to reskill existing workforces and instil a culture of lifelong learning

While it has been common practice to encourage employees to continue learning and developing throughout their careers, it’s now essential to upskill and retrain employees to stay competitive, with technological advances changing the nature of work. Businesses will need to incorporate a culture of lifelong learning to provide training and development opportunities that meet the demands of the future.

Survey findings show:

  • 62% of firms are expecting to retrain at least some employees to take up new roles in the year ahead, with over half of those businesses identifying new technologies or new services driving the need to retrain.
  • Nearly nine in ten (87%) anticipate upskilling employees in their current roles during next 12 months.
  • The single most common driver behind upskilling is the need for employees to acquire new skills/knowledge to raise productivity (reported by 74%), followed by the introduction of new technologies or services (63%).

Are you worried that you may not be able to fill all your higher-skilled vacancies in the future? For advice on this and other HR matters, email me or call me on 020 7099 2621.