People powerDoes the UK economy have the skilled people it needs for the future?June 2018 People power2People power1000employers were asked for their insight and views in this reportDoes the UK economy have the skilled people it needs for the future? 3Contents1. Foreword 052. The employers’ outlook for the next 3 - 5 years 063. Predicted job growth and decline by occupation to 2024 084. Skills gaps and shortages 125. Quantifying the impact of skills gaps and shortages 136. Employers’ solutions 167. Brexit 228. Attracting new talent 249. Predicted growth and decline by industry to 2024 2510. Focus on Construction 2711. Focus on Human health and social work 3212. Focus on Wholesale and retail trade 3613. Focus on Accommodation and food services 4214. Recommendations 4615. Methodology 50People powerThere has been a lot of talk over the last few years about the problems employers are having recruiting new employees, particularly in those industries that tend to be low paid, and which have relied heavily on workers from countries within the European Union. With the lowest unemployment figures for decades, but around 800,000 vacancies being advertised for at any one time, it is fairly clear that competition to attract workers is fierce.45Does the UK economy have the skilled people it needs for the future? 51With the lowest unemployment figures for decades, but around 800,000 vacancies being advertised for at any one time, it is fairly clear that competition to attract workers is fierce. Exacerbating the issue, the jobs market is in one of the greatest states of flux we have seen for decades. Increasing globalisation and digitalisation, the introduction of artificial intelligence and the automation of many roles means that industries and jobs are changing incredibly quickly. And then of course there is Brexit, as well as a move more generally by Government to curtail economic migration to the UK. There is a huge amount of uncertainty about how this will play out in the medium to long term and what the impact will be on the UK labour market. It’s not surprising then that many employers feel they are facing a very uncertain future, with some sectors in particular, such as construction and accommodation and food services, relying heavily on overseas labour to fill vital roles, and already experiencing huge recruitment challenges. As happens from time to time in the life of any economy, the labour market currently appears to resemble a giant snow-dome that has been given a huge shake, and as yet we don’t quite know where exactly all the pieces will fall.In this country we have a real issue with low productivity and it’s no coincidence that we also have one of the lowest levels of employer investment in skills development in Europe, with the UK ranking 23 out of 26 counties according to the CIPD. Some work has been done by the UK Government to try to stimulate greater employer investment in skills with the introduction of the apprenticeship levy in 2017, the careers strategy and the forthcoming T Levels, with varying degrees of success to date.ForewordTo understand the impact of these interlocking issues on UK plc we polled over 1,000 UK employers to find out how they are faring in terms of recruiting and training the skilled workers they need to thrive and to uncover what challenges they see on the horizon. We also worked with economic modellers Emsi to consider the current state of the UK labour market and predict what it may look like in the coming years.This research aims to give some context and pointers to where future demand is likely to be, so that those currently grappling with these issues can have a more solid basis for doing so. It also provides practical recommendations for employers, Government and the education sector to help combat skills gaps and shortages. It is our belief that this data and analysis that follows might shed enough light on future job demand and workplace trends to be able to influence the answers to some of the big questions facing the British economy. As ever with research such as this it’s only as useful as the actions that come out of it and we sincerely hope that the nine recommendations we’ve outlined will be acted upon to create real and lasting change and stop this research becoming yet another piece of commentary on such a vital issueKirstie Donnelly MBEManaging Director, City & Guilds and ILMThe UK is in the grip of a skills crisis that is affecting many of our industries and impacting productivity, growth and ultimately the bottom lines of businesses across the country. Our education system is simply not well aligned to the needs of industry and employer investment in skills development has not recovered since the 2008 recession.6People power2UK businesses are confident about their futuresSo what are the employers’ perceptions of the near future?Interestingly, despite the current economic and political climate the majority of employers (85%) told us that they are confident that their business will grow over the next three to five years, with nearly a third (32%) telling us that their business will grow significantly. It remains to be seen if this is a case of over-optimism as they tackle the impacts of issues such as; Brexit, increasing levels of migration control, the forecasted interest rate rises, the diminished value of the pound, skills gaps and ongoing poor productivity.Small businesses (between 1 – 50 employees) were less confident than large employers (5,000 – 10,000+ employees) about their growth prospects though, with only 21% of small businesses confident that they would see significant growth over the coming years, compared to 50% of large employers.Employers believe skills shortages and Brexit will impact their productivity in the next 3 – 5 yearsDespite their optimism overall, many employers told us that there are factors that are likely to impact their ability to grow and their productivity more generally in the coming years.Internal factorsSkills gaps and shortages are having a significant impactEmployers believe that the factors that will most impact their productivity over the next three to five years are; the struggle to recruit skilled workers (47%), the fact that existing staff do not have the right skillset (32%) and a lack of effective leaders and managers within the business (27%). The employers’ outlook for the next 3 – 5 yearsWhat internal factors might impact upon the productivity of your business over the next three to five years?of UK businesses are most worried about the impact of skills gaps on their businessI struggle to recruit the skilled people I needExisting staff don’t have the right skillsetLack of effective leaders and managers within our businessWe don’t have the right technology in placeThere are no internal factors that might impact upon the productivity of my business over the next three to five yearsOther, please specify47%32%27%27%27%27%External factorsBrexit begins to biteIt should come as no surprise with the deadline for the UK to leave the EU looming large, that employers told us that Brexit was their biggest concern when it came to their productivity over the next three to five years, with 46% stating it was a concern. Larger companies (1,001 – 5,000) were even more alarmed, with 55% stating it might have a negative impact on their ability to reach their potential.47%47%of UK businesses are most concerned about the impact of Brexit on their business7Does the UK economy have the skilled people it needs for the future? Concerns over Brexit were followed by over two-fifths (44%) of respondents stating that increased competition was likely to be an issue and over a third (35%) who told us that skills shortages in their industry were likely to be a problem. A further 27% of respondents said that the education system wasn’t creating the skilled individuals they needed.What external factors might impact upon the productivity of your business over the next three to five years?BrexitIncreased competitionSkills shortages in my industryNew legislation (i.e. GDPR)Education system not creating the skilled people I needSize of the market we operate in is likely to shrinkThere are no external factors that might impact upon the ability of my business to grow over the next three to five years46%44%35%21%30%27%5%People power83Before we start to consider which jobs UK employers are finding most difficult to fill, it is worth thinking about which job types are likely to grow in the coming years so we can see where competition is going to intensify. We have also considered which jobs are likely to decline and some of the reasons for this. It comes as no surprise that many of the jobs making up the top 20 high growth jobs in 2016 are those Predicted job growth / decline by occupation to 2024towards the lower end of the spectrum in terms of skills and wages, as these types of role are typically higher volume than higher skilled, more specialist roles. For example, cleaners and domestics, elementary storage occupations, kitchen and catering assistants, waiters and waitresses and bar staff as well as caring, leisure and other service job classifications.Top 20 occupations in Great Britain in 2016 by total job numbers400,000800,0001,200,0000JobsEmsi 2018.1 Ocupations, Employees and ProprietorsSales and retail assistants1,239,128Care workers and home carers788,909Cleaners and domestics724,715Other administrative occupations n.e.c.722,806Nurses682,776Elementary storage occupations589,850Kitchen and catering assistants574,786Sales accounts and business development managers508,647Book-keepers, payroll managers and wages clerks507,030Primary and nursery education teaching professionals415,438Managers and directors in retail and wholesale385,214Waiters and waitresses375,997Bar staff349,713Nursing auxiliaries and assistants342,365Secondary education teaching professionals341,940Large goods vehicle drivers340,813Teaching assistants330,176Receptionists307,749Chefs293,847Customer service occupations n.e.c.287,9352016 job numbers9Does the UK economy have the skilled people it needs for the future? Although there are a handful of higher wage occupations in the top 20 – primary and nursery education teaching professionals, secondary education teaching professionals, and nurses, for instance – the overwhelming number of occupations are low wage, with the average hourly pay for these jobs being just £12.52 per hour, compared to the national average for all jobs of £15.47. As for education level, most of the jobs in the top 20 require a lower level of educational attainment, with 16 of the 20 requiring a Level 1-3 qualification.In terms of job growth, this echoes what we find in the top 20 current jobs, albeit with some interesting differences. For example, although care workers and home carers is the second largest occupation in terms of job numbers, growth in this area is expected to outstrip all others with over 44,000 new jobs being created between 2016 - 2024. Elsewhere, Sales and retail assistants, which was by far the biggest occupation in terms of overall job numbers in 2016 (over 1.2 million), is set to see only very slight growth between 2016 and 2024 (17,110 jobs) and this growth will be in largely non-retail related areas, reflecting the decline seen in high street shopping.Top 20 occupations in Great Britain by job number growth40,00030,00020,00010,0000JobsEmsi 2018.1 Occupations, Employees and ProprietorsCare workers and home carers44,470Nurses40,502Elementary storage occupations39,448Kitchen and catering assistants38,468Other administrative occupations n.e.c.32,158Waiters and waitresses26,337Large goods vehicle drivers22,913Book-keepers, payroll managers and wages clerks22,613Sales accounts and business development managers22,423Programmers and software development professionals20,215Cleaners and domestics19,955Nursing auxiliaries and assistants19,911Chefs18,987Receptionists17,342Sales and retail assistants17,110Bar staff16,036Medical practitioners13,738Information technology and telecommunications professionals n.e.c.13,013Financial managers and directors12,728Customer service occupations n.e.c.12,580Projected growth 2016-2024Next >