UK competitiveness threatened by a skills shortage

A skills shortage threatens the competitiveness of the UK written by Tim Baugh, biz4Biz director and partner at marketing agency Howardsgate.

The UK government has finally announced that the Hinkley Point power station will go ahead with expertise and financial backing from France and China. At the same time, contracts are being put out to tender for work on the HS2 high-speed rail line – firms in Spain, France, Germany, the Netherlands and China have expressed their interest in bidding. It appears that the country that opened the world’s first nuclear reactor and built the first rail line no longer has the expertise to build nuclear power stations or a high-speed rail line without help.

However, these major projects will create work in the UK, although both could suffer from a lack of workers as the UK faces its biggest skills shortage for a generation. The construction industry accounts for about 7% of GDP and is facing a severe skills shortage, especially in London and the south-east. A recent survey by the recruitment consultant Manpower found that UK construction companies are turning down work on larger projects due to a shortage of skilled labour.

Meanwhile, the Royal Academy of Engineering estimates that the UK needs to recruit and train 75,000 engineers every year until 2020 to meet demand. It says the current figure is too low at around 22,000 per annum.

The UK’s productivity (output per worker) also lags behind our EU rivals like France and Germany. If the UK’s productivity matched that of the USA, the UK economy would be 30 per cent bigger than it is now. There are a number of factors that affect productivity: poor infrastructure, red tape and over-regulation, a lack of affordable housing and so on, but the skills shortage is high up on the list and is something that needs addressing.

So how do we address this crisis? Apprenticeships are now available in a wide range of careers, from advertising to law and information technology. However, the attitude in schools needs to change. Many schools discourage pupils from taking up apprenticeships and believe a university education is all that counts. This view needs to be challenged.

Most young people are unaware of the vast array of career opportunities open to them in the workplace, much less the skills they needed to secure them. There needs to be better careers advice at school, which should involve the business community so that young people can make informed decisions about possible careers and future education options. Young people need to see that employers value apprenticeships and practical degrees in science and engineering, and that they offer a path into a secure a well-paid career. They need to be made aware of the skills that will be in demand when they leave school.

And let us not forget adult learners. The pace of technological change and the need for people to work beyond 65 means some workers will have to retrain to equip themselves with skills employers need. We should value the concept of lifelong learning to improve and upskill the UK’s workforce to ensure the UK remains competitive, drawing on the potential of older workers and those who did not fare well at school, but want to return to education later in life.

It is therefore disappointing to see more cuts to the further education budget, which will impact on the ability of colleges and training providers to provide much-needed vocational training to plug skills gaps. We will pay a heavy price for such short-sighted policymaking.

As a leading global economy, we need to invest money in developing and maintaining a highly skilled workforce so that the UK improves its productivity and remains competitive.

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