Discover how the UK's most significant skills gap in 18 years affects industries and what businesses and educators can do to close it. Explore skills-based hiring, upskilling, and strategic partnerships to meet future workforce demands.

LATEST figures indicate that the UK is facing its most significant skills gap in more than 18 years, with 80 per cent of sectors struggling [1]. As cautious hiring trends persist, it’s clear that businesses and academic bodies need to act now or get left behind.

The key to staying ahead lies in investing in people. By working together, employers and education and training providers can fill the gap by upskilling existing staff, creating more job opportunities, and creating strategic plans for future workforces.

“As the new government takes office, it’s vital that they implement a cohesive plan that involves educational institutions, businesses, and policymakers to equip our workforce with the skills needed for today’s economy,” said Rosalind Gill, Head of Policy and Engagement at the National Centre for Universities and Business (NCUB).

“As technology quickly advances, the labour market is transforming at pace, and the skills gaps will only become more acute. Failure to address these issues now risks further economic stagnation and missed opportunities for growth.”

Local authorities, colleges, University Technical Colleges (UTCs), and universities must combine their efforts to address the skills shortfall. These key stakeholders can make a lasting impact by working closely with businesses on progressive apprenticeships, on-the-job training schemes, and continuous professional development (CPD). Through collective action, businesses can benefit from innovative recruitment strategies, industry-specific curricula, Skills Bootcamps, T-levels, and Higher Technical Qualifications (HTQs). 

Understanding the Skills Shortage 

As the economy evolves, so do the skills needed across various fields and industries. Our skills system must cater to these changes, ensuring each local area can effectively respond to green growth, emerging technologies, and new global markets.

The Skills for Jobs White Paper outlines the Government’s plan to revamp the UK’s technical skills system to better align with employers and the broader economy’s needs. To support this new direction, the Department for Education (DfE) has rolled out Local Skills Improvement Plans (LSIPs) and Local Skills Improvement Funds (LSIFs).

Designed to tackle specific local skills shortages and foster stakeholder collaboration, LSIPs aim to:

• Put Employers in the Driver’s Seat: Employers are not just participants but central in shaping local skills systems. They can use LSIFs to improve education delivery and skill investment.

• Encourage Dynamic Collaboration: Foster direct & effective working relationships between employers, education providers, & local stakeholders.

• Boost Learner Outcomes: Equip learners with the skills they need to secure good jobs & enhance their career prospects.

Organised around clear occupational routes and pathways, these efforts help to bridge the gap between education and employment and drive meaningful change.

For instance, through the West & North Yorkshire COC, Calderdale College recently received more than £6m LSIF funds to address local skills gaps. The Halifax-based college applied for the funds on behalf of a consortium of local colleges, sixth forms, and training providers. The money was invested into skills improvements in construction, creative industries, digital, engineering and manufacturing, health and social care, and financial and professional services.

What Is a Skills Gap?  

  A skills gap occurs when a job applicant or current employee’s skill set doesn’t align with the requirements of a specific role. To fully grasp this, it’s crucial to distinguish between hard and soft skills. While many businesses focus on hard technology skills as their primary gap, others argue that soft skills are equally, if not more, important. Ultimately, employers seek a balanced workforce with a blend of both skills. 

• Hard skills relate to job-related knowledge, expertise, and abilities that employees need to perform their work tasks well. These could be academic qualifications, vocational certifications, or experience using specific tools, equipment, or software, such as computer & analytics, marketing, presentation, languages, management, design, and technology. 

• Soft or non-cognitive skills are personal qualities and people skills that employees need to get ahead in the workplace. These attributes are essential in most professions. They include: Communication & listening skills, Leadership, Problem-solving, Teamwork, Good work ethic, Time management, Empathy, and Perseverance.

Business Strategies: Closing the UK’s Skills Gap

  “In the face of stiffening economic headwinds, skills-based hiring is not just a nice-to-have, it’s a necessity for UK businesses to thrive in 2024 and beyond,” said Michael Stull, Director at ManpowerGroup UK. “Employers have a stark choice. They can either continue fishing in the same pond for scarce skills, or adopt a new approach by focusing on skills-based hiring.” 

Skills-based hiring prioritises an applicant’s abilities and experience over education or background. Some argue this approach could alleviate talent shortages, drive innovation, and create a more diverse workforce. But how do people gain the necessary skills in the first place?

A Collective Effort: Employers & Educators Working in Unison 

Lindsay Conroy, Head of Apprenticeships at UCAS, believes an “all-hands-on-deck” approach is vital in helping break fresh ground. “Employers and education providers alike need to actively participate in discussions surrounding the challenges young people face and work together to provide solutions,” she said.

“Now we need the sector to come together, through the critical work that training providers and colleges do with employers, to help create opportunities. We need to be talking about population growth and that young people will bring innovation, new ways of thinking and new skills to the workforce. They will be the population who tackle the skills shortages employers are crying out about.” 

Strategies such as upskilling, reskilling, university collaboration, and apprenticeship investments are crucial for filling the skills deficit. Let’s explore these strategies and understand how businesses can implement them.  

Upskilling & Reskilling 

Businesses are constantly adapting to new working methods, from post-pandemic adjustments to hybrid models and emerging technologies. This shift has underscored new skills gaps that need addressing to stay competitive and innovative. Challenging your workforce through upskilling and reskilling helps them adapt to new technologies and evolving industry demands while futureproofing your business.

Here’s how to get started: 

• Identify Skill Gaps: Conduct regular skills assessments to strategically pinpoint where training is needed most and which members of staff need what support
• Access Training Programmes: Tap into funded courses or free support provisions such as Help to Grow: Management and Help to Grow: Essentials & Skills Bootcamps. Numerous free online courses are available, including V-Hub. Backed by entrepreneur Steven Bartlett, the free resource aims to help SMEs get the digital skills they need to thrive. Consider tailoring your in-house training to your company’s needs.   Embracing lifelong learning is not just a strategy; it is a mindset. Encourage a culture where continuous learning is valued. This can include support for professional certifications, such as CIM, apprenticeships and degree apprenticeships. 

With a renewed focus on science, technology, engineering, and mathematics (STEM) skills, stakeholders need to unite to empower youngsters with the skills they need to succeed in their chosen fields.

Continuous Professional Development (CPD): 

  CPD is vital for keeping your team sharp and competitive. Here’s how to implement it effectively:   

• Structured CPD Plans: Develop clear CPD pathways for employees, incorporating mandatory training & optional courses for personal growth. 
• Regular Workshops & Seminars: Host events with industry experts to keep your team updated on the latest trends & best practices. 
• Mentorship Programmes: Help knowledge transfers by pairing less experienced employees with veterans. This will foster a culture of professional growth and development within your team. 

Collaborating with Universities & Colleges: 

Collaboration is key! Here’s what businesses should focus on when partnering with universities and colleges:   

• Education Engagement: Contact schools, colleges and universities about any short courses, business enterprises or professional qualifications they provide. Is there anything on offer that could help your business grow?
• Network: Cultivate contacts with your local education providers. Seek opportunities to visit these organisations to talk to youngsters about your business and hold free skills workshops and fun training sessions. Take part in careers and job fairs.
• Tailored Curricula: Work with universities to develop courses that match your industry requirements. This ensures graduates have the skills needed in the workforce. 
• Internships and Placements: Offer real-world experience through internships & placements, which help students apply their knowledge & gain valuable insights into your industry. 
• Research Partnerships: Collaborate on research & development projects that can drive innovation & provide practical solutions to industry challenges. 

Investment in Apprenticeships: 

  Here’s how companies can benefit from investing in apprenticeships:   

• Comprehensive Apprenticeship Schemes: Design programmes that balance on-the-job training & classroom instruction.
• Financial Incentives: Use government grants & incentives for businesses supporting apprenticeship programmes. 
• Career Pathways: Develop clear career progression pathways for apprentices to ensure they see a future within your company. Work with colleges, UTCs & universities to upskill your existing staff through apprenticeships.

Education Providers: Key Players in Solving the UK’s Skills Challenge 

The skills shortage was recognised as the second most significant risk to UK businesses in 2023. As cost-of-living challenges persist, post-school prospects are swiftly changing for youngsters contemplating their academic and employment avenues.

Education providers must collaborate with businesses to create targeted courses and training programmes that align with current job market demands and industry needs. Industry placements and apprenticeships are beneficial and essential in bridging the skills gap.

A recent report by The St Martin’s Group underscored the significance of apprenticeships in addressing the UK’s skills gap. The research showed that 99 per cent of employers recognise the benefits of offering apprenticeships. These include the apprentice gaining knowledge and skills directly relevant to their business needs, improving staff retention, and significantly reducing skills gaps.

Mastering the right skills is crucial for employees, students, and apprentices to reach their goals. Enhancing apprenticeship opportunities through robust sector partnerships could help spread this success across various industries.

Latest figures show that 40 per cent of all UCAS registrants are interested in an apprenticeship, which is set to grow. A further 91 per cent of students craved help developing their soft and hard skills. Some apprentices might feel like they’re diving straight into a job, with the pressure to perform like seasoned pros. They need skill-building, but their employers should also reassure them that it’s all about growth and learning.

Source: Project Next Generation: Early Careers & Apprenticeships Report

Apprenticeships play a starring role in the Government’s strategy to bridge the skills gap, as highlighted in Enabling Better Outcomes: A Wider View of Apprenticeship Success. The Government is increasing investment in the apprenticeship system in England to £2.7bn by 2024-25. The report emphasises the vital partnership between employers, government bodies, and educational institutions. We are told that employers can make a real impact by investing in robust off-the-job training (through financial support, tax incentives and grants) and providing staff with training resources or mentorship programmes. 

It also encourages apprentices to look into financial support, such as the Learner Support Fund (LSF), which covers travel costs, accommodation, laptops, and Ofsted-registered childcare. It recommends that large employers consider providing more financial aid to their apprentices. 

It noted that employers could significantly boost apprenticeship completion rates by training managers and fostering a supportive culture. With clear guidance from the Department for Education (DfE), employers could confidently fulfil their duties. The Apprenticeship Agreement template could be simplified to clarify roles and responsibilities. And relationships could be bolstered by holding regular three-party meetings between employers, education providers, and apprentices.

Bridging the UK’s skills gap calls for a comprehensive strategy. By concentrating on upskilling, reskilling, CPD, university partnerships, and apprenticeships, businesses can cultivate a more robust, flexible workforce prepared to tackle the challenges of tomorrow.

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Also written by Angela