The skills gap is costing UK businesses more than £2 billion a year in higher salaries, recruitment costs and temporary staffing with experienced people in high level jobs able to increase their salaries, according to research from The Open University.
The Open University Business Barometer – which monitors the skills landscape of the UK – finds that 90 per cent of employers have found it difficult to recruit workers with the required skills in the last 12 months and some have had to inflate salaries to attract talent above market rate, costing at least £527 million alone.
The findings come at a time of low unemployment in the UK, continued uncertainty about Brexit and concerns that EU nationals are being deterred from taking UK roles.
The OU says this means the recruitment process is taking longer for three quarters (75%) of employers – an average of one month and 24 days more than expected – adding to costs in the form of recruitment fees and hiring temporary staff, estimated to be at least £1.7 billion.
Talented workers with strong skill sets are in high demand and are now able to command a higher salary, says the report. More than half (56%) of businesses had to increase the salary on offer for a role well above market rate to get the skills they required in the last 12 months, with the average increase amounting to £4,150 per hire for SMEs and £5,575 per higher for larger organisations.
Managerial roles are proving particularly difficult to fill, with one in five struggling to hire both senior managers (21%) and mid-level managers (19%), and more than two in five (43%) finding candidates lack management skills. At the same time, around half (47%) of employers say that they are struggling to attract talent with the right IT skills, despite the crucial role digital skills play in the UK economy.
Many employers (53%) were unable to find a candidate with the required skill set and chose to hire at a lower level as a result, says the report. More than half (53%) are using training to boost these new employees’ skills and to bring them up to the level required for the role.
Over the next year, employers are planning to change the type of training they offer to their staff, with the number of organisations in England offering apprenticeships expected to nearly double from 31 per cent, to 59 per cent – most likely as a result of the new apprenticeship levy, introduced in April, says the OU. Just over half (52%) of employers in England expect the levy to reduce the skills gap in the next year, with three in five (62%) viewing it as an opportunity for their organisation.
Despite this, seven in 10 (69%) businesses believe they will struggle to hire people with the right skills in the next 12 months, implying certain skills may take longer to build. Three in five (58%) employers say the skills shortage has damaged their organisation.
Steve Hill, External Engagement Director at The Open University, said: “The UK challenge of finding talent with the right skills means that businesses need to look at recruitment, development and retention differently. Now faced with a shrinking talent pool, exacerbated by the uncertainties of Brexit, it is more important that employers invest in developing their workforce.
”Organisations need an agile workforce that can embrace change and meet new challenges. The cost of the skills gap to the UK economy shows it must become a business and government priority to build the skills and capabilities of each individual through investing in talent at all levels.”
The OU research comes amid reports of a nursing recruitment crisis, with the number of nurses leaving the profession now outstripping those joining. The top three reasons for leaving were working conditions, a change in personal circumstances and disillusionment with the quality of care provided to patients. Low pay was cited by a fifth of those leaving – pay rises have been capped at 1% since 2012.
An earlier report showed the number of nurses from the EU registering to practice in the UK has fallen by 96 per cent since the referendum result. Approved nursing degree courses last for three or four years full time or longer if taken on a part-time basis. Accelerated courses for graduates take two years.