UK looks to overcome damaging skills ‘deficit’

The United Kingdom has a skilled labor problem, particularly in England. According to the country’s Department for Education, nearly a third of all job vacancies in 2022 were related to skills shortages while a majority of firms regularly report being unable to fill vacancies.
An obvious knock-on effect is on productivity. Since the financial crisis, the UK has struggled with sluggish productivity growth and multiple studies point to a link between this and its widening skills gap.
One of the ways the new government wants to tackle the problem is by revamping the way it identifies skills shortages and trains workers.
Last month, Prime Minister Keir Starmer launched Skills England, a new government body which aims to cut the country’s skills gap by funding the training courses likely to produce the workers businesses need most.
“We are going to fire up the training of all UK workers,” said Starmer. “If there’s one thing we know that will drive innovation and accelerate productivity, [it] is having skilled workers.”
For Mark Gray, a country manager for the UK and Ireland with robotics firm Universal Robots, the UK’s skills shortage is something he comes up against on an almost daily basis.
He highlights the example of a small company he knows which employs 10 skilled welders. Many of the welders are over the age of 50, with two set to retire imminently.
A severe lack of skilled welders in the general workforce means they have to look at alternative solutions to maintain productivity and keep securing the contracts they need for the business to survive.
“One of the things that this company has looked at is putting two robot welders in there and having a younger operator who can program the robots,” Gray told DW. “And the robots will do the lower value, repetitive things, and let the guys with the skills concentrate on what they’re really good at.”
While Skills England could potentially help train up the robot program operators for a role like this quickly, it will also need to boost the training of more traditional manufacturing roles like welding, said Gray.
“The average age of a welder in the UK is 50,” he said. “And as they start to retire in the next 10, 15 years, that is going to leave us with a huge skills gap, which we are going to have to fill.”
The UK’s skills gap is regularly mentioned as a source of the country’s sluggish economic productivity.
“While we have one of the most highly educated workforces in the world, in terms of the proportion of the educated to degree level, we have a substantial skills deficit in terms of intermediate and technical skills and qualifications,” said Lizzie Crowley, senior skills adviser at the Chartered Institute of Personnel and Development.
She told DW there are also major deficits in terms of basic skills, including literacy, numeracy and digital. The country also faces challenges with poor leadership and management skills, she said, all contributing to lower productivity growth.
Kate Shoesmith, deputy CEO at the UK’s Recruitment and Employment Confederation, said the UK has had a significant skills gap for decades but that the COVID-19 pandemic emphasized and exacerbated the problem.
Shoesmith said her organization did financial modelling which estimates that skills shortages now cost the UK economy £39 billion (€46 billion/$50 billion) per year.
“It’s a huge cost in terms of lost GDP to the UK economy,” she said. “It’s a significant burden. Employers said it got far harder to recruit as they came out of the pandemic.”
The pandemic combined with the chaotic events of Brexit to intensify the problem, with many EU nationals leaving the UK workforce in recent years. 
“The figures show that the proportion of EU nationals that have left the UK is quite fundamental,” said Shoesmith. “So these were people that were living and working in the UK and contributing to the economy in terms of jobs. They’ve left.”
She said the current problems are apparent across multiple sectors, from data analysts and cybersecurity specialists in the digital economy, to truck drivers, teachers and health care professionals.
In the launch, Starmer emphasized that the UK would not turn to foreign labor as a way of dealing with the problem, describing it as an “easy lever.”
Yet the question is, will Skills England be able to solve the problem?
It will largely replace the existing Institute for Apprenticeships and Technical Education, but there is considerable optimism that it will be an improvement.
Mark Gray said the key is that the program works well with all stakeholders, from business to colleges and other third-level institutions.
“Getting training apprentices to go to those companies with the next generation of skills…if you invest in that, then you’re going to see the productivity increase in the companies that you’re supplying with labor,” he said.
Skills England aims to identify regional and sectoral shortages by working with the central government, local councils, educational and training institutions, businesses and trade unions. “Historically, there has also been a lack of join-up between skills and education policy and local and regional economic development, industrial strategy and workforce development,” said Lizzie Crowley.
“Skills England has the potential to address these weaknesses, by bringing together central and local government, businesses, training providers and trade unions to meet the skills needs of the next decade and ensuring alignment between the government’s industrial strategy and local skills and growth priorities,” she added.
Shoesmith said that while it’s still not fully clear how Skills England will work, the ambition to connect various parts of the system — and to focus on regional differences — is clearly something to welcome.
“The other emphasis of the remit for Skills England is to really look at the local and regional differences of the employment market and ensure that training adapts to deliver for that employment market,” she added.
As the new system takes shape, many comparisons have been made with other countries’ training models, from the likes of South Korea and Canada to Germany’s vocational education system.
But Crowley said the key to Skills England’s future success may be to focus on what has happened in the UK over the years, to understand what works best.
“While there are excellent examples internationally, in my view we would do better from learning from our own past successes and failures in this space,” she said. “And building on that knowledge rather than cherry-picking from other countries, which are operating in very different historical, political and socioeconomic contexts.”
Edited by: Rob Mudge