Home > News > February 2004 > 03-Feb-2004

Lack of skills leaves 20% of vacancies unfilled, says survey

The highest proportion of vacancies was in the West Midlands, with the most critical skill shortages (46%) occurring in the wood and paper industry, followed by the construction industry (38%) and the transport equipment industry (35%)

The Learning and Skills Council (LSC), the organisation responsible for skills development in England, commissioned the survey which shows that almost half of the employers reporting "skills shortage vacancies" said they were losing business to competitors as a result of the lack of skilled workers.

According to 83% of respondents, skill shortages increase the workload for other employees; 52% said shortages led to customer service targets remaining unmet; 44% reported loss of business or orders going to competitors; 41% reported delays in new product development; and 38% reported increased operating costs, resulting in reduced profits

The figures come on the back of CBI data published in late 2003 showing that 29% of companies are exporting jobs overseas, with a further 43% feeling pressure to do so. A quarter of those polled cited labour skills as a key factor in their decision to relocate abroad. Recent high-profile relocations include leading businesses such as HSBC and P&O.

Skills gaps

Skills gaps within employers' existing workforces are also a significant problem. More than one fifth (22%) of employers say the skills of their workforce are not up to scratch. Having an under-skilled workforce adversely affects the bottom line for more than 30% of these employers, who stated higher operating costs as a consequence. Over a fifth of these employers also said they lost orders as a result, with quality and customer service also significantly affected. Small businesses are the most likely to lose orders because of a lack of skilled staff.

The highest proportion of employers reporting skills gaps was in the West Midlands (15%), followed by Yorkshire and the Humberside (13%). The greatest proportion of skills gaps (72%) was ascribed to employees lacking experience, suggesting that these problems could alleviate over time. However, a significant number of skills gaps were attributed to a ‘lack of motivation' (33%), ‘failure to train staff' (29%) and ‘not keeping up with change' (27%), suggesting shortcomings among employers in equipping staff with the skills and motivation needed to carry out their jobs efficiently. Sales and customer service staff were ranked bottom it comes to doing their jobs competently

The implications for the UK economy are significant. According to research by Ernst & Young, industry losses through lack of basic skills are as high as £10 billion annually. The research also reveals that the same lack of basic skills costs a typical business with 50 employees £165,000 a year2. Significantly, output per hour worked is around 30% higher in the US, France and Germany than in the UK. Up to a fifth of this productivity gap with Germany and France is as a direct result of lower skills levels in the UK.

Training

And although four in five employers are now taking active steps to address skills deficiencies in their workforces, with employers spending some £4.5bn on training, only half of employees are benefiting. Meanwhile, nearly a third of employers experiencing skills deficits in their workforce admitted that it was their own failure to train their staff which was contributing to skills-related problems.

The Learning and Skills Council (LSC) is calling on business to work with it to address this challenge. Mark Haysom, Chief Executive of the LSC, said: "This survey is all about listening to and understanding the needs of business. To remain competitive both nationally and internationally, English businesses must be strategic about staff training and development. This survey, the largest of its kind into the skills needs of employers in England, will allow us to better identify those specific areas most in need of investment, and continue our work with employers to develop solutions. We need businesses to recognise the issues at stake here and work in partnership with us."

Over 40% of employers surveyed had provided no training for staff over the previous 12 months. Employers in London provided the least amount of staff training (40%), while employers in the North East were most likely to have trained their staff (64%). Encouragingly, 53% of employees have received training over the past year, with employers providing the equivalent of an average of five days training to all employees

The survey looks at 27 business sectors, and involves all sizes of organisation. One company involved was leading automotive manufacturer BMW. Commenting on the findings of the survey, Harald Krueger, Managing Director at BMW, said: "We know that addressing skills gaps in the workforce is crucial to the success of our business. At BMW, we're fully committed to staff training at all levels and consider it fundamental to the ultimate profitability of the company."

About the research

The National Employers Skills Survey 2003 (NESS) was commissioned by the LSC in partnership with the Sector Skills Development Agency (SSDA) and the Department for Education and Skills (DfES). 72,100 interviews were conducted with a representative sample of employers in England across 27 industries.

The survey was managed by IFF Research. IFF, in conjunction with the University of Warwick Institute for Employment Research (IER), undertook the national reporting of the survey. The questionnaire which formed the basis of the survey was drawn up by the Project Steering Group, Project Technical Group and MORI. Design of the sample was the responsibility of MORI. Fieldwork was conducted between April and June 2003 by IFF Research, BMG, and NOP World. ORC International and IFF weighted the data to ensure that it reflected the known population of establishments and employees in England from the Annual Business Inquiry (ABI) 2001.

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