“The long-standing skills crisis…may now be escalating to critical levels.”
Director at The Open University, Viren Patel wrote a clear warning in last year’s published Business Barometer report. Commissioned by The Open University, the annual research of 1,000 senior business leaders has been tracking the skills shortage across UK businesses since 2017.
It’s true to say that it has been a year like no other. But for businesses seeking talent to strengthen their workforce, this should’ve been the year they were spoilt for choice. Yet, despite the labour market growing everyday with people looking for work, just over half (55%) of organisations said they are still struggling to find applicants with the right skills and experience.
This is in part due to the lowest paid and lowest skilled workers typically being hardest hit by the pandemic.1 But the numbers aren’t just another fallout of the last 12 months.
Patel writes that “senior leaders reporting skills shortages…has barely changed in the last three years.” While the figure for 2020 dropped slightly to 56%, the pre-pandemic total in 2019 stood at 68%, up from 62% in 2018.
It’s a crisis that has so far evaded a solution and forced businesses to drill deep into their budgets. A staggering £6.6 billion was spent by businesses last year to “plug short term gaps” in their workforce – £1.7 billion more than in 2019. Of it, £3 billion was spent trying to find the right talent with the right skills, and £1.2 billion was spent on temporary staff to fill skills gaps.
However, with 52% of senior leaders reporting that their organisation’s post-pandemic survival now depends on reducing costs, a change in approach towards workforce planning may be the only option.
The benefits of growing your own
As National Apprenticeship Week gets underway, there’s a clear sense of anticipation that 2021 may be the year it begins. While the introduction of the apprenticeship levy has made many businesses stop and think strategically about how they are going to ‘use it before they lose it,’ the perceptions of apprenticeships still hold many more back.
As an apprenticeship training provider, one of the most cited reasons employers give for not wanting apprentices, is the time and resource required to mentor and train while in the workplace – especially early talent. Even for those looking to upskill existing employees, mandatory requirements such as off-the-job training often become deal breakers.
But what if, instead of apprenticeships being viewed as a barrier to BAU, they were seen as a long term, permanent strategy, for future proofing workforce capability and business success?
Calls for businesses to invest more in ‘home growing’ their own talent have certainly got louder over the past 12 months, and while resourcing strategies will undoubtedly have been adapted to navigate the immediate economic fallout of the pandemic, it’s fair to say that the knock-on effects can be expected to last for years.
Add to that an ageing workforce, which by 2025 is forecast to have 300,000 fewer workers under the age of 30, but one million more workers over 502, and nurturing a healthy pipeline of future talent has never been more pertinent – or indeed advantageous. Government research into the benefits of bringing young apprentices into businesses found that 86% of employers said it helped them develop skills relevant to their organisation, and 78% reported increased productivity across the wider workforce.
Even with existing employees, retaining skills can only be achieved by retaining talent. The Skills Funding Agency found that 80% of companies who invest in apprenticeships report an increase in staff retention. And with costly salary increases now becoming the most effective bargaining chip for flight risks, it’s clear that more mutually beneficial and sustainable alternatives need to be explored.
Commitment yields return
Around half (48%) of senior leaders surveyed by The Open University said that apprenticeships and work-based learning would be vital to the recovery of their organisation following the economic fallout of the pandemic. This is a seemingly positive outlook from where we currently stand, but is it enough? Prioritising BAU over long term planning will fight today’s fires, but it could risk a longer, and bumpier road to recovery that may still not withstand future crises if they come along – whether that’s a global pandemic or a continuing decrease in skilled workers.
It’s been 14 years since National Apprenticeship Week began and the message this year is more important and poignant than ever before – there are viable options out there for businesses to “Build the Future: Train, Retain, Achieve.” And yes, there is no denying that apprenticeships are a significant commitment for businesses. But isn’t that the point? Is it really a turnoff if the upfront investment could yield a greater return in the long run?
Simply look at an apprentice. Their commitment is driven not by gaining a job, but by attaining a career. What if for a business, apprenticeships became about attaining peace of mind? That no matter what the future brings, the skills they need in their people will always be there.
Estio is a leading apprenticeship training provider, specialising in digital and IT skills development. With over 1,000 apprentices in learning, we partner with some of the UK’s biggest employers, delivering level 3 and level 4 apprenticeships across networks and infrastructure, software development, cyber security, data and business analysis and digital marketing.
To find out how we can transform your workforce planning, visit estio.co.uk or call 01133 500 333.
1 Resolution Foundation, 16th May 2020.
2 The impact of Brexit, migration and ageing on the UK workforce, Mercer Workforce Monitor, March 2018