The skills dilemma
Perhaps not unlike the climate change emergency the growing skills crisis seems to have caught much of the business community by surprise – despite having been a widening gap for years.
UNICEF Executive Director Henrietta Fore put the challenge into context with her statement that “There are 1.8 billion young people between the ages of 10 and 24 today. Every month, 10 million reach working age – and they’re finding that yesterday’s skills no longer match today’s job market”.
In the UK a report commissioned by the Open University found that the majority of organisations (91%) have struggled to find workers with the right skills over the past 12 months, whilst a recent PwC CEO survey, highlighted that 34% of CEOs globally said that they were extremely concerned about the availability of key skills and saw it as one of the most significant threats to business growth.
So the question on the lips of many at Davos last week was simply – “How have we arrived at a place where there is such a pronounced skills gap that it seriously threatens growth? And what can we do to fix the situation?”
One question at a time.
Demand outstrips supply
Firstly, there’s a significant shift underway in terms of the types of skills organisations are demanding. Back in 2017 the World Economic Forum predicted that 35% of the skills that workers need, regardless of industry, would have changed by this year. According to the Royal Society, demand for workers with specialist data skills in roles such as data science and data engineering has more than tripled over the last five years. According to research from Indeed based on analysis of job postings, demand for AI skills in the UK has also almost tripled over the last three years.
Technology is changing the workplace
Secondly, accelerations in the rate of adoption of technologies such as artificial intelligence, machine learning and automation have meant that an increasing number of repetitive duties and tasks are being replaced. The ONS analysed the jobs of 20 million people in 2017 and found 7.4% of these were at high risk of being replaced, with around 1.5 million at high risk of some of their duties or tasks being automated in the future. And whilst it’s likely that new jobs will be created, it’s also likely that these will require new types of skills that we haven’t prepared employees for.
Our institutions are not adapting fast enough
Thirdly, our education and training institutions have not been able to adapt to the changes in the workplace fast enough. In the UK currently £10.5 billion of employment and skills funding is commissioned by eight Whitehall departments or agencies across 20 different national schemes, with different criteria and eligibility, and the skills gap is getting worse, not better. The OECD estimates the cost of going back to school and retraining workers could be up to £60bn.
What to do?
So if we understand how we got here, how do we reverse this alarming trend? If the supply of skills is not matching demand, and the gap is growing rather than shrinking as a result of the pace of change, organisations have to re-think how they access skills. Do they buy, build or borrow?
Buying talent – or talent acquisition - is one option, but it can be an expensive solution. The Open University highlighted that employers are spending more than £6 billion a year on the skills shortage,
predominantly through recruitment activities. Couple recruitment costs with the associated overheads of permanent staff, plus the time lag involved in getting them up to speed, only to risk losing them again within a relatively short period of time, and business leaders are increasingly asking – is it worth it?
Borrowing is another option and can be an agile, cost-effective approach to accessing the right skills at the right time, without making the more substantial commitments associated with buying in skills.
Building is favourable in the long run. Capita research highlighted that 88% of business leaders believed that upskilling employees in new and emerging areas was essential.
Part of this comes from looking at your workforce differently – investing in re-skilling and re-training maternity returners, older workers, or those who have taken a chunk of time off for various reasons could pay dividends. According to the ONS in 50 years’ time, there are likely to be an additional 8.6 million people aged 65 years and over. That’s a pool of experienced and potentially untapped talent that businesses cannot afford not to draw upon.
Finally, rather than focusing on skills alone, we need to think about the mindsets and drivers that fuel a culture of continuous learning. How can we encourage curiosity and a thirst for knowledge? Capita has been working with organisations including TED, and a host of other experts on this subject – asking not just what we need to know for the next decade, but how we will learn it, how will use it, and how will we apply it?
Whether at Davos or not, business leaders cannot afford to keep hoping the skills gap will fix itself. The World Economic Forum expects more than half the global workforce will need significant training and development over the next five years.
In an increasingly uncertain economic environment it won’t be enough to keep plugging short term gaps with short term solutions; what is needed is a revolution in the way we think about skills and build them (and the associated growth mindset) in our populations – like the rising sea waters, this is another problem that isn’t going away.