Blogpost, 11th May 2012 - Job Shortages and Skills Shortages

Forecasters this week have been outlining their view that unemployment in the UK is going to keep rising for a good while to come yet. With the double dip recession and the ongoing farce that is the Eurozone, you would be forgiven for thinking all is lost. But on the ground there is a different picture. There have been a number of articles and surveys expressing some surprise at the news of the double dip recession when business confidence is, in fact, pretty strong. Also for all the unemployment news, there are significant and potentially damaging skills shortages in the UK as well.

So how can there be job shortages and skills shortages?

Two main explanations spring to mind.

Public Sector Cuts

Probably this government’s highest profile policy, and the one for which they will be remembered, is the cutting of the public sector. This has caused hundreds and thousands of redundancies. The cuts are on such a large scale that they are inevitably warping the figures. Unemployment is at its worst in areas with high public sector employment – the North East for example – and sadly it does look as though that will continue to rise for the foreseeable future. But private sector employment could rise quite significantly without the effect being noticed at all when the statistics are flattened out across the whole country and economy. To an extent I think it is clear that this is happening – gains in the private sector (which to be clear aren’t huge) are being obliterated by the cuts.

The Pace of Change

The other key factor here is self evidently the issue of jobseekers lacking the necessary qualifications for the jobs available. Unfortunately this is a very real, and very long term, issue which affects both the unemployment figures and the overall economy.

Training takes time. To change the education system takes a generation. But technology reinvents itself every few years, if not months. So the sheer pace of the disruptive technologies in the market now – mobile and cloud for example – mean that many people are coming to the job market and finding that their skills are unsuited, and there isn’t the time to catch up.

In the long term, this is the government’s problem. We need to be educating our children in a way that positions them for the new reality of the workplace. Personally I don’t think this necessarily means more specific IT lessons – I think it means reverting to the pattern of teaching people how to learn, as lifelong learning is becoming crucial in the workplace. But whatever the solution, the government is going to need to address the skills gap, and soon.

In the short term, this is business’ problem. Many companies have outstanding vacancies they simply can’t fill – this is damaging to their business and slows their growth. Just waiting for a magical candidate to appear can’t be the only option – companies need to show flexibility and creativity in their hiring and be ready to hire people they can develop. Not only will that solve their problem in the medium term but it will improve the general pool of talent in the country. Unfortunately it’s in stark contrast to the way most companies behave in recessions, where hiring becomes far stricter due to the (erroneous) view that the available pool of talent has got bigger.

Obviously it’s easy to say and far harder to do. But looking at a landscape where millions are unemployed while companies scream for talent, it’s pretty clear that some flexibility is going to be essential on all fronts if we’re not going to find this situation permanently entrenched.