The government must do far more to fix the new labour market crisis

19 Jun 2021, 6:00

We need a revolution to close the potentially disastrous skills gap, writes Kirstie Donnelly

Skills gaps are nothing new. But, since March 2020, the arrival of the Covid-19 pandemic and a series of subsequent lockdowns simultaneously unlocked a wave of seismic change in the UK labour market, significantly changing the sorts of skills sought by employers. 

With over 800,000 workers displaced from their jobs and 11 million people furloughed, the numbers paint a stark picture of how the pandemic impacted the jobs market.

Yet the UK’s shrinking economy is just one piece of the puzzle. Sweeping changes in the way people lived and worked have caused some industries to contract. But new and existing trends – such as digital transformation and automation – have taken off, further propelling labour market transformation. 

In our new annual Skills Index report published last week, which is intended to show how skills supply and demand is evolving, we uncovered some striking findings. This includes how demand for skills shot up most notably in the health and social care and tech sectors.

For example, as businesses and individuals increasingly relied on technology for their day-to-day lives, job postings for tech and digital roles rose by 21 per cent between April 2020 to April 2021 alone.

And with remote working creating a plethora of new cyber-security risks for businesses, demand for cyber-security technicians rocketed, rising a staggering 19,222 per cent.

Meanwhile, as the pandemic put increased pressure on the health and social care sector, specific technical skills – such as nursing, mental health support and personal care support – were among those that saw the greatest increase in demand in 2020.

Our report also pointed to a growing mismatch between the skills that people possess, and the skills employers need, suggesting that businesses’ productivity is at stake.

Fifty-six per cent of organisations faced some kind of barrier to meeting their skills and talent needs, while 61 per cent of working-age adults don’t feel they are equipped with the skills they will need in the next five years.

The bottom line is that while many businesses were facing skills gaps before the pandemic, these gaps are now even wider – and are poised to be disastrous unless we urgently reconcile the disparity between skills supply and demand.

The solution? It’s no surprise that there’s no easy one.

We’ll need a revolution, and a significant shift in attitudes

We’ll need a revolution, and a significant shift in attitudes.

At an individual level, people need to be equipped to identify where they need to develop skills, and where their existing skills are transferable, so that they can seek appropriate support and opportunities – and be empowered to fund their own training if need be.

Employers must facilitate this process, by providing mechanisms for individuals to understand which skills are likely to be in demand throughout their lifetimes, and by providing employees with the training they need to stay relevant. 

The reality is that many workers are now facing a five-decade-long career – so, practically, this will mean a mixture of better “all ages” careers advice, and a commitment to re-skilling and upskilling workers throughout their working lives. 

Meanwhile, the government must provide a wider programme of support for people who need to retrain. The Lifetime Skills Guarantee makes headway on providing such support, allowing adults without a level 3 qualification access to a free college course.

But it is limited to lower-skilled individuals and misses others who may have lost their jobs due to the pandemic now, those who will do in the future, or those who are older.  

Current government support doesn’t go far enough ̶ we need a less restrictive offer available to all those displaced so that we can retrain workforces and divert labour to where it’s needed. 

This sort of countrywide culture shift won’t be easy, but if we seize the opportunity with both hands, this could be the jumpstart we need to create a long overdue lifelong skills culture that works for all.

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