Brexit might still be hogging the headlines, but it’s far from the biggest issue facing much of the UK economy.
It’s not poor productivity. It’s not stagnant growth. It’s not inflation. For manufacturing, construction, engineering and a range of other sectors, the biggest and most urgent concern is the skills shortage.
That’s not to say the others aren’t major issues. None of them are to be taken lightly. But none have the potential to see whole sections of the economy grind to a halt without action. The skills shortage does.
We need to be clear about the scale of the problem. The Chartered Institute of Builders estimates that the construction industry will need 157,000 new recruits by 2021.
A report by the City & Guilds Group found that 54% of construction businesses surveyed were being affected by a lack of skilled workers in some way.
In 2017, twice as many workers left construction as joined it. And in the next nine years, one in ten construction sector employees are expected to retire.
The government estimates that we’d need 186,000 new recruits every year to solve the shortage in the engineering sector.
Only 6% of 16-23-year-olds surveyed by the Barclays Corporation were considering careers in manufacturing – and the Open University’s 2018 Business Barometer study found that the skills shortage is already costing UK companies £6.3bn annually.
This is exactly what the government’s flagship apprenticeship levy was supposed to tackle. But last year, it seemed to abandon its previous target to create three million new apprenticeships by 2020.
And, unfortunately, all the evidence seems to indicate that the policy has been a failure. Apprenticeship numbers actually dropped by a quarter in the first year after it was introduced.
But a whole swathe of the UK economy is now united in the belief that something needs to urgently be done – and while change has often seemed painfully sluggish up until now, there are signs it finally seems to be speeding up.
Chris Alderson is Managing Director of the global window component manufacturer Edgetech, and has watched anxieties about lack of skilled workers grow significantly in recent years.
“For a long time, there was a sense that the skills shortage was a problem, but something that was somehow in the background – something that, as an industry, we’d deal with later. That’s no longer the case. Businesses throughout our sector are waking up to the fact that we need to be thinking about it and acting on it now. The most obvious way that’s manifested itself is in increasing interest in automation.
“At Edgetech, for example, we manufacture spacer bars – crucial components that separate the panes of glass in a double-glazed window, and help the finished product offer great thermal and acoustic performance through their warm edge technology. One of our main USPs is that our warm edge products can be easily automated. Most of our competitor products need production lines manned by as many as nine people.
“Ours can be applied with as few as three or four thanks to automation – and in the last year, we’ve seen a surge of people switching to us, citing the lack of skilled workers as the key reason. That trend isn’t limited to our sector, either. A recent study by the Adecco Group found that 34% of UK businesses are considering automating elements of their businesses to try and combat skills shortages, with that figure rising to 44% in London.
“It’s important not to get carried away when it comes to the benefits of automation, of course – it’s naïve and over-simplistic to think that the robots are going to suddenly sweep in and save us from the skills shortage on their own. Regardless of how the apprenticeship levy has fared, it’s clear that creating more ‘earning and learning opportunities’ is at least part of the solution. Industry has to forge much closer links to schools, colleges and universities.
“We need more innovative, out-of-the-box thinking too. The construction sector’s embrace of modular construction, where individual ‘modules’ of a building are assembled on-site and combined together like a high-tech Lego set, is one example of that. But I’m personally convinced that automation has a huge role to play in tackling the skills shortage – and will drastically reshape the future of our industry, and most other industries, in the years ahead.”