One of the largest surveys of employers ever undertaken in England has revealed major skills shortages in the workforce and insufficient workplace training.
The survey of 72,100 employers by the Learning and Skills Council (LSC), the body responsible for all post-16 work-based learning and adult education outside universities, was carried out between April and June 2003.
It revealed that more than one in ten workers (11 per cent) are considered to be incompetent by their employers– the equivalent of 2.4 million people.
While employers said that incompetence was largely due to inexperience, a significant number of skills gaps were attributed to a ‘lack of motivation’ (33 per cent), ‘failure to train staff’ (29 per cent) and ‘not keeping up with change’ (27 per cent).
But employers are also to blame for failing to help staff acquire the skills and motivation needed to carry out their jobs efficiently - almost a third of employers admitted that their own failure to train staff was contributing to skills-related problems.
More than one in five employers (22 per cent) said their workforce's skills were not up to scratch. This figure has a direct impact on the bottom line for a third of employers, who said that it resulted in higher operating costs, orders being lost and new product development being delayed.
Over a fifth of these employers also said they lost orders as a result, with quality and customer service also significantly affected.
Small businesses are the most likely to lose orders because of a lack of skilled staff.
A fifth of job vacancies – some 135,000 – are also going unfilled due to skill shortages, employers said, and they were loosing business to competitors as a result.
The figures come on the back of CBI data published in late 2003 showing that one in three companies are exporting jobs overseas, with a further four in ten feeling pressure to do so. A quarter of those polled cited labour skills as a key factor in their decision to relocate abroad.
Accountants Ernst and Young have put losses through lack of basic skills "as high as £10bn annually".
The research also reveals that the same lack of basic skills costs a typical business with 50 employees £165,000 a year. Significantly, output per hour worked is around 30 per cent higher in the US, France and Germany than in the UK. Up to a fifth of this productivity gap with Germany and France is as a direct result of lower skills levels in the UK.
The survey suggests that while eight out of ten employers are addressing skills deficiencies – and spending some spending some £4.5bn on training in the process - only half of employees are benefiting. Moreover, four out of ten employers had provided no training at all for their workforce in the 12 months prior to the survey.
Mark Haysom, Chief Executive of the LSC, said: “This survey is all about listening to and understanding the needs of business. To remain competitive both nationally and internationally, English businesses must be strategic about staff training and development.
"We need businesses to recognise the issues at stake here and work in partnership with us."