Skills shortages hit UK productivity

May 08 2007 by Nic Paton Print This Article

British businesses face a constant battle to find people who have the right skills or experience to do the job, with managers blaming skills shortages for a quarter of their unfilled vacancies.

The situation is also having a significant impact on Britain's economic muscle on the world stage, a new report has concluded.

When it comes to competitiveness and productivity, the vast majority of British businesses are so hamstrung by skills shortages that they are in effect running on the spot simply to keep up with their neighbours in Europe and the U.S.

This lack of skills at all levels, from the most basic to the highest, is at the heart of Britain's historically low levels of productivity, when compared with its neighbours in Europe and the U.S, the report by the Sector Skills Development Agency has concluded.

The Sector Skills Almanac has found that, while Britain's employment rate is the fourth highest in Europe and some sectors are more productive than their EU and U.S. equivalents, the UK's overall productivity levels are 21 per cent behind the USA and eight per cent lower than Europe.

The snapshot reported that the majority of sectors performed below EU and U.S. averages.

Nine outperformed the EU sector equivalent, including agriculture, hunting, forestry and fishing, manufacture of machinery, electrical and optical equipment and wholesale trade.

Six outperformed their U.S. equivalents, including education, manufacture of furniture, other goods and recycling, publishing, printing and reproduction of recorded media, manufacture of food, drink and tobacco and mining and quarrying.

More than a third Ė 38 per cent Ė of the workforce was aged 45 and over and in some sectors, such as education, agriculture, hunting, forestry and fishing, was particularly acute, with half the workforce above 45.

In the financial services, hotels and restaurants sectors older workers made up a considerably smaller proportion, said the agency.

A quarter of all vacancies in England existed because of a lack of candidates with the required skills, qualifications or experience (in other words a skills shortage vacancy).

This ranged from 46 per cent in the manufacture of basic metals and 13 per cent in electricity, gas and water supply sector, it added.

Employers in England reported six per cent of all employees were less than fully proficient or had a skills gap.

This was highest in the hotels and restaurant sector (just under 10 per cent) but lowest in the computer and related activities sector (4 per cent).

Professor Mike Campbell, director of development at the agency, said: "The almanac, which we will be an annual publication from now on, shows how vital it is that we raise skill levels in this country.

"There is a shortage of basic and employability skills, vocational and technical skills, and intermediate and higher level skills are more plentiful in the workforces of other countries.

"Similarly the UK's productivity level relative to its competitor countries is weak. The difference is stark when per hour or per worker measures of productivity are considered," he added.

"The UK is starting from a position of disadvantage and significant progress is required if we are to ensure a strong economy for the future," he concluded.