- UK’s talent mismatch still among the worst in Europe, behind only Ireland, Spain and Portugal
- Wage pressure to rise as skills shortages deepen
- Labour market flexibility declines despite government efforts to cut red tape
The UK is facing a growing talent crisis in the labour market, raising the risk of slower economic growth and lost opportunity for British people and businesses.
The UK’s talent mismatch level – the gap between which skills people can offer and what employers are looking for – increased again this year and is among the most severe worldwide behind only Ireland, Spain and Portugal in Europe.
These are the findings of the Hays Global Skills Index 2014, a report published today by Hays plc, the leading global professional recruiting group, produced in collaboration with Oxford Economics. The report, titled ‘The Perfect Talent Storm’ is based on an analysis of professional employment markets across 31 major global economies, highlighting the dynamics of the global skilled labour market.
The combination of chronic skills gaps in high-skill industries such as engineering and IT, and the demands of a recovering economy have created a perfect storm in the UK labour market. This ultimately limits the prospects of every business. Companies are likely to face an even fiercer war for talent in the future, as the continuing economic recovery further stimulates confidence in hiring – highlighting, in turn, the lack of workers with relevant skills. Organisations will face ever-greater challenges in recruiting the talent they need to flourish.
This growing talent mismatch is starting to lead to further pressure on wages in highly skilled niche occupations. As a recruiter of qualified, professional and skilled candidates, Hays has started to see signs of this for its candidates in 2014. Broader job market measurements are likely to show evidence of this wage inflation in due course as the demand for scarce skills intensifies.
Importantly, Britain’s long-term economic future depends on a broad range of long-overdue infrastructure upgrades, including high-speed rail, toll motorways and better energy infrastructure. These projects, including Crossrail, HS2 and others, too could be jeopardised by skills shortages.
Commenting on the findings of the report, Hays’ Chief Executive Alistair Cox said: “The Hays Global Skills Index makes it very clear that organisations are increasingly facing major issues finding the talent they need – particularly in areas such as technology and engineering.
“The UK’s chronic skills shortage is one of the biggest threats to our nations future prospects. If this talent mismatch continues to rise at the current rate as the economy improves, we will reach crisis point in a matter of months.
“There is no miracle cure for the issue but in the lead-up to a General Election we have to start by acknowledging the problems. Despite some Government efforts to cut red tape and create a more business-friendly legislative environment, our research shows labour market flexibility has actually declined.
Equally, there is greater scope for Government to work with businesses and education providers to develop the workforce we will need in the medium term. Shorter term, the only viable route to find sufficient numbers of skilled workers to fill the jobs we are now creating is to look overseas. However, we need to revisit our skilled immigration policies to make this happen. The Government must take a long-term view and make sure immigration policy is sensitive to employer needs. In the meantime, businesses need to take responsibility for their future workforce and work hand-in-hand with education providers to develop tomorrow’s talent pool.”
Notes on methodology
The Hays Global Skills Index provides a score for each country of between 0 and 10 which measures the pressures present in its labour market. The score is calculated through an analysis of seven equally weighted indicators, each covering different dynamics of the labour market, such as education levels, labour market flexibility and wage pressures.
An overall score of above 5.0 indicates that the labour market is ‘tighter’ than normal. A score below 5.0 indicates the market is ‘looser’ than normal. Within these overall scores, however, the scores attributed to each of the seven indicators can vary significantly, highlighting the different dynamics and pressures faced by each country.
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Hays plc (the "Group") is a leading global professional recruiting group. The Group is the expert at recruiting qualified, professional and skilled people worldwide, being the market leader in the UK and Asia Pacific and one of the market leaders in Continental Europe and Latin America. The Group operates across the private and public sectors, dealing in permanent positions, contract roles and temporary assignments. As at 30 June 2014 the Group employed 8,237 staff operating from 237 offices in 33 countries across 20 specialisms. For the year ended 30 June 2014:
– the Group reported net fees of £724.9 million and operating profit (pre-exceptional items) of £140.3 million;
– the Group placed around 57,000 candidates into permanent jobs and around 212,000 people into temporary assignments;
– 24% of Group net fees were generated in Asia Pacific, 42% in Continental Europe & RoW (CERoW) and 34% in the United Kingdom & Ireland;
– the temporary placement business represented 59% of net fees and the permanent placement business represented 41% of net fees;
– Hays operates in the following countries: Australia, Austria, Belgium, Brazil, Canada, Colombia, Chile, China, the Czech Republic, Denmark, France, Germany, Hong Kong, Hungary, India, Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Poland, Portugal, Russia, Singapore, Spain, Sweden, Switzerland, UAE, the UK and the USA
About Oxford Economics
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Oxford Economics is a world leader in quantitative analysis, going deeper and further than other economic advisory firms, in helping its clients to fully assess the opportunities and challenges they face for future strategy and direction. It specialises in global quantitative analysis and evidence based business and public-policy advice, underpinned by a sophisticated portfolio of business forecasting services consisting of regularly updated reports, databases and models on countries, cities and industries.
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