Britain’s manufacturers are struggling to recruit skilled workers and keep pace with global technology, according to an industry report.
Three-quarters of companies say they have faced difficulties finding the right workers in the last three years, according to business group EEF. It warns a skills shortage is putting productivity growth at risk and adding to pressure on manufacturers as they battle a host of pressures in domestic and overseas markets.
The report comes just weeks after the Office for Budget Responsibility (OBR) cut its forecast for potential productivity, or what workers in the UK can produce an hour, triggering warnings of damage to living standards, wages and government tax receipts.
The EEF says the struggle to find the right people with the right skills is compounding those problems. It predicts demand for skills will rocket and urges the government to launch grants for apprenticeships and reform the education system to ensure leavers’ skills match needs of businesses.
Technology is manufacturing globally, with increasing automation of production in sectors such as car-making. In turn, that has increased demand for new skills such as programmers for robots. In the wider economy there have been warnings of large-scale job losses from the so-called fourth industrial revolution. The World Economic Forum has predicted more than 7m jobs are at risk in the world’s largest economies over the next five years as technological advances in fields such as robotics and 3D printing transform the world of work.
The EEF claims that ministers are not matching industry’s efforts to tackle a skills crunch, such as in-house training programmes and competitive pay packages. “We still struggle to find a sufficient number of candidates to satisfy the demands of our sector, and too many candidates lack the skills that manufacturers need,” said EEF’s chief executive, Terry Scuoler. “Had manufacturers not already been taking action, we would arguably now be over the cliff-edge, not just approaching it.”
Two-thirds of manufacturers cited a lack of technical skills among applicants and almost as many, 64%, said there was an insufficient number of candidates, according to the EEF’s survey of 239 companies.
The group also highlights government figures showing that the proportion of hard-to-fill vacancies in manufacturing remained at 35% in 2015 – unchanged from 2013 and worse than in 2011 when it was at 30%. Those figures from the UK Commission for Employment and Skills put hard-to-fill vacancies for all sectors in the UK together at 33%.
The EEF predicts recruitment difficulties will intensify given manufacturers expect their demand for skilled workers to rise over the next three years. Almost six in 10 (59%) expect to need more production-related technical skills and almost half expect to need more staff with IT skills, according to the skills report.
Overall, 72% of companies said they were worried about acquiring the skills their business will need in the next three years. Companies in the survey said they were offering training and flexible working to help, with eight in 10 planning to recruit manufacturing and engineering apprentices in the next 12 months.
The EEF used its report to renew its complaints over the cost to employers from a new national living wage coming in this week and an anticipated apprenticeship levy due to start next year. It also demanded more help on skills from the government, which has pledged a “march of the makers” and less reliance on consumer spending to fuel economic growth.
Responding to the report, the Department for Business, Innovation and Skills (BIS) said the government was working closely with manufacturers to raise productivity and had already cut red tape and invested £6.9bn in the UK’s research infrastructure.
New figures show more people are in work in the UK than ever before. The growth has been driven by an increase in full-time work which now stands at 31.42m – up nearly 0.5m from a year before.
The UK’s employment rate is 74.1%, the highest since comparable records began in 1971, and wages (before bonuses) have risen 2.2% compared with last year, while inflation was close to flat. Private sector employment, meanwhile, is the highest on record at 26.1m with 2.8m more people working in the private sector since 2010.
The unemployment rate still stands at 5.1%, the lowest in a decade, and the number of people claiming unemployment benefits has fallen to its lowest level since 1975.
Employment Minister Priti Patel said: “This is another strong set of figures showing private sector employment at the highest since records began, wages rising and a near record number of job vacancies available in the UK economy. “
The latest labour market statistics, released by the ONS, also showed that the female employment rate is at a record high of 69.1%, with a million more women in work since 2010, the number of young people claiming unemployment benefits is at it lowest since the mid-1970s and the number of people not in employment and not looking or not available to work – is at a near record low.
The latest REC Jobs Report (compiled by Markit) shows that the UK labour remains healthy despite a number of headwinds on the horizon.
February’s data pointed to a further increase in permanent staff placements with the rate of expansion at a 3-month high. Temp billings rose at the same pace as in January. The level of available job vacancies continued to rise in February with the rate of growth marked and the fastest in six months. Demand for permanent staff continued to show a stronger trend than that for temps.
The availability of staff for both permanent and temporary/contract roles continued to fall in February. However, the rate of decline eased in each case to the slowest in at least two years. Starting salaries for successful permanent candidates rose at the fastest pace in three months during February. However, temp pay growth eased, hitting a 33-month low.
Despite the encouraging numbers, REC chief executive, Kevin Green, stressed that there were a number of threats to its continued strength:
“The UK labour market is at a critical juncture. Permanent hiring improved last month, demand for staff remains strong, and pay is going in the right direction – but serious threats are looming just around the corner.
“Next week the Chancellor will announce his plans for the coming financial year, at a time when recruiters across the country are reporting serious skills shortages alongside buoyant jobs growth. Now is not the time to put up additional hurdles that could throw the jobs-rich recovery off course.
“The introduction of the National Living Wage on April 1st, closely followed by tax changes on April 6th, will disrupt hiring strategies for many businesses. Employers will seek to offset rising wage bills, for example by scaling back recruitment and increasing automation. This could weaken future demand for staff.
“In June, the EU referendum carries a very real risk that business confidence will be curtailed and investment in hiring could falter. It’s vital that we have an informed debate about the impact the referendum might have on jobs, both in the short and long term. All parties must remember that UK employers need access to the global labour market in order to thrive.
“Global economic headwinds only add to the uncertainty around what the months ahead hold, and the Recruitment and Employment Confederation calls on the government to avoid further destabilising the UK jobs market in next week’s Budget.”
The latest data from The Office for National Statistics shows that unemployment in the UK fell by 60,000 between October and December to 1.69m, leaving the rate of unemployment unchanged at 5.1%, maintaining a decade-low rate. More than 31.4m people are in work, the highest figure since records began in 1971. But ONS statistician Nick Palmer said that growth in people’s earnings was still slow. ”While the employment rate continues to hit new highs and there are more job vacancies than ever previously recorded, earnings growth remains subdued and markedly below the recent peak of mid-2015,” Mr Palmer said. Pay increased by 2.0% during the period, very similar to the growth rate between September to November 2014 and September to November 2015, which was 1.9%. The number of Britons in work increased by 278,000 in the three months to the end of December, to 28.28m, while for non-UK nationals, the figure rose by 254,000 to 3.22m. The economically inactive rate for women fell to 27.2%, a record low. Wales, the North East and the North West of England recorded the largest drops in the rate of unemployment, all falling more than half a percentage point. The North East of England still has the highest rate of unemployment, at 8.1%, and the South West of England the lowest, at 3.7%. There were 5.35m people employed in the public sector in September 2015, according to ONS, down 59,000 on a year earlier. It is the lowest figure since comparable records began in 1999, the ONS says.
The UK unemployment rate has fallen to its lowest rate in more than a decade but wage growth has slowed according to the Office for National Statistics (ONS). The rate hit 5.1% in the three months to November meaning unemployment is now at its lowest rate since the three-month period to October 2005.
Average weekly earnings, including bonuses, were up 2%, the slowest increase since February and down from the previous 2.4% rise. The 2% growth in wages was also less than the 2.1% growth forecast in a Reuters survey. Excluding bonuses, average weekly earnings growth slowed to 1.9% in the three months, the ONS said.
The number of people out of work fell by 99,000 to 1.68m in the three month period, putting the employment rate at 74% – the highest since comparable records began in 1971. The report comes a day after Bank of England governor Mark Carney ruled out an early rise in interest rates because of the turmoil in the global economy and weaker UK growth. A sustained improvement in wage growth was one of the factors he said would help the Bank to gauge when to raise rates.
Today’s figures show that almost 23m people are now in a full-time job, 436,000 more than a year earlier, while 8.4m are working part-time, up by 152,000. The number of workers in part-time jobs wanting a full-time post is 1.2m, down by 21,000 in the latest three months. Economic inactivity, counting people on long-term sick leave, looking after a relative or who have given up looking for work, fell by 93,000 to just under 9m, the lowest since the spring of 2014. The inactivity rate for women reached a record low of 27%.
A report from CV Library suggests that almost 8m British employees have resolved to leave their jobs in 2016. The survey found that one quarter of the current 31.2m workers in the UK will make the New Year’s resolution to find a new career, and quit their current role. The report also found that vowing to go to the gym has been seemingly replaced with more work-related hopes as 54% of the 3,300 employees surveyed claimed they planned to make a job-related promise.
46% admitted they were ready for a new job in 2016, not that surprising as almost one third of workers questioned said they return to work after the Christmas holidays feeling unhappy about their employment. Lee Biggins, Founder and Managing Director of CV-Library, explained what these results could mean for the UK jobs market. He said: “Businesses need to be prepared to pull out all the stops in 2016. “They’ll need to work hard to hold on to talented employees, as well as fighting to draw in the best new candidates.
“With workers choosing to leave their jobs in 2016 in the knowledge that they hold all the cards, employers have a challenge ahead of them when it comes to January. However, ensuring that workers feel valued and supported is a good place to start.”
One reason for the apparent dissatisfaction in the British jobs market could be down to the fact that UK employees working in areas such as the technology sector can expect to be paid much less than their American counterparts.
The UK unemployment rate has fallen to a seven-year low of 5.3% in the three months to September, new figures from the Office for National Statistics (ONS) show. The ONS said this was the lowest jobless rate since the second quarter of 2008. The number of people out of work fell by 103,000 between July and September to 1.75m. There were 31.21m people in work, 177,000 more than for the April-to-June quarter and 419,000 more than in the same period a year earlier.
ONS statistician Nick Palmer said: “These figures continue the recent strengthening trend in the labour market, with a new record high in the employment rate and the unemployment rate still at its lowest level since spring 2008.” The ONS also said the total earnings of workers, including bonuses, in the three months to September were up 3% from a year earlier, the same rate as in the three months to August.
In September, total wages rose by 2.0%, down from 3.2% the previous month and the weakest increase since February. Excluding bonuses, average weekly earnings growth slowed to 2.5% in the third quarter and 1.9% in September, both the weakest since the first quarter of 2015.
Chris Williamson, chief economist at research firm Markit, said: “The UK labour market continued to tighten in September, as unemployment fell more than expected and employment rose sharply. Pay growth remained surprisingly weak, however, despite further evidence of growing skill shortages, which normally leads to higher salaries.
“Pay growth remains central to policymaking, and interest rates are likely to stay on hold for as the official data show pay growth remaining subdued. Today’s data therefore support the Bank’s current projections that there will be no need to raise interest rates until 2017 due to persistent low inflation.”
The latest Labour Market Outlook from the CIPD, the professional body for HR and people development, suggests that wage inflation is unlikely to take off in the next year due to limited skills shortages and subdued pay settlement forecasts from employers.
The quarterly survey of more than 1,000 employers shows that across all sectors just 15% of current job vacancies are proving difficult to fill. It also reveals that, outside a limited number of industries, UK employers continue to be able to recruit the workers they need without significantly hiking wages and that median basic pay rises of just 2% are predicted by employers in the 12 months to September 2016.
The Labour Market Outlook finds that the number of applicants per vacancy has remained steady over the past year, with average applications for jobs running at 25 for each low-skilled role, 15 for medium-skilled roles and 8 for highly-skilled roles. This suggests that in general, most businesses are seeing a steady flow of suitable candidates, despite unemployment falling to a seven-year low in October and despite a slight year on year increase (44%-49%) in the number of employers reporting any hard to fill vacancies.
The most common employer response to hard-to-fill vacancies are up-skilling existing staff (48%), followed by hiring more apprentices (27%), recruiting migrant workers (23%) and raising starting salaries for hard to fill positions (22%).
Across all organisations reporting any job vacancies, the proportion of hard-to-fill vacancies is only modestly higher in the private sector (16%) than the public sector (11%).
Focusing on organisations reporting recruitment difficulties, the proportion of hard-to-fill vacancies is greatest in the manufacturing and production sector (24%), which includes industries such as construction and utilities, and private sector services (24%), which covers industries such as finance and retail.
Over half (54%) of UK businesses feel that retention will become as a big a challenge for businesses as recruitment over the next ten years, according to recruitment firm Capita Resourcing. Nearly three-quarters (73%) also think employees are becoming more demanding and aware of their skills.
The Workforce Horizons study combines a survey of 200 HR professionals with in-depth interviews of 10 leading HR experts. It found that 94% believed that it is important to engage with the very best talent even before a position is available to them. The results signal a subtle but significant power shift from employer to employee, which is only set to accelerate even further over the next decade.
Most organisations are falling behind employees in realising the importance of a brand, with only 18% of those surveyed having developed an employer brand. Fewer still (11%) have commenced training to develop their value proposition for the employer brand.
The survey also found that 92% of HR professionals believe employment flexibility (to include a wide mix of ‘total reward’ elements such as working from home or part-time) will become the most important factor for employees in determining the suitability of a future employer. Only 8% of the workforce, however, currently work on a flexible contract meaning a significant shift needs to occur to meet demand.