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The Great British talent mismatch: why can't businesses find the skills they need?

by LLB Editor
2nd Oct 13 6:20 pm

Unemployment is high, yet you can’t seem to find the right recruits – why?

Imagine a world where Andy Murray enters The Voice, Stephen Fry becomes the captain of the English cricket team and the One Direction lads join the army.

“What a waste of talent!” might be your reaction to my absurd suggestion. But look around you -a great talent mismatch permeates many sectors, around the world and in the UK.

According to the Hays Global Skills Index 2013, a report published by recruiting experts Hays and Oxford Economics, 18 out of 30 leading economies are facing some form of skills shortages, at a time where both unemployment levels and numbers of unfilled vacancies are rising. It is the perfect storm of these three factors coincidingthat creates a talent mismatch.

Why do we see this “major paradox” in the world’s skilled labour markets?

“Employers across the globe are struggling to find enough people with the right set of skills for the posts they have available, even as millions of people remain unemployed,”says Hays’ chief executive Alistair Cox.

“It is too easy to lay the blame for unemployment at the door of the global recession. The fact is, there is more that governments and businesses can and should do in order to develop the right talent pipeline and assure their future prosperity.”

This year, employers in many markets haven’t been able to find the skill-sets required for job vacancies.

The Hays Global Skills Index indexes countries from 0 to 10.0 for talent mismatch, where a score over 5 depicts a worrying picture.

The US, where 29% of all unemployed individuals have been unemployed for a year or more, has a talent mismatch rating of 10.0.

Japan is struggling with a generation of economic stagnation and deflation, and is indexed at 9.1. Spain, Portugal and Ireland, all grappling with the Eurozone crisis, are all rated 10.0 for talent mismatch.

Talent mismatch in the UK

The UK’s position is fractionally better than these troubled economies, but it isn’t exactly a bed of roses.

The UK scored a worrying 9.0 on the talent mismatch scale with the most pressing issue contributing to the score being long-term unemployment. More than 35% of the unemployed in the UK were looking for a job for at least a year.

However, healthy rates of improvement in education levels and positive net in-migration are helping to reduce measured labour market pressures.

“It remains tough for employers to find top talent. The high talent mismatch levels are due to on-going skill shortages and a reduced talent pool because candidate confidence to move jobs is low and employers have largely remained focused on recruiting to replace leavers. However, more positive sentiment is starting to gain momentum throughout the UK,” says Nigel Heap, managing director, Hays UK & Ireland.

Federica Silvi, HR manager, Lenstore, an award-winning e-tailer of contact lenses, has found it “very frustrating” to find employees with the right skill sets.

“The report indicates that there is a significant lack of talent in IT, and at Lenstore we have found this to be true,” she says.

“We often find ourselves struggling to recruit web developers that possess the level of skills and knowledge we are looking for. The IT job market is a very fast-moving one, and many candidates that we have interviewed and deemed suitable have been quickly snapped up by other companies before we could offer them a position.”

She adds: “The talent mismatch in the UK is a troubling prospect. This can noticeably hamper a thriving companythat has the capacity of success, but lacks the workforce to pursue their strategy. From an employer’s prospective, this is frustrating, as it seems to be largely down to a lack of communication between businesses and educational institutions.”

Nigel Heap adds, “We would have liked to see the indicator for talent mismatch reduce in the UK. We know organisations are starting to invest in developing skills – through apprenticeships and training programmes – but it will be some time before these come to fruition and more needs to be done in the meantime.”

UK talent mismatch

Talent mismatch in the UK

The broader picture for UK talent

The UK’s overall score, which looks at the seven indictors you see in the diagram below, stands at 5.2. The score suggests slightly greater labour market pressures than in normal economic times. An expected decline in labour market participation and upward pressure on wages in high-skill industries will contribute to this pressure beyond 2013.

The study found that the UK is among European countries experiencing the weakest overall wage growth. This is attributed to the UK’s current economic recovery,which has exposed a lack of skills across multiple industries.

In brighter news, the study found that although UK economy is still emerging from recession, there is some evidence that the recovery is gaining momentum. However, headwinds from the current government’s austerity plan and ongoing deleveraging suggest caution.

What can the UK do to overcome its talent mismatch?

Coming back to the great talent mismatch, what can be done to get candidates with the right skills into the right jobs? Hays has suggested that it’s only when businesses, educational establishments and governments come together that we can “build the right skills pipeline for sustainable recovery and growth”.

The Hays Global Skills Index 2013 made the following recommendations:

1. Governments must demonstrate real financial and political commitment to improving the flexibility of labour markets

The study calls for a review of employment legislation and regulation to ensurethat businesses have the flexibility to manage their workforceand react to labour market shifts. This would help businesses use short-term contracts and allow staff to work overtime to meetchanging workflow needs.

2. Education reform must be developed through close collaboration between governments and the business community

Annual revenue targets aren’t enough. Businesses should take a longer-term view of the skills they are lacking in their organisations and commit to investment in education on a national basis. The government should set aside funds for areas with skills shortages and secondary education institutions must help students adopt both life and technical skills.

3. Businesses need to develop and implement tailored policies for their youngest and oldest staff

The so-called Millennial generation is as important as the 65-year-old employee. Businesses should map out their strategies to attract and nurture young talent through training and apprenticeship programmes while working with representative bodies to cater to older workforce.

“The supply of people with the right skills is the foundation for every successful organisation and finding the right person for a job can transform businesses, people’s lives and make societies stronger,” Hays chief executive Cox says.

“There are no easy answers to fixing today’s problems in the world’s skilled labour markets. However, we believe the principles outlined in our recommendations are relevant across the globe and should enable real progress towards addressing structural problems within international labour markets. Each and every one of us will reap significant benefits from this in the long-term.”

Hays Global Skills Index key findings:

  • There is no clear link between economic performance of a country and the efficiency of its labour markets. Employment policies and educational policies, not economic conditions are the keys to tackling the global talent mismatch 
  • Few countries have edu
    cational systems that deliver the skills required to provide employers with the skills they need
  • Most countries have inflexible supplies of labour, indicating key groups of working age are not  participating in the labour market
  • Developing economies such as China and India have highly flexible workforces, but inflexible educational systems in these countries mean skills provision through education is unlikely to adapt effectively to changing economic conditions
  • In most countries, skilled labour markets have tightened over the past year.

You need to read:

How London’s looming tech talent shortage could cripple our country

Nigel Heap: How to tackle the skills shortages of tomorrow

Britain’s got talent! The government just has to help firms find it


On 16 October, Boris Johnson, Will King, Terry Morgan, Helena Morrissey, Tim Campbell, Rajeeb Dey & London business leaders take on skills & talent issues

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