THE BLOG

Mind the Gap: Could UK Infrastructure Be the Biggest Victim of Skills Shortage?

19/11/2014 14:09 GMT | Updated 19/01/2015 10:59 GMT

HS2, Crossrail, Thameslink and the much-needed expansion of the UK's airport capacity. These are all projects which promise to transform our infrastructure landscape and drive a competitive, healthy and resilient UK economy for the future.

As recognised by the Government's national infrastructure plan, there is a critical need for investment in this area. In the 2014 World Economic Forum report on global competitiveness, the UK slipped down to 27th place for "quality of overall infrastructure", behind Taiwan, Bahrain, Barbados and Oman.

Yet there is a major problem. We are already facing a critical shortage of workers with the necessary skills and training in science, technology, engineering and maths. Job vacancies in these industries have risen sharply in the last year, driven by the growth of planned infrastructure projects and the wider economic recovery. However, too often there are simply not enough candidates available to fill these positions. This is leading to wage inflation in certain roles and businesses being forced to outsource work overseas, or even consider moving abroad.

Our research shows that the average London structural engineer's salary has gone up by over 10% in the past year. The trend is set to continue in 2015 as 65% of employers in the construction, property and engineering space expect to encounter a shortage of experienced applicants when looking to increase permanent staff.

The UK's global standing was thrown into sharp relief last week as we launched the 2014 Hays Global Skills Index, in collaboration with Oxford Economics, a detailed analysis of labour markets in 31 countries. The good news is that every country we analysed is set to experience some form of economic growth in the next 12 months. The bad news is that the UK's talent mismatch - the gap between the skills companies need the skills available in the local labour market - is among the worst in the world.

The UK scored a "talent mismatch" of 9.6 out of 10, exceeded only by Ireland, Portugal and Spain in Europe, who each lost many skilled workers during the depths of the recession. By contrast, Germany, with its strong apprenticeship and training systems, scored just 3.3, reflecting a far better balance of the supply and demand of skills while France scored 5.9. If the UK talent mismatch continues to rise at the current rate as the economy improves, the UK will reach crisis point in a matter of months.

Unfortunately there is no miracle cure. The Government has already taken a number of positive steps, including funding more apprenticeships and offering schemes to encourage more women to choose a career in technology and engineering. Yet more needs to be done - by business, universities and the government - to really change things for the better.

In the short term, we need to revisit our skilled immigration policies to make sure that employers have access to the world-class talent they need. We cannot ignore this issue because of the political sensitivities around immigration and the government's restrictive net migration target. Bringing in highly skilled and qualified workers from Europe, Asia and the Americas is absolutely essential if we wish to fill all the skilled jobs our industries are creating today. The alternative in the short term is to leave these roles empty.

Looking ahead, we need to find ways to develop our domestic workforce to be a better match with the skills our economy and industries now need. This requires stronger incentives for students to study STEM subjects and clearer advice from schools and universities about the excellent career opportunities these courses can provide. Businesses also need to look at ways to boost the number of people participating in the workforce. This could include retraining older workers who already have decades of valuable experience as well as attracting more young students and apprentices.

As politicians set out their vision for the UK ahead of next year's elections, sustaining economic growth should be top of the agenda. We all want world-class infrastructure, world-class industries and a world-class economy, but that requires world-class talent to make it happen and the fact is that the UK is constrained on talent today. Solving this problem will unleash greater prosperity for all, but it needs to be addressed now if we wish our country to realise its full potential.