Does the UK have a tech skills shortage crisis?

Does the UK have a tech skills shortage crisis?

Does the UK have a tech skills shortage crisis?

With skills now at the forefront of hiring, reports of a tech skills shortage across the UK are increasingly being called out as a problem.

You may think that, in the world of hiring, the skills a worker possesses have always been the best way to judge their fit for the role. However, that has not always strictly been the case, with many workers often not even being considered as applicable for a role without, for instance, specific industry- or company experience, or the relevant education qualifications - and skills taking an initial back seat.

As the world changes, however, so too of course do hiring trends. A recent report from LinkedIn shows that the skill sets needed for jobs have evolved by 25% since 2015. Hiring practices, too, according to LinkedIn's data, have begun to put more emphasis on skills, suggesting that companies are increasingly adopting what is being widely referred to as a "skills-first hiring approach".

In a 'skills first' market, firms place priority of skill sets over, for instance, CVs packed with big-name companies, or degree-level education at CV review stage. Where many candidates were previously often not being invited to interview, or being rejected outright, due gaps in their CV or not holding the right educational qualification, now employers are more likely to look past these facets of a CV, if the skill set is strong.

Skills have, seemingly, therefore become the premium currency for many firms. Additionally, considering the speed at which basic skill requirements change (driven by the continuous evolution and adoption of technology), re-skilling and up-skilling is progressively becoming more and more advantageous for workers across the globe.

The skill sets needed for jobs have evolved by 25% since 2015

For technology roles, this can mean tech-specific or digital skills - as well as softer skills, which are increasingly becoming something employers prioritise as the tech market grows.

A huge benefit of adopting a 'skills first' approach has the benefit of being a naturally more diverse way to hire. American firm Opportunity at Work found in a recent report that there are more than 70 million workers in America, many of whom are people of colour, who have developed skills without first achieving a degree. Widening the requirements of a role to first place priority on competency at initial CV screening stage, ahead of experience or education, opens doors to people for whom they may have previously been closed, creating a more level playing field across the board.

With this increased focus on skills in the hiring market, in conjunction with the steady incline in tech skill needs globally, re-investment in employees and access to wider skill pools are becoming a necessity for companies wishing to hire and grow. For the UK, however, reports show that this seems to be a bigger challenge than many other regions across the globe.

In April 2022, analyst firm Forrester published a report ranking the top 50 cities across Europe, as a means of helping tech firms and business leaders identify where to find tech talent. Forrester determined that a skills gap has formed in Europe, in response to disruptions from the pandemic, as well as firms increasingly adapting automation, and widespread digital transformation efforts creating increased demand. As such, Forrester have urged European businesses to focus on building out their digital and technology teams by taking a more 'remote-first' approach to hiring.

"The task of reskilling, training, and learning affects businesses, government, institutions, and employees."
Dan Bieler, Forrester

Dan Bieler, Principal Analyst at Forrester, in his blog post discussing the report writes, "Career pivots, in which European workers transition to new occupations, will play an important role and require reskilling. Hence, a new mindset is a prerequisite for sustainable skill transformation to take hold. The task of reskilling, training, and learning affects businesses, government, institutions, and employees."

Analysts at Forrester determine that the top cities primed to support technological and digital growth are, among other things, globally integrated, filled with innovative businesses and have an infrastructure that is digitally advanced enough to be able to both attract and accommodate a significant concentration of skills and talents moving forwards.

When looking at the UK's tech skills pool, Forrester report that regulatory hurdles stemming from Brexit are currently preventing UK-based cities from being ranked as leading 'skill clusters' in Europe. London, often described as Europe's main tech hub, ranked only 19th, largely due to the new immigration rules which affect movement of labour post-Brexit.

It may not just be Brexit that is hindering UK's growth on a continental level. A study from IBM, carried out by Morning Consult in April 2022 focusing specifically on the skills gap in artificial intelligence (AI), has found that training for tech workers is falling behind, in comparison to that of Spain or Germany. IBM report that across Spain and Germany, 42% of workers reported to receiving training opportunities on topics such as software engineering and programming languages. The UK, on the other hand, shows only 32% of staff receiving similar training, with just 27% specifically focusing on software engineering. A similar report, carried out back in 2020 by Microsoft on AI skills in the UK, found that UK organisations were less likely to be classified as "AI pros", when compared with the global average. In the same report, only 17% of UK employees stated that they'd been a part of reskilling efforts - a much lower than the global average of 38%. With problems still being identified two years later, it would seem that UK companies have still more to do when it comes to investing in the skills of their workforce.

Top 10 Skill-Cluster Cities

The top 10 cities with the best skill and talent clusters
across Europe, according to Forrester:

1. Helinski
2. Stockholm
3. Copenhagen
4. Berlin
5. Hamburg
6. Oslo
7. Munich
8. Vienna
9. Zurich
10. Amsterdam

Not all is lost, though. Despite skill shortages being widely seen as rampant across the country, the visa process has been made much simpler to navigate and access. Companies are being encouraged, too, to broaden their areas of search to adapt to the new landscape and attract talent. Providing employees with flexible working options, opening location searches to cast a wider net and indeed, targeting out of country applicants and are all an excellent start.

Beyond this, putting more into training and development, as well as reviewing salaries, bonus and benefit schemes have long been lauded as ways to increase both talent attraction and retention - and now they're more crucial than ever. Exploring, too, the idea of hiring transferable skills and cross-training employees may be a vital way to grow a workforce and combat internal skills shortages, despite being an inevitably slower route.

The ever-growing competition for talent is transforming the scope of hiring across the UK and, with skills, both digital and soft, at the forefront of everything, innovation and investment is more crucial than ever for companies who want to succeed and grow.

The Difference Engine is a recruitment and executive search firm specialising in technology. We work with firms across the United States of America and the UK.