The “skills gap” – it’s a common thread to be heard amongst businesses and in the conversations I’ve been privy to businesses usually place the blame squarely on the educational institutions. For me one problem here is the people doing the complaining do not seem to be doing anything to rectify their quandary. So I thought I’d do a little digging and put in my 2 pence.
According to research by The Open University the skills gap is costing UK businesses more than £2bn a year as companies struggle to find workers with the right attributes,
Companies are claiming they have to shell out extra on higher salaries, recruitment costs and temporary staffing to fill positions with people that have the right skill set. Businesses say they have found it difficult to recruit workers with the required skills in the past 12 months and so had been forced to inflate salaries above the market rate to attract talent.
According to data from the Office for National Statistics UK’s unemployment rate is at its lowest for more than 40 years sitting at 4.6pc in April 20017, meaning the pool of talent has become shallow which is forcing wages up.
So a side effect of the ‘situation’ is that companies are also having to hire less qualified people and train them on the job. Apprenticeships are on the rise, due in part to the governments apprenticeship levy, and are expected to double in 2018.
So it all seems very real.
However, no holds barred, the ignorance of living in our economic system and then complaining about the supply and demand of labour is staggering.
In economic theory, the law of supply and demand is considered one of the fundamental principles governing an economy. It is described as the state where as supply increases the price will tend to drop or vice versa, and as demand increases the price will tend to increase or vice versa. And this is precisely what’s happening in the job market.
The skills gap is nothing more than unwillingness for business to pay for the skilled labour they want or the desire to train people in the required skills they need. Businesses talk about having to pay above the going market rate but fail to recognise that going market rates alter continually as a natural force of economics.