Chairman of Vedior’s Board of Management and Chief Executive from February 2004 to September 2007.

There is a great deal of noise about skills shortages in the UK. The allegation is that new entrants to the labour market - school and college leavers and immigrants - do not have the basic skills to contribute
effectively in the workplace.

There is the emotive issue of the broader impact of immigration on the economy. Then there is the stark reality that the UK is less productive per hour worked than the USA and Japan, and some of the UK’s European Union neighbours such as France and Germany. This is in spite of our more flexible labour market.

To analyse these issues we commissioned Ipsos MORI to interview human resources directors and managers from 200 organisations across the spectrum of the UK economy – in the services, manufacturing and public sectors. We asked Ipsos MORI to review the nature and extent of the UK’s skills shortages, the likely consequences, and how organisations plan to resolve the problem.

The first point to note is that the UK does continue to face a major shortage of skilled workers. The survey reveals a high level of concern among all types of organisations at their inability to fill skills shortages - 40% of human resources professionals overall said the problem continues to be ‘serious’. But the problem is particularly acute in the manufacturing sector, where half of the organisations we spoke to said the situation was ‘serious’. The public sector also faces a high level of risk, with 41% of organisations reporting a major shortage of the right skills. In contrast, the services sector is less concerned, although a third of services companies still said skills shortages are a serious problem. 

The good news is that skills shortages are now on the board agenda. The vast majority of human resources professionals said that their board is paying the right attention to skills shortages and their potential impacts. However, there appears to be some complacency within the services sector, as a quarter of our respondents in services said that their boards are not concerned enough about skills shortages.

One of the most interesting findings from our survey is that employers are expecting that skilled immigrants will have a big positive impact on their ability to meet their skills requirements as the crisis deepens. Employers see Eastern Europe as the best source of foreign talent for UK companies out of anywhere in the world. A quarter of human resources managers said this, rising to 38% of manufacturers.

Eastern Europe is way ahead of the second and third most important sources of skills outside of the UK, France and Germany, and, overall, two thirds of UK organisations believe that membership of the European Union will help them fill their skills shortages.

In contrast, North America, India and the Far East are seen as being far less important sources of talent. The level of comparative interest in new workers from Asia corresponds with the finding that relatively few
companies – 5% - say they are very likely to turn to offshoring to alleviate their skills problems. This probably contrasts with many people’s perceptions of the extent of offshoring.