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Perfect storm of factors leads to skill gaps in British economy

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Over the last month a crisis of recruitment in the road haulage industry has hit the headlines, with threats of food shortages and industrial supply chains looming large. Lurid threats of no chicken at Nando’s and no beer at Wetherspoons predictably made great splashes in the British media. Much of this has been blamed on Brexit – but while it’s certainly true that a lack of EU workers has contributed to the skills shortage, this crisis is more indicative of stagnated wages in the UK and a societal lack of interest in skills training. What can the road haulage crisis teach us about wider trends for UK industry? 

Apart from just haulage firms, there has been a perfect storm of factors that have led to UK businesses struggling to recruit. According to the British Office for National Statistics, 41% of companies employing over ten people have reported greater recruitment challenges in September. It’s easy for some to blame lazy British workers and myopic Brexiteers for the lack of cheap and hardworking labour from the EU, but this would be a misreading of a complicated situation. 

Although much of the difficulty business is facing in recruitment has been blamed specifically on Brexit, this could also be viewed as a success story for the traditional British left, as the pro-Brexit wing of the Labour Party had always advocated for leaving the bloc in order to give workers and trade unions a better bargaining position without the threat of being undercut by cheaper European labour. Many HGV drivers have seen their wages shoot up by 40% in recent months. While those in the haulage industry have had rocketing pay increases to reflect the value of their labour to the economy, other workers have also benefited: the Open University estimated employers spent an extra £2.16 billion on salaries, with 67% obliged to increase salaries last year, and by an average of £3,400 each time. Skills being in short supply is bad news for industry and the wider UK economy, but in some cases excellent news for the pay packets of those who are skilled in in-demand areas. The Open University estimates that British businesses now have to pay an extra £6.33 billion a year in ‘recruitment fees, inflated salaries, temporary staff and training for workers hired at a lower level than intended’ due to skill gaps in the wider British economy. 

But recruitment issues are not just a question of Brexit and workers agitating for higher wages: it is also the result of long-term neglect for skills training, both for young people and for workers who require reskilling. Research from the CBI shows that nine in ten employees will need to reskill by 2030 to keep up with advances in technology and the changing work environment after coronavirus and automation. And this is not just the case for traditional blue-collar jobs in sectors such as haulage: the UK Department for Digital, Culture, Media & Sport has shown huge gaps in hard data skills in the UK. The CBI have long complained of how the UK has neglected skills training: the expectation that any moderately successful pupil at secondary school will go to university has created not only rampant grade inflation and a weakening of the employability of a bachelor’s degree in Britain, but has also deprived the tertiary training sector of willing candidates to learn skills many of which are vital to keep society functioning. And with workers in many such jobs having an average age of over 50 – or 55 for HGV drivers – this shortage is likely to become acute in the next decade as workers retire and exit the workforce. 

British workers lack skills, and those that do have such skills are now in a position to demand higher wages and better working conditions. This isn’t just a leftist or trade unionist position: this is fundamentally free-market capitalism working well, as without EU immigration diluting the market workers now have a chance to bargain effectively for their skills and labour – all as Adam Smith intended. Another fundamental factor in the difficulty industry faces in recruitment, however, may lie in the aftereffects of the coronavirus pandemic. Putting aside increased mortality as a factor in a smaller labour pool –something that will have an impact on the pool of workers available, 

but the exact data on this will take some time to shake out – many in late middle age working in skilled jobs have taken COVID as an opportunity to retire slightly early rather than risk their health. This will have had an impact on 

The difficulty of sourcing HGV drivers and the current high pay demanded by drivers may be the last spasm of good news for an industry tipped to be decimated by automation, but at the moment it represents a significant success story for British workers. The government and the tertiary education sector will have to rethink how it attracts young people, to make sure further skill gaps do not emerge in other industries. After Brexit, the UK will lose the ability to outsource its failure to train sufficient numbers of workers to a readily available European labour pool. Industry will either have to accept paying higher wages for skilled labour, or commit to creating more apprenticeships and adult learning programmes to produce their own skilled workers in-house. Brexit may have raised the simmering problems of the British skills gap to boiling point, but it cannot be blamed for the crisis entirely.

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