Skills Shortages in Coventry and Warwickshire – What Can We Do?
Skills shortages facing businesses in the Coventry and Warwickshire areas have been strongly highlighted in the latest Quarterly Economic Survey. What does this mean for employers and candidates? What does it mean for our local area?
The Quarterly Economic Survey
The Quarterly Economic Survey (QES) is produced by the British Chamber of Commerce. It is described as the “largest and most representative independent business survey of its kind in the UK.” It is compiled using survey data gained from over 7500 companies. It covers a vast range of issues affecting the working arena.
The QES carries a great deal of weight, especially when considering what’s coming on the horizon for the world of work in the UK. It always gives us an indication of what’s coming. This is because it is ahead of the game, and indeed is published before official data is released. Typically it acts as a precursor to what the official data will show. Therefore, paying heed to the QES allows us to get ahead of the trend.
Furthermore, the QES is taken by a number of different organisations to help influence and shape their policy. The Bank of England, the Treasury, the IMF, EU Commission and the Office of Budget Responsibility all keep an eye on the QES. Fundamentally, therefore, the QES tends to predict and form national changes in business confidence.
Is the QES Locally Important?
In order to comprise the QES report, different regions undertook their own research. This means that drilling down into the report, and looking at the data which fed it, gives us an excellent local insight. In our area, Coventry and Warwickshire Chamber of Commerce have undertaken the data-collection. This has then been compiled in to a report titled ‘Skills Shortages in Coventry and Warwickshire’.
The title is obviously a little alarming. So let’s take a look in more detail.
Skills Shortages in Coventry and Warwickshire
The report covers Q3 of 2017. The fundamental premise of the report is that the area is facing significant skills shortages. In short – it’s becoming increasingly hard to recruit appropriately skilled workers. This isn’t unique to Coventry and Warwickshire. Low unemployment nationwide is making it difficult for companies everywhere. But we have some exacerbated issues, and more notable problems, in our area.
The report does make for slightly alarming reading. Here are some of the stats:
- 1 in 3 businesses in our area believe that a skills shortage is “the biggest barrier to growth”.
- 70% of businesses that are looking to recruit believe that their recruitment difficulties are directly attributable to the skills shortage.
- Of this 70%, 44% put this down to a straightforward lack of workers.
However, that doesn’t quite paint the whole picture. As you’d expect, there are different factors coming into play. Firstly, there is a notable difference between the experience of manufacturing and service-based businesses. Manufacturing businesses seem to be facing even more of a problem, with 73% struggling compared with 63% in the service sector.
There are also key differences when we look at business size:
- Micro businesses (fewer than 10 workers) - the majority of businesses in Coventry and Warwickshire - are facing a two-pronged problem: the skills shortage, and the inability to afford the right skills.
- Conversely, for large employers (250+ workers) the main concern is competition for the right skills.
It makes sense that, if there’s a skills shortage, businesses will be forced to pay more to attract the right talent. This is the basic concept of supply and demand in the recruitment marketplace. This hasn’t quite been played out in reality recently, although this could be starting to change. This would mean that there would be pay rises to absorb the increases in cost of living. Indeed, the report suggests that as many as 80% of businesses facing the skills shortage are planning to implement a pay rise over the next year.
However, again we need to look at this data a little more closely. Not everyone stands the same chance of getting a pay rise. There is a strong correlation between the impact of the skills shortage and an anticipated pay rise. Therefore, as we’d expect from the data we explained earlier, those in manufacturing are more likely to receive a pay rise than those in retail. Yet, from a recruitment point of view it is headline news that pay increases in our area will be resulting from the skills shortage, rather than as we traditionally know – inflation.
A Look at Coventry and Warwickshire Pay in More Detail
For those looking to recruit in an environment of a skills shortage, it’s important to understand what is on the horizon with regards to pay increases. This is where we need to look at pay as an umbrella term for the entire employment package on offer to employees. Different size enterprises have different weapons in their arsenal. For example, a micro business is more likely to increase performance related pay, whereas they are unlikely to increase annual leave entitlement or benefits available.
The report explains that 7 in 10 businesses in the area “will implement either a pay or no-wage related pay increase over the next 12 months.” With a closer look at the figures, this could ensure a pay increase for 78% of the local workforce.
How to Combat the Skills Shortage
We can’t solve a skills shortage overnight. It’s going to take time. That means that for the moment there will be increased competition for talent. In order to address the skills shortage we need to think of other skills strategies, for example apprenticeships and retraining. This seems to be the main route being taken by medium to large enterprises. Again, let’s look at the data from the report:
- 86% of large businesses are using apprenticeships and graduate schemes
- 68% of medium businesses are focusing on retraining their current labour force.
Traditionally, nationwide, we’ve plugged some of our skills shortages using overseas labour. In the wake of the Brexit referendum this is proving less popular, or possible. We do, however, need to look at different options such as enticing dormant labour options such as mature workers, flexible working to entice women to return to work, and those with disabilities.
For the employer it’s all about identifying and targeting the right talent, and beating the competition. That’s why it is essential to choose the right recruitment strategy for your needs. At QPLtalent we rise to the challenge of our national and local skills shortage, and come up trumps with the right talent in finance and HR. To see how we can help you, register your vacancy, or call us on 024 7699 2004.