By Riaz Moola, CEO and founder, HyperionDev
UK businesses are facing a digital skills crisis. The rapid pace of technological advancement is compelling businesses to prioritise tech skills in their recruitment drives, but demand is outstripping supply.
If not addressed, this gap is poised to inflict an annual loss of £63 billion to the UK economy in potential GDP. Even more perturbing is that it’s expected to widen, resulting in a workforce inadequately equipped to meet the demands of the digital age. Thus, to avert this and ensure long-term economic prosperity, increasing the supply of digitally and tech enabled workers at all levels is crucial.
The current state of the UK tech sector’s skills gap
According to the 2023 Consumer Digital Index commissioned by Lloyds Bank for the Department for Education, 7.5 million people, or 18% of UK adults, lack the essential digital skills required for the workplace. The new Labour government has proposed several plans to address this issue.
Firstly, they intend to curb skilled worker visas to reduce the reliance on overseas workers and address home-grown skills shortages. The government has requested its independent advisers on migration to review the technology and engineering sectors’ dependence on skilled worker visas, signalling an intention to reduce overseas hiring. This move is in response to the high levels of international recruitment, which indicate shortages in the UK labour market.
Labour has also committed to reforming the Apprenticeship Levy, promising businesses greater flexibility in utilising government funds. This reform aims to enhance the effectiveness of apprenticeship programs and better align them with industry needs.
Lastly, the government has introduced the Skills England Bill, which aims to support economic growth by improving the assessment of skills needs and the training landscape. The bill seeks to ensure that training programs are well-designed and delivered to meet these needs and that regional and national skills systems provide the skilled workforce necessary for businesses to flourish and contribute to the government’s Industrial Strategy.
Understanding the source of the skills gap
There’s a notable mismatch between the skills job seekers possess and those demanded by employers, who say that just 48% of individuals exiting full-time education have the necessary advanced digital skills. Companies frequently cite the lack of available talent as the principal barrier to their growth.
Therefore, improving the availability of digital skills is crucial for realising businesses’ full economic potential and empowering individuals. By improving these skills, people can access attractive, sustainable, and well-paid jobs across the economy.
Why skills-based hiring matters
Skills-based hiring is an emerging trend that focuses on candidates’ specific abilities rather than formal educational qualifications. This approach is gaining traction, particularly in sectors like technology, where significant skills gaps persist. By adopting skills-first hiring, employers can tap into non-traditional talent pools, reassign existing employees, and promote junior staff to mid-career positions earlier than usual. Furthermore, it helps break down employment barriers related to discrimination or socioeconomic challenges.
For job seekers, the shift towards a focus on skills could improve access to employment opportunities, especially for workers traditionally underrepresented in key industries and roles that don’t require a four-year degree. Employers’ reliance on degree-based hiring filters in HR systems often excludes capable candidates who lack formal education but are otherwise qualified. This change mainly benefits people of colour and those from low-income backgrounds, who have historically had less access to higher education.
For employers, embracing a skills-based hiring model offers several advantages in a tight labour market. Many roles, as it turns out, do not require a university degree, and by not mandating one, companies broaden their available talent pool. This approach may also lead to better-suited candidates, improved retention rates, and reduced costs associated with high turnover. Ultimately, by aligning hiring practices more closely with the actual needs of the position, companies can foster a more efficient, inclusive, and capable workforce.
Policy reforms and the way forward
The Labour government’s initiatives play a crucial role, but further support for businesses is essential, particularly by facilitating collaborations between educational institutions, tech companies, and training providers. Findings from HyperionDev’s Graduate Outcomes Report 2024 demonstrate the effectiveness of such partnerships, showing that 88% of graduates secured employment within six months of completing a skills bootcamp.
Backed adequately by Labour’s policies, these partnerships can enhance scalability and adaptability to rapid technological advancements. They also promote a culture of collaboration and creative thinking, essential elements that help companies maintain their competitive edge and continue leading in innovation.
As a final thought, it’s time for tech and business enthusiasts to pool their expertise and passion to help bridge the skills gap. Their involvement can help foster a more resilient and equitable workforce and economy, paving the way for sustainable growth and innovation across sectors.
