Challenges and opportunities facing the UK labour market in 2021 – Key Messages from Edge’s Skills Shortages Bulletin

After the extraordinary upheaval of 2020, the UK’s existing chronic skills shortage has become a critical problem. With the pandemic and economic crisis ongoing, the Edge Foundation’s first Skills Shortage Bulletin of 2021 – published today (21 Jan) – is perhaps the most important to date.

Combining expert voices and research from across the education, business and employment sectors, this invaluable resource tracks ongoing and emerging trends in the UK labour market.

Covid is a common theme

Unsurprisingly, Covid is a common theme in the latest bulletin. Notably, the latest research suggests that the pandemic has not necessarily created new challenges so much as accelerated existing ones.

The Learning and Work Institute found that those facing the greatest levels of unemployment are so-called ‘low-skilled’ workers and others in sectors that were struggling pre-pandemic. Of particular concern are younger workers, who are entering a deeply depressed labour market; unemployed older people, who face greater obstacles to re-entering the workplace after prolonged unemployment; and non-white workers, for whom the pandemic has compounded existing institutional inequalities.

Employer Skills Survey

The Skills Shortage Bulletin includes similar findings from the DfE’s Employer Skills Survey. While the last survey took place pre-Covid, in 2019, it provides an excellent baseline for the state of play.

Over the last decade, the survey has shown a consistent fall in recruitment, accompanied by growing skills deficiencies in middle- and high-skilled roles and poor investment in skills development.

This highlights that the pandemic is by no means the only cause of the current skills gap. Something to bear in mind if the government seeks to pursue this narrative!

Open University’s Business Barometer

The Open University’s Business Barometer also offers interesting insights. Their latest survey, which took place in summer 2020, well into the pandemic, confirms that skills shortages are a prolonged issue. But it also highlights that the problem is growing.

During FY19-20, businesses spent £6.1bn plugging short-term skills gaps, compared with £4.4bn the previous year. 61% of businesses also felt they lacked the agility to cope with the demands of the pandemic due to a lack of leadership, management and digital skills.

Broader and more transferable skills

It is no surprise then that all this is highlighting the need for young people to gain broader and more transferable skills – something Edge has long advocated for. Despite some gloomy findings, there is cause for hope.

For instance, Ada, the National College for Digital Skills, provides an excellent blueprint for how the education sector might adapt. Offering an industry-focused digital skills curriculum, Ada works with partners like Deloitte, Facebook and Sainsbury’s, who provide paid apprenticeships.

This funnels a diverse range of talent directly into the UK’s tech industry – a game-changer for young people moving into growth jobs like software development or data analytics. While apprenticeships have stalled during lockdown, approaches like this will be key to rebuilding the economy post-Covid.

The Green Economy

The green sector is also set to play an important role in the UK’s economic recovery. Research from the Local Government Association found 185,000 people employed in the renewable energy and low carbon economy in 2018. Projections suggest this could climb as high as 694,000 by 2030.

We can also expect to see the greening of existing sectors like construction and healthcare. According to the Institute for Public Policy Research, this alone could create more than 200,000 jobs by 2030.

While questions remain about who will drive the change, the government has made eye-catching investment announcements, earmarking £2bn for green homes and £1bn for more energy-efficient public buildings.

Apprenticeships and work-based learning vital to recovery in 2021

More immediately, the OU Business Barometer shows that 48% of employers see apprenticeships and work-based learning as vital to their recovery in 2021 and beyond. It also found that 67% of employers are committed to hiring future employees from more diverse backgrounds. If seen through, this would be a boon for tackling structural and racial inequalities post-Covid.

Meanwhile, the rich findings of recent Learning and Work Institute reports focus on providing effective employment support to the unemployed (including those who were out of work pre-Covid), tying new jobs creation to public investment and upskilling people in these new areas.

As the economic landscape shifts to the new lie of the land, there’s no doubt we are in for a bumpy ride. But with employers becoming more open to apprenticeships as they look to the future, and the pandemic opening minds to new approaches in areas such as assessment, we have a once in a generation opportunity to ensure that young people obtain the skills they need to thrive in the new economy.

Despite the stark short-term outlook, the overriding message is hopeful. With support from organisations like Edge, employers, education providers and government can shape a much brighter future for the next generation.

Let’s not squander this opportunity.

Olly Newton, Executive Director, Edge Foundation

Olly recently chaired a roundtable discussion with key contributors to the latest Skills Shortage Bulletin. You can watch the discussion here.

The Edge Foundation is an independent education charity dedicated to making learning relevant. It works to transform the way young people develop the skills and attitudes they need to succeed in the 21st century. Find out more about their work at edge.co.uk.