Urgent action needed to prevent skills shortages and potential impact on the economy and employment

Essential employment skills required by employers now are set to become even more important in the future, according to a new report.

The report says that while many occupations will experience greater demand for specialist knowledge and skills, it is transferable skills such as collaboration, communication, problem-solving and decision-making that will be vital for powering the economy and individual careers in 2035. This might reflect, in part, the fact that transferrable skills such as these, are harder to automate.

Demand for these essential employment skills is expected to grow significantly between now and 2035 as they will be in even higher demand across the labour market than they are already. Furthermore, almost 90 per cent of the 2.2 million new jobs that will be created in England between 2020 and 2035 will be professional and associate professional occupations, such as scientists and engineers. These roles will require higher levels of proficiency in these essential employment skills.

Given the skills shortages that currently exist across the country, these projections suggest that the situation will get even worse in future without action. It is therefore imperative that central government works with local authorities, employers and educationalists to help the workforce develop these skills in tandem with the knowledge acquired in schools. A limited supply of these skills in the future could hold back economic growth, increase friction in the labour market and put some groups at significant risk of unemployment, resulting in widening inequality.

The publication is the latest in a suite of papers under the NFER-led Skills Imperative 2035: Essential skills for tomorrow’s workforce, a five-year research programme funded by the Nuffield Foundation.

This latest analysis, carried out by Sheffield University in collaboration with NFER, identified the six skills expected to be most demanded by employers in the next 15 years. They are:

• Collaboration
• Communication
• Creative thinking
• ‘Information literacy’ (skills related to gathering, processing, and using information)
• Organising, planning and prioritising work
• Problem-solving and decision making  

The country currently has over a million job vacancies, with many business groups repeatedly warning that chronic labour shortages in some sectors and occupations threaten England’s ambitions for economic growth.

Jude Hillary, the programme’s Principal Investigator and NFER’s Co-Head of UK Policy and Practice, said:

“The demand for the top six skills is projected to increase between 2020 and 2035. The implication is clear; the future labour market will need a greater supply of these skills than it has today.

“To meet these future demands we need an urgent government-led, cross-sector approach to increase the development and availability of these skills across the workforce. The Government should support more workers to acquire the skills to ‘move up’ the occupational hierarchy and take action to ensure young people have higher average levels of these skills than previous generations.”

Dr Emily Tanner, Education Programme Head at the Nuffield Foundation said:

“This data-driven approach to identifying changes in skills demand makes an important contribution to the field and provides the robust evidence needed to shape skills policy and practice.”

The report also projects that:

• Demand for the more than 150 skills outside of the top six most used skills in 2035 is also changing. Around 70 per cent of these skills are projected to increase in demand over the period 2020 to 2035. These include skills such as ‘Developing and Building Teams,’ ‘Providing Consultation and Advice to Others,’ and ‘Developing Objectives and Strategies’.
• Thirty per cent of these skills will reduce in demand over the next 12 years. These include physical and sensory skills, which have, historically, primarily been used in the primary and secondary sectors (i.e. agriculture, extractive industries, manufacturing and construction). Demand for these types of skills has been in decline over the last few decades as the economy has increasingly become dominated by services. This trend is set to continue.
• Changes in the composition of the labour market will also drive increases in the demand for a wide range of specialist skills by 2035. However, while demand for some specialist skills has increased markedly, they still do not appear as highly in the rank order of the most important skills across the labour market in 2035.

In the next stage of the research programme, we aim to estimate what the future supply of these essential employment skills will be in 2035 and predict where skills gaps are likely to arise – including identifying which groups are most at risk of lacking the essential employment skills needed. We will consider what actions are needed to support these groups to transition to other opportunities, and move on to investigate how the education system can support the development of the essential employment skills needed in future.

Sector Response

Julie McCulloch, Director of Policy at the Association of School and College Leaders and member of the Strategic Advisory Board for the NFER’s The Skills Imperative 2035 programme, said:

“This research highlights the need to regularly review what and how pupils are taught, to ensure they have the knowledge and skills they need to thrive both now and in the future. It suggests that the ability to analyse, create and communicate are skills that are much more in demand than being able to memorise vast amounts of information. GCSEs in their current form, following government reforms introduced in the name of academic rigour, involve young people having to take a large number of terminal exams and require students to retain and recall large amounts of information. This approach looks increasingly outdated.

“We need to consider ways in which we can enable young people to develop a wide range of skills, including analysis and critical thinking, how we evaluate these, and how a blend of academic and vocational subjects might best prepare young people for the modern digital economy where change is rapid and constant.”

Responding to NFER’s report, Teach First CEO Russell Hobby said:

“Skills shortages disproportionately affect those from the poorest areas. We must ensure that every young person, irrespective of their background, starts adulthood with the foundation of the skills and knowledge they need to succeed in the world of work.

“The earlier we can start developing these skills the better. That’s why we want to see a free extra-curricular programme for young people from low-income backgrounds that supports them to flourish, and provides much needed childcare for parents, so that the skills gap can be addressed.

“If we’re to build the highly skilled workforce needed to power the economic potential of this country, then we must invest in our young people right from the off.”