Thursday 12 May 2022

Addressing the tech skills shortage is essential for economic growth

Digital skills pictureTuesday saw the Queen's Speech lay out the government's agenda for the coming year. Unsurprisingly the government's stated priority was "to grow and strengthen the economy and help ease the cost of living for families". With consumer price inflation now at 7.0% and news on Thursday that GDP contracted in March, the economic situation is understandably front of mind for businesses and consumers.

There is much for the technology sector to consider in the government's stated priorities. You can read Georgina's comprehensive summary of where digital investment will support these priorities here.

Meanwhile The Times Education Commission Summit, in associated with professional services firm PwC, also took place on Tuesday. The Commission launched in June last year, with the objective of "examining Britain's whole education system and considering its future in light of the Covid-19 crisis, declining social mobility, new technology and the changing nature of work".

It set out a slew of worrying statistics - including several from a survey of employers conducted for the summit, which found that:

  • 33% of businesses said their organisation could compete better in international markets if the education system were reimagined to better meet their needs;
  • 35% reported basic skills (literacy & numeracy) shortages in their organisation; and
  • 39% were struggling to recruit people with the right digital and technological proficiencies.

The government is correct that a focus on growth is essential for the country to prepare for the future. And as we have commented before, it is also correct that digital investment is a key building block in achieving the innovation and improvements in productivity which are essential to driving growth. Some measures targeting skills of young people and workers were presented in the Queen's Speech. But statistics such as those bulleted above suggest there is a long way to go to provide UK businesses with the talent pipeline they need.

Aside from the moral imperative of ensuring more equal access to the skilled jobs market for all in our society, there is also another imperative which should worry us all. The current shortage of workers in particular disciplines - including IT - has the ingredients to create a wage/price inflation sprial, as those with the in-demand skills bid up wages for employers desperate to attract them. This threatens to embed inflation and depress growth for the medium-term, leaving those without the skills to bargain even worse off.

The government is adamant it will not spend its way out of economic trouble - but one area where we cannot afford to scrimp is investment in literacy, numeracy and STEM skills.

Posted by Tania Wilson at '15:00' - Tagged: skills   growth   productivity   resilience   macro  

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