The Skills Imperative 2035: Rethinking Skills Gaps And Solutions

This report by the Nuffield Foundation suggests the labour market will continue to change, both in terms of the jobs that exist and the skills that are needed to do those jobs.

The Essential Employment Skills (EES) required by 2035 are communication, collaboration, problem-solving, organising, planning and prioritising work, creative thinking and information literacy. These skills are growing in importance across the labour market and are also most intensively utilised in the occupations that are expected to grow their share of UK employment by 2035.

This report builds on prior research by quantifying the current availability of EES amongst the population, by measuring the skills gaps that exist between the EES people possess and the skills requirements of their jobs, and by exploring how these skills gaps might change between now and 2035.

Employers indicate skills challenges are severe and growing. Employers indicate that skills gaps are most prevalent in the lowest skill level occupation groups.

Employers also report experiencing a lack of essential employment skills, as well as a lack of technical skills. Some 9.2 per cent of workers in elementary occupations were identified by their employers as not being fully proficient in their roles, compared to 2.5 per cent of Directors, managers and senior officials.

• 13 per cent of workers in 2023 have ‘substantial’ EES skills deficiencies – meaning the skills requirements of their jobs surpass the skills they possess – which may be jeopardising their ability to fulfil their job requirements effectively.
• Nearly one in five workers in managerial jobs (e.g. HR managers and directors), professional jobs (e.g. accountants) and associate professional occupations (e.g. engineering technicians) have substantial EES skills deficiencies.
• The number of workers in England with ‘substantial’ EES deficiencies may grow from 3.7 million workers in 2023 up to seven million workers in 2035.
• Self-report data indicates that 14 per cent of workers have substantial EES under-utilisation – that is, the skills they possess are higher than those required to do their jobs. Our analysis shows that skills under-utilisation is more widespread among jobs such as skilled trades, sales, customer services and administration. Tapping into these latent skills will become increasingly important for employers in the future.

Key Findings:

• Nearly one in five workers in higher skill level occupations have substantial skills deficiencies.
• Workers in low skill level occupations tend to have the highest average levels of skills under-utilisation.
• Without action, the number of workers with substantial EES skills deficiencies could nearly double by 2035, meaning up to seven million workers may lack the EES they need to do their jobs fully.
• High skill level occupations are likely to have the largest skills deficiencies in 2035, but the prevalence of skills deficiencies in mid- and lower skill level occupations may also grow.
• Workers in high skill level jobs tend to have higher Skills Requirements and higher Skills Supply of all six essential employment skills.
• Levels of EES vary across the population, with ‘Education and training’ an important determinant of Skills Supply.
• People with higher levels of EES earn more and are more likely to be in management positions.
• People with higher levels of EES have higher job and life satisfaction.

Recommendations:

• Employers grappling with skills gaps should consider what more they can do to align expectations and skills assessments between managers and workers across their workforce.
• Employers should consider what more they can do to support their line managers to identify and utilise the ‘latent’ EES of their workers, particularly the under-utilised skills of workers in mid- and low skill level occupations.
• Employers should reflect on the extent to which skills gaps in their organisation could be a consequence of ‘skills withdrawal’ and how they ensure that working conditions and practices promote organisation commitment, engagement and work effort.
• Government should further incentivise employer investment in the development of their workforce’s EES.
• Government and institutional funders should fund more research to (i) understand the causes, scope and consequences of perception differences between employers and employees, (ii) identify the determinants of EES, and (iii) identify the most effective strategies for educators and employers to assess and develop EES.
• The Department for Education should consider what more it can do to support education and training providers to identify and adopt the best strategies for assessing and developing people’s EES.

Link: The Skills Imperative 2035: Rethinking Skills Gaps And Solutions