There’s barely a report about the labour market nowadays that doesn’t mention the UK skills shortage. It’s a major issue for businesses and, indeed, the economic future of the UK.
In a bid to solve the problem and ensure companies can access the talent they need to grow, experts have suggested everything from improving education and lowering tuition fees, to drawing on foreign professionals.
Central to much of the skills shortage discourse is contractors and the role they play in plugging the gap where the right permanent candidates cannot be found.
However, with the availability of the self-employed already tight, questions emerge as to whether contractors can really be as key to the skills shortage as assumed.
The skills dilemma
According to the UK Commission for Employment and Skills’ ‘Employer skills survey’, vacancies as a result of the skills shortage now account for one in five of all jobs posted.
This figure is up from one in six in 2009, with more employers unable to access workers with the right skills and qualifications to do the job.
Despite the fact vacancy rates are now back to pre-recession levels, the skills shortage is proving a threat to the economic recovery.
Indeed, the Recruitment and Employment Confederation (REC) found that a growing number of firms are at risk of having to turn down new businesses due to a lack of talent. Many companies have admitted that they would need to grow their headcount if they had to take on new projects.
Thirty-one per cent of businesses currently have no spare capacity and will have to hire new staff if work increased, while 54 per cent claim they would have only “a little capacity” in the event of new business.
Kate Shoesmith, REC head of policy, explained that with many employers unable to increase productivity without taking on new staff, pay growth will also suffer.
The lack of skills has been felt the most in technical and engineering sectors, while computing, IT, education and training are also struggling to source talent.
Plugging the gap
The skills shortage isn’t something that we’re at risk of in the future – it’s happening now. Consequently, dealing with the problem takes more than ensuring future generations have the skills valued by employers.
We need people that have the talent to do the job in the short-term and can be in place to help train future generations.
This is where contractors come in. As highly skilled professionals, freelancers are capable of bringing their expertise to multiple projects, helping businesses tick over.
Employers have cottoned on to this and the PCG has noted that contractors are now able to access more opportunities and better rates.
In the ‘Economic outlook: The freelancer’s perspective’ report, it was identified that independent professionals will be the winners in the skills shortage.
Self-employment is increasing every year, growing by an average of 2.2 per cent per annum. The sector is resilient to economic cycles and individuals continue to be drawn to this way of working.
In February, the REC observed that nearly half of employers intend to increase their temporary workforce over the next three months. Over the next four to 12 months, 46 per cent also expect to use more agency workers.
However, taking on more contractors isn’t in itself the key to solving the skills shortage. It’s about maximising their utility and using them to train and develop existing staff.
Self-employed individuals can play an important role in plugging the skills gap and creating a sustainable talent stream once the next generation enters the workplace. However, they need the support of employers and businesses need to understand how contractors work. The government can also help by making it easier for companies to access the talent they need from the freelancer pool.
I am a chartered tax advisor with a specialism in the freelance contractor sector advising contractors on how to structure their affairs and recruitment businesses and end hirers on the effective…
