The #FutureofWork: Rethinking skills to tackle the UK’s looming talent shortage
Profound structural shifts are under way in the UK workforce. Here’s how companies can prepare to meet the challenge and nurture the skills and talent that will help them stay competitive.
The adoption of automation, along with technologies such as artificial intelligence (AI) and the Internet of Things, is likely to unleash profound structural shifts in the UK workforce—which will be amplified by other megatrends such as the aging population. As a result, demand for occupations such as managers, technology specialists, and health professionals could rise nearly 20 percent by 2030, while demand for administrative and manual roles could decline just as steeply.
Our research shows that UK companies will need to respond to these threats by transitioning up to a third of their workforces into new roles or skill levels over the next decade. If they fail to meet this challenge, they could find themselves with even more acute shortages of talent than today. These potential talent shortages will not only be among technology specialists and engineers, but also among the managers needed to lead change and upskill teams, especially in customer-facing service roles. By 2030, two thirds of the UK workforce could be lacking in basic digital skills, while more than 10 million people could be underskilled in leadership, communication, and decision making.
Technology-adoption trends are a tremendous opportunity for UK businesses in all sectors—not just a disruption to be feared. Companies that move fast to take advantage of automation and digitization—and build or find the relevant skills to enable that transformation—will boost productivity, accelerate innovation, and better engage both customers and employees.
In this article we highlight the looming skills mismatches that could beset UK companies if they fail to prepare for the shifts ahead. Our Occupational Talent Shortage Index pinpoints where employers are likely to be short—and long—on talent. We also outline a set of creative steps that companies can take in a disrupted market to find and nurture the skills that will help them win in the future.
Mind the gap: Why the talent already in short supply will be in even greater demand by 2030
The impact of the Fourth Industrial Revolution on the future shape of work will be profound. Modeling by the McKinsey Global Institute (MGI) on the effects of technology adoption on the UK workforce shows that up to 10 million people, or around 30 percent of all UK workers, may need to transition between occupations or skill levels by 2030.
Moreover, technology affects higher- and lower-skilled workers very differently. It tends to augment highly skilled workers, for example, by making doctors more efficient and effective at treating patients. This tends to increase demand for the services that such professionals provide, which in turn increases their employment. In contrast, when the tasks performed by workers require lower skills, those workers can be substituted with machines more easily. In the short term, this tends to lead to talent shortages among high-skilled occupations—along with a narrowing of job opportunities for lower-skilled workers. To test the application of this trend in the UK job market, MGI and McKinsey’s UK and Ireland office analyzed the projected growth in employment of 369 different occupations from 2017 to 2030. We placed those occupations into five quintiles, with top-quintile occupations exhibiting the strongest, and bottom-quintile occupations the weakest, projected employment growth.
This occupation-by-occupation modeling suggests that demand for occupations in the top quintile will increase by an average of about 19 percent from 2017 to 2030, which equates to 1.4 percent per annum. Those occupations include management roles in a host of sectors, as well professional roles in information and communication technology (ICT), engineering, health, and teaching. Over the same period, demand for bottom-quintile occupations is expected to shrink by about 17 percent. Those occupations include administrative and secretarial roles.1
The challenge for UK companies is that the top-quintile occupations—those in which employment demand will grow fastest—are also those already facing a shortage of workers. In other words, acute talent shortages are on the horizon in the occupations that are most critical for business and economic growth. People in these management and professional positions also play a fundamental enabling role—in their firms and in the broader economy—as they often help other workers strengthen their skills and improve their performance.
Several statistics reinforce this concern. The top-quintile occupations on our list had a weighted average vacancy rate of 3.6 percent in 2016, compared to 2.4 percent across all occupations—and they also have below-average unemployment rates. Their weighted average median hourly pay in 2018 amounted to £16.4, compared to £14.7 across all occupations.3 Between 2001 and 2017 these occupations experienced annual average employment growth more than double that of all occupations. They also rank highest in an independent assessment of areas of labor market tightness: the Shortage Occupation List compiled by the Migration Advisory Committee (MAC).
The Occupational Talent Shortage Index: Pinpointing talent tightness, today and in the future
This exercise shows just how challenging it might become for UK companies to secure critical talent at a reasonable cost. Roles that are currently hard to fill and demand high salaries will continue to see robust growth in demand—with ICT professionals being a case in point. Conversely, growth in demand for jobs with currently high unemployment rates and low wages is likely to be significantly weaker. These include elementary sales and storage occupations and many administrative roles.
Could automation itself be part of the solution to the problem it is creating, by helping UK businesses reduce pinch-points in the talent market? After all, MGI’s analysis suggests that more than one in five jobs in the United Kingdom are potentially automatable by 2030. However, automation is unlikely to relieve the acute talent shortages that the Occupational Talent Shortage Index identifies in sectors such as ICT, professional services, and healthcare—as roles in those sectors are significantly less automatable than those in other parts of the economy.
Talent shortages and skills mismatches are not a new phenomenon. It has always been the case that, as business needs and job requirements change, the supply of people with the right skills lags behind. The following quotation is from a research paper published nearly 20 years ago, which highlighted skills shortages reported by businesses:
“The main areas of deficiency which were identified embraced a wide range of technical and practical skills and shortcomings in generic skill areas such as computer literacy, communication skills, problem-solving skills, and customer handling skills.”
The quotation is eerily similar to the findings of the October 2019 Industrial Strategy Council research paper, UK Skills Mismatch in 2030.7 This paper identified significant expected shortages in both workplace skills and knowledge areas in 2030. For example, about 21 million workers—or two thirds of the workforce–might lack the necessary basic digital skills employers will need in 2030. Five million of those workers could be acutely underskilled in digital. More than 10 million workers could be underskilled in leadership and management, while a similar number could lack skills in decision making and advanced communications.
Companies certainly recognize the challenge and impact of current and future talent shortages: in a survey by the Confederation of British Industry, more than 80 percent of firms stated that access to skills was the most significant threat to the UK’s labor-market competitiveness. But the pervasive nature of the issue suggests that employers everywhere need some fresh solutions.
Businesses can get ahead of the game through creative talent strategies
How can businesses prepare now to secure the right talent in the occupations that face shortages today—especially since those pressures are likely to build even further in the future? Companies will need to craft their talent strategies with the same degree of care and attention as their business strategies.
A foundational step is to look at the workforce more strategically—and to plan now for future dislocations. By identifying the roles and skills that will be needed in the future, companies can find the most effective and creative ways to acquire and nurture the right talent. To be effective, such workforce planning will need to be underpinned by effective information management—including robust data on both available and required skills.
Once companies have a clear view on the nature and scale of their specific talent shortages and overages, they have three ways to address the gaps in key roles and skill sets.
The first is to build new skills among existing employees. The costs of firing and hiring can quickly become prohibitive, so the best way forward for the majority of positions is likely to be to purposefully upskill existing employees while replacing routine work with automated systems. One example is a hospitality business in Cornwall that—faced with chronic staff shortages—reskilled all front-line staff to become customer service personnel while upgrading its web presence to reduce low-value customer calls. Not only did this improve profitability; it also resulted in higher employee motivation and loyalty.
The second approach to addressing talent shortages is to “rent” talent from external partners. For example, companies can develop outsourcing partnerships that bring in specialized skills—or they can tap the gig economy by taking advantage of the rise of digital platforms. Several global technology firms have used platforms such as Topcoder to source software developers and other experts for application-design and -development projects.
The third approach is to acquire talent from unconventional sources, by focusing on the intrinsic qualities a person has rather than which sector those skills came from. Our detailed analysis of the UK workforce suggests significant commonalities between occupations that look quite different on the surface. For example, school secretaries already have many of the foundational skills needed to become IT business analysts, architects, and systems designers; and people in storage occupations have relevant skills for careers in leisure and sports management.
Companies can use such insights, and the kinds of analyses illustrated in Exhibit 1, to identify pools of workers in sectors, regions, occupations, or age groups that will meet their skills needs. This gives them the opportunity to secure potentially high-performing employees at low cost. Such individuals are likely to require some upskilling or retraining, but there are innovative capability-building approaches that are very cost-effective. One example is the Generation youth employment program, which develops job-ready skills in as little as six weeks through intensive “boot camp” immersions.
What of the workers in occupations with shrinking demand? We believe there is a big opportunity for more rapid and agile reallocation of staff across traditional boundaries. While companies may have to release some employees from their workforces, there is considerable scope to reskill and redeploy such workers. For example, our analysis shows that while robotic process automation and image-recognition technologies will reduce the need for data-entry and -manipulation tasks in companies’ finance functions, the people in these roles already have skills similar to taxation experts and accountants.
That said, many companies in the UK lag behind their global peers when it comes to rapid reallocation of both financial and human resources. To do this well, companies will need to shift from assessing people mostly based on their qualifications and career histories to assessing their underlying skills. As Sal Khan, founder of Khan Academy, points out, this can reveal many hidden talents. We believe that unlocking this potential is an opportunity for companies to tap into the talent and skills they need, at a reasonable cost. It also gives them a far greater chance of winning the new war for talent in a market heavily disrupted by the rapid adoption of automation.
The fundamental shifts in the skill sets required for the future are an opportunity as well as a threat. If businesses proactively adopt talent strategies that tackle the challenge head on, they can gain a distinct competitive advantage and improve their resilience in a fast-changing world.
Study reveals the Top 10 skills graduates need to succeed in an increasingly automated workforce
With automation increasingly impacting the UK workforce, a new study, "Automation-Proofing your Industry" has revealed the top skills graduates need to future-proof themselves, with relationship building, having a positive and professional attitude and communication skills being the most commonly desired by employers.
The research published (20 Jun 2019) by sales recruitment specialist Pareto Law, reviewed 20,000 keywords in entry level job postings across 15 industries and analysed a broad range of soft skills, which are less likely to be subject to automation. The resulting list included problem-solving, flexibility and attention to detail as key areas that graduates should focus their skillsets.
Pareto Law’s analysis builds on the report from the McKinsey Global Institute which suggests that soft skills are becoming more crucial, with AI set to cause mass displacement in the job market. Developments in technology could reduce the number of ‘predictable’ tasks, such as data entry, being done by humans.
In addition, a 2019 report by the Office for National Statistics revealed that nearly 1.5 million jobs in England are at risk of automation.
The analysis revealed that the top 10 most desired skillsets for entry level graduates’ jobs across the UK workforce are:
- Relationship building (19%)
- Having a positive and professional attitude (17%)
- Communication skills (15%)
- Being business-minded (12%)
- Being organised (10%)
- Attention to detail (7%)
- Problem solver (6%)
- Independent (5%)
- Flexible (4%)
- Data and analysis (3%)
According to a 2017 ONS report, young people are more at risk of having their jobs automated than those aged 35-54.
Automation-Proofing your Industry
AI and automation are making some roles obsolete. Read our research on soft skills and find out how you can future-proof your industry. There are mixed reactions to the possibilities of automation and its effects on our workforce. But automation has already had a strong impact in one of industry’s most visible, volatile settings - the high street. An estimated 25% of all checkout assistant positions in the UK have disappeared since 2011, replaced by self-checkout machines. As we develop bigger advances in automation, jobs in other industries could be at risk too.
Along with robots to reduce physical labour requirements, artificial intelligence is proving more useful at taking on roles most often handled by humans. Tasks such as data entry and financial processing make up a large part of a typical day at the office. But AI developments could see the reduction of what the McKinsey Global Institute calls ‘predictable’ tasks like this. Though they’re not easy, it could soon be the case that artificial intelligence can perform multiple office-based tasks that involve the gathering and processing of data as a matter of routine.
But while automation takes the weight off manual labourers, it also creates opportunities – and jobs - that didn’t exist 20, or even 10 years ago. Advances in technology have led to floods of Big Data that employers are scrambling to make the best use of. Along with other highly skilled roles that wouldn’t be possible without automation to do the heavy lifting, recruiting and training up new talent to push the potential of new technology is essential.
While the future of automation has its positives and negatives, it’s up to employers to decide how best to maintain a thriving talent base in the face of these advances. But when it comes to recruiting that talent, do bosses know what skills are future-proof?
Using data pulled from job boards, graduate resources and public bodies, we’ve identified several skills areas that recruiters for entry-level roles should prioritise when looking to ensure their talent base can adapt to potential workplace automation.
Future-proofing talent: What you should be looking for in your next hire.
To find out what forward-thinking employers are looking for in the next-generation of tech-savvy talent, we compiled information from online listings for entry-level roles from across the workforce. We then cross-checked keywords to see what connections and themes emerged in their job requirements.
While there was a strong demand for various qualifications both academic and vocational, we looked closely at soft skills – the kind of personal qualities and on-the-job experience that allows prospects to work effectively with other people. While robots, programmes and algorithms allow businesses to work faster and more efficiently, it’s these unique personal traits that arguably keep the wheels of business turning.
To find out what kind of soft skills are the most in demand, we scoured more than 20,000 words taken from job listings across 15 industries – from recruitment to retail, and everything in between. We then placed each of the soft skill keywords mentioned into one of 10 categories, which we believe are the foundations of future-proofing talent.
To come up with the skills areas employers are most focused on, we ranked those categories by the number of occasions a keyword occurred within the word bank. Here then, ordered by popularity, are the skills employers are looking for in a future-proof workforce.
10 areas of focus – ranked
Technology has taken bold steps toward making human/machine interaction remarkably routine – one in four UK households now owns a small, chatty black or grey box. But recruiters want the kind of talent who can build ongoing positive relationships with colleagues, clients and customers alike – not a walking virtual assistant.
You can’t programme a sunny disposition – no matter how annoyingly cheery your smart speaker may seem on a rainy Monday morning. Employers want to counteract the effects of a robotic revolution with the personal touch that, well, only people can provide. A readiness to take on even the most taxing aspects of a role is a clear sign of confidence, ambition and talent.
Good communicators can seamlessly shift between modes of address whilst being clear on the issues and solving problems. Communication is key when keeping colleagues and customers up to date on developments, and in ensuring that new strategic and operational systems are delivered with minimal disruption to the business. Choosing when and how to deliver key information is still the domain of humans – for now.
Chatbots are just one example of software created to support and enhance the customer journey. Though when it comes to negotiating or arguing a point professionally, even the best AI can’t pivot and adjust the goalposts like humans can in the heat of the moment.
There are countless apps on the market for to-do lists, workload planners and diaries. But when was the last time you were able to make a list for work, and plough through it from beginning to end? When an urgent deadline is moved up or a project slips through the cracks, our ability to adapt and make things happen on the fly is where the real work happens.
Apart from aspects of Data & Analysis, the skills that make up our top 10 are things that, as yet, are qualities we can’t wholly attribute to technology.
A computer can solve a problem given an amount of information, but can’t be relied on for instinct. Humans can solve problems and analyse a situation using much more than data – even pure gut feeling can play a part when it comes to making a tough business decision.
Independence and flexibility are highly desired skills in an on-demand industry – employees who can put themselves to work and show some initiative are far more likely to succeed in their chosen career than those who need long-term guidance and hands-on support. Therefore, to future-proof your business it is essential you are retaining employees that have the ability to harness these core soft skills to boost your bottom line.
Most desired soft skills – by industry
We’ve found out what recruiters are looking for in new hires on a more general basis, but between industries there are some notable shifts in priority. Our keyword research has thrown up some interesting examples of the different attitudes to soft skills.
In Accounting, Banking & Finance the most sought after soft skill is Communication. A decade on from the global financial crisis, a YouGov survey indicated that two thirds of the British public “don’t trust banks to work in the best interest of UK society”. Since the crisis happened banks have juggled regulatory overhauls with PR refreshes, to position themselves as more trustworthy propositions. With those two objectives appearing contradictory, workers in the finance sector are nonetheless tasked with presenting a clear message to the public.
Positive and Professional Attitudes are the top asks for talent in the IT, Sales and Charity sectors. With some business’ entire operations dependent on the smooth running of servers and the whirr of office computers, IT professionals are under a lot of pressure to perform around the clock. And with so much of a charity’s operations relying on their staff going above and beyond to maintain relationships with the community, having the kind of personable skills to raise awareness and money for the cause is a useful talent. Sales reps, perhaps more than most, need a positive outlook and a can-do attitude to thrive in the industry. Not only does this help with the knock-backs that come with the territory, having a great attitude is critical to building relationships with clients and will ultimately increase success levels.
In the Engineering & Manufacturing sector, Relationship Building takes priority. Manufacturing is one of the most vulnerable areas for automation - only Transport & Storage has more jobs at risk according to PwC. Recruiters are keen to hire talented team members who can work together to solve problems and spot opportunities for efficiency in a sector ripe for disruption.
Recruiters: how to source soft skills
Applicants aren’t necessarily going to highlight things like ‘positive and professional attitude’ on their CV when there are more concrete projects and responsibilities they would rather promote. But there may be tell-tale signs that an applicant deals with day-to-day tasks in a way that suggests they’re right for a role.
- Project management. Unless working solo, a prospective candidate who’s mentioned managing a project on their CV is someone who combines organisational skills with teamwork and interpersonal relationships as part of their role.
- Societies / clubs. Someone who is a member of a club or society will doubtless have experience with networking. A club leader will also have leadership experience, which would come in very useful for delegation and mentoring.
- The CV itself. You’ll know when a candidate can deploy good communication skills just by reading the CV. A summary of the prospect’s career to date that’s written effectively with no superfluous information is a good indicator that they display awareness of an objective and the means to communicate it.
- At the interview you’ll get a better idea of suitability for a role, and how closely candidates match with soft skill requirements.
Conclusion: the future of the automated workforce
PwC predicts that three distinct waves of automation will place some industries at different degrees of risk. In the short term, algorithms could displace workers in financial services, as developments in AI will make analysis and processes much easier and faster. As automation takes a wider scale, we could see a complete transformation in the transport industry in the long-run, as driverless vehicles and the like continue to develop.
As automation continues to gather pace in transforming businesses, the value of experts in relationship building, collaboration and attention to detail cannot be overstated enough. It is absolutely essential for businesses to value these top skills in employees over automation advancements. They may be more abstract than qualifications and more applied forms of training, but these more abstract skills will prove invaluable to employers. The sales industry, in particular, will likely continue to see advancements in technology that elevates talent, rather than completely replacing it. In this field, AI can help sales people to better understand consumer behaviour through advanced analytics and CRM tools. This could cut down on hefty admin time and leave more space for human experts to do what they do best. In turn, soft skills such as leadership, communication and attention to detail in industries like sales could become even more fundamental. Even in the near future, these kinds of skillsets can’t be emulated by an algorithm.
Chris Unwin, CEO of LAC Conveyors and Automation, gave advice to graduates based Pareto Law’s findings:
“Be flexible, ensure that you have the basic building blocks of communication with a desire to embrace change - this will be key to achieving successful progression”
Graduates entering Accounting, Banking and Finance sectors should be aware that strong communication skills are a top priority for employers. This was reiterated in the Property and Construction sectors.
Sales and Recruitment/ HR, where communication skills are key, were more likely to pursue graduates with a positive and professional attitude. Sales had almost double the mention of positive and professional attitude compared with communication.
According to PwC, manufacturing is one of the industries most likely to be impacted by automation. Pareto Law’s study found employers in Manufacturing and Engineering industries are looking for graduates who can build relationships/ be a team player and can problem solve.
Jonathan Fitchew, CEO of Pareto Law, commented:
“With automation impacting the workforce in a variety of ways, from robots reducing physical labour requirements to AI taking on tasks such as data entry and financial processing, those entering the workforce need to future-proof themselves. This process starts with developing soft skills - skills that cannot be imitated by AI.
With the graduation season upon us we wanted to help graduates understand the skills they’ll be expected to have when applying for entry level roles in 2019 and beyond. While traditional ‘hard’ skills are still important, with technology impacting jobs in an unprecedented way, it’s clear that graduates need to be strengthening their soft skills to prepare for the future of work.
AI is evolving rapidly, and Pareto are at the forefront of this progression. Businesses need to know the difference between value added by automation, and value added by humans, and make sure they can derive the best results from both”
With automation continually impacting the workforce soft skills are a way for grads to future proof themselves.
Methodology: 20,000 keywords across entry level job postings were analysed for soft skills across 15 industries as outlined by the World Economic Forum. The skills were grouped into ten wider categories and ranked according to the number of times mentioned.
The categories were then ranked by the number of occasions a key word occurred in the word bank and ordered by popularity.