Research Identifies the Skills needs of businesses in the Heart of the South West Developed region
A research report has been published for the Heart of the South West Developed region setting out the recommendations for delivering training that meets the needs of local employers.
The research has been commissioned as part of the Skills Support for the Workforce Programme which Serco’s Employment, Skills & Enterprise business manage in the Heart of the South West Developed region and which is co-financed by the Education and Skills Funding Agency (ESFA) and the European Social Fund. The ESFA commissioned Serco to conduct research to understand employers’ skills needs created by automation and barriers to training in the Heart of the South West Developed region.
The findings of the research provided recommendations for training providers and others working in the skills environment to consider as part of their future planning for skills delivery in the Heart of the South West Developed region in order that it meet current employer needs.
The key findings are:
- The rapid pace of digitalisation of many aspects of the economy and the skills challenges this brings are a key context to the research, alongside policy on energy and sustainability born of the climate change crisis. The economic context, prior to the Covid-19 pandemic and subsequent recession, for which data is available, showed productivity challenges in the UK, but broad strengths in the Heart of the South West with high levels of economic activity (82.4 per cent) and low unemployment leading to skills shortages and hard to fill vacancies. Within the Developed area of the Heart of the South West, there are skills gaps with six per cent of the workforce not proficient in their role and 37 per cent of firms reporting staff were underutilised. This may be related to the proportion of the working age population with higher level qualifications in the Developed area being below the national average (34.4 per cent vs 39.5 per cent).
- While national data is not yet available for these indicators, other metrics suggest that the socio-economic impacts of the post Covid-19 pandemic recession are going to be rises in unemployment, and some sectors having to adapt as the economy undergoes structural shifts. In this quickly changing context the need for reskilling parts of the labour market is going to be highly important.
- The research shows that 90 per cent of businesses in the Developed area had a vacancy in the last 12 months, above 68 per cent for comparators in 2017 and 2018. On average businesses in the Developed area reported 9.2 vacancies in the past 12 months on average, higher than in the rest of the Heart of the South West (6.4). Fifty-seven percent of businesses reporting vacancies stated they were hard to fill, equal to an incidence rate of approximately 51 per cent of all vacancies in the Developed area. The density of hard to fill vacancies in the Developed area was 53 per cent, in line with the rest of the Heart of the South West at 54 per cent.
- Low numbers of applicants with required skills was the most frequently cited challenge in filling these hard to fill vacancies. This was more common among higher skilled and higher value occupations. Skilled trades and professional roles made up a quarter of occupations that were hard to fill, which along with other occupation categories disproportionately reflected more high value roles.
- Among job applicants, the lack of technical skills specific to the sector or role were cited by 48 per cent of respondents. A lack of digital skills among applicants were reported by 10 per cent of business respondents.
- Impacts of hard to fill vacancies on businesses in the Developed area was to increase workload for other staff (reported by 74 per cent of businesses), difficulties meeting customer service objectives (37 per cent) and difficulty meeting quality standards (24 per cent). Thirteen per cent of businesses claimed that the inability to recruit to hard to fill posts was leading to difficulties introducing new technology which may inhibit innovation and productivity. One-quarter of businesses reported that the failure to recruit was resulting in a loss of revenue.
- In response to these challenges, 30 per cent of businesses were prepared to offer training to less qualified recruits, up on seven per cent for 2017. Increased training to existing staff was also reportedly greater under this study than comparable figures from 2017, at 22 per cent for the Developed area and 31 per cent for the Heart of the South West compared to six per cent.
- Ninety percent of businesses reported that their staff had undergone some form of training in the last 12 months and just over half of businesses had training budgets in the Developed area. The proportion of businesses training their staff in the previous year was 20 per cent greater than in 2017. Almost 75 per cent of businesses reported training was provided internally, with just over half using in person external provision. Of a list of over 200 training providers cited by respondents across the Heart of the South West and 67 in the Developed area, much of the provision was therefore specific to the businesses. On average, the training provision these businesses received was highly scored at 4.29 out of 5 in the Developed area.
- Challenges in the cost of training was cited by 36 per cent of businesses as an obstacle and inability to spare staff time for training was similarly cited by almost a third of businesses. A difficulty finding training providers who could deliver services where or when required was another challenge faced by nearly a quarter of businesses.
- One-third of the respondents in the Developed area had some link to academic institutions with 43 per cent of these through offering internships or placements. Twenty per cent of businesses ran graduate programmes and another 47 per cent dealt with academic institutions through work and contracts. Figures for the whole Heart of the South West were similar and 22 per cent of this group reported research and development collaboration; a positive sign for innovation with over one fifth of these from manufacturing sectors. Only 12 per cent of businesses recruited through universities or colleges however, though 35 per cent had considered and two thirds felt that they would have the skills to support their organisation.
- Just under half of businesses had links with schools or colleges in the Developed area with much of this to offer work experience (77 per cent). Fifty-two per cent of businesses offered apprenticeships and traineeships in conjunction with schools and colleges, and a third of businesses were involved in the apprenticeship levy as either contributors or recipients. For most of the respondents who took on apprentices, they did it to support young people (61 per cent) and recruit (57 per cent). Where businesses did not take on apprentices this was mainly due to them not being suitable for their business model, though 32 per cent in the Developed area also stated they did not know enough about apprenticeships providing a potential opportunity.
- Skilled trades were reportedly the most likely to be affected by the need to acquire new digital skills with new technology introduction and important factor among 38 per cent of businesses in the Developed area, and business growth, a driver for nearly half of firms. General digital technology skills were the most in need in the next three years with examples including advanced Excel and online customer service. Higher level digital skills requirements AI, programming and software management. A basic level of knowledge in using digital technology was very important to 63 per cent of business respondents in the Developed area. Over one-quarter of businesses simply required these skills in their business processes and eight per cent each reported it was important for productivity and future business.
- Within the Developed area 32 per cent of businesses surveyed concluded they had sufficient skills within the organisation to prepare for changing patterns of digitalisation in their industry in the next three years, though 11 per cent reported that to no extent did they have the digital skills capacity to prepare for such change. Approximately one half of respondent businesses in the Developed area were going to seek external training support for new technology investments.
- While 90 per cent of the respondents reported they promoted or delivered clean growth and sustainability, the remaining 10 per cent did not. Of those who did, most examples were standard practice of recycling, using energy efficient appliances and eco friendly materials and products. Nearly half of businesses reported that they offered some training on sustainability and clean growth and there was little link between a lack of skills and sustainability.
- Despite the challenges brought about by the Covid-19 pandemic, the research shows that training is highly important to overcome challenges such as low productivity and improving revenue and service offering. It is important that businesses are supported to help overcome the challenges they face in accessing training for their staff and that any such training is specific enough to be useful to the business. Digital skills training is an opportunity for wide sectoral impact and with the increasing pace of digitalisation there remain a high proportion of businesses in the Developed area of the Heart of the South West LEP which may struggle to fulfil these skills needs internally. Finally, encouraging closer integration between businesses and the range of training providers available, including universities and colleges is important, and likely to grow with economic restructuring during the recovery from the pandemic induced economic shock.
Rob Matts, Head of Skills Support for the Workforce said:
“This is a very important piece of research that we are pleased to have been able to deliver on behalf of the ESFA. The findings provide first-hand insights from employers that can guide the skills sector in order it meet the training needs of the diverse business community in the Heart of the South West Developed region. I would like to personally thank the businesses, training providers and stakeholders that have taken time to contribute to this important piece of work."
The full report for the Heart of the South West region can be downloaded here