Skills gap within the labour market

Written by Josh Musominari

Across the labour market, there are numerous sectors and skillsets that are in high demand leading to skills shortages and in some cases, this leads to a massive gap in demand and supply. The potential economic losses in terms of output are projected to cost the UK an estimated £120 billion over the next decade.

While this is typically understood to only affect specialist high skilled sectors, the statistics suggest it is not this simple with the UK experiencing either over and under subscription in all skills groupings.

Skill Level*

Number of positions available

Number of workers in this category

High Skilled

17.4 million

14.8 million


9.5 million

12.7 million

Low Skilled

2 million

5.1 million


As we can see from the table above, the intermediate and low skilled levels have a deficit of either positions or professionals leading to an imbalance of suitable opportunities or qualified professionals in the labour market, but there is an excess of roles available in the higher skill level. Employers are reporting that on mass there are gaps in core skills. 

Addressing this has been a key priority for the government and numerous employers have taken towards making efforts to upskill to bring employees in line with job requirements at different levels. Since 2009, the level of funding available for adult learning and apprenticeships has fallen significantly at a rate of 45% in real terms. The government have since been looking to invoke remedial action to ensure the skills gap can be addressed.

In light of the shocking blow to the labour market in 2020, the Chancellor has recently announced that further funding will be allocated towards increased traineeships and apprenticeships. An additional £126m has been allocated to create 40,000 additional traineeships and incentive payments that organisations receive for bringing in apprentices have doubled to £3000 per hire. The scheme also allows for employees to do this on a flexible basis and split their time between different employers in one sector.

In September the government also announced the “Lifetime Skills Guarantee” that is due to begin in the 2021 financial year. This directive will give access to numerous free courses designed to cover topics relevant to numerous industries and disciplines. Further to this, the government has also piloted “Skills Bootcamps” which are 3 – 4 month flexible courses, coupled with local employment opportunities and interview prospects at the end of each course. These “Bootcamps” are being rolled out regionally with more accessibility planned in the near future.

With these policies being implemented currently, there is a hope to ensure that the options available for professional development are accessible and relevant towards the current landscape, allowing individuals to upskill themselves and build careers in these sectors. Internationally, this is a global issue and numerous countries have taken similar approaches to ensure the labour market does not have large supply-demand imbalances. While these programmes have taken time to implement they have been popular and lead to strong uptake that should pay dividends for organisations and companies alike in the years to come.

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