National employer skills survey 2003

A survey of 72,000 employers, the largest of its kind, today reveals that one-fifth (20%) of job vacancies in England remain unfilled because of a lack of skilled applicants – some 135,000 vacancies. The Learning and Skills Council (LSC), the organisation responsible for skills development in England, commissioned the survey which shows that almost half of the employers reporting “skills shortage vacancies” said they were losing business to competitors as a result of the lack of skilled workers. The figures come on the back of CBI data published in late 2003 showing that 29% of companies are exporting jobs overseas, with a further 43% feeling pressure to do so. A quarter of those polled cited labour skills as a key factor in their decision to relocate abroad. Recent high-profile relocations include leading businesses such as HSBC and P&O.

Skills gaps within employers’ existing workforces are also a significant problem. More than one fifth (22%) of employers say the skills of their workforce are not up to scratch. Having an under-skilled workforce adversely affects the bottom line for more than 30% of these employers, who stated higher operating costs as a consequence. Over a fifth of these employers also said they lost orders as a result, with quality and customer service also significantly affected. Small businesses are the most likely to lose orders because of a lack of skilled staff.

Recruitment problems also put the country’s innovation under threat. For example, 36% of employers with vacancies they were unable to fill said they had to delay developing new products as a result. A recent DTi report stated that overall UK innovation was at best average compared to major international competitors1. Other effects of skills shortages in the job market include poor customer service (52%) and an increased workload for existing staff (83%).
The implications for the UK economy are significant. According to research by Ernst & Young, industry losses through lack of basic skills are as high as £10 billion annually. The research also reveals that the same lack of basic skills costs a typical business with 50 employees £165,000 a year2. Significantly, output per hour worked is around 30% higher in the US, France and Germany than in the UK. Up to a fifth of this productivity gap with Germany and France is as a direct result of lower skills levels in the UK.3

And although four in five employers are now taking active steps to address skills deficiencies in their workforces, with employers spending some £4.5bn on training, only half of employees are benefiting. Meanwhile, nearly a third of employers experiencing skills deficits in their workforce admitted that it was their own failure to train their staff which was contributing to skills-related problems.

The Learning and Skills Council (LSC) is calling on business to work with it to address this challenge. Mark Haysom, Chief Executive of the LSC, said: “This survey is all about listening to and understanding the needs of business. To remain competitive both nationally and internationally, English businesses must be strategic about staff training and development. This survey, the largest of its kind into the skills needs of employers in England, will allow us to better identify those specific areas most in need of investment, and continue our work with employers to develop solutions. We need businesses to recognise the issues at stake here and work in partnership with us.”

The survey looks at 27 business sectors, and involves all sizes of organisation. One company involved was leading automotive manufacturer BMW. Commenting on the findings of the survey, Harald Krueger, Managing Director at BMW, said: “We know that addressing skills gaps in the workforce is crucial to the success of our business. At BMW, we’re fully committed to staff training at all levels and consider it fundamental to the ultimate profitability of the company.”

Notes to editors:


1. DTi Innovation Report – ‘Competing in the Global Economy: the Innovation Challenge’
2. The Independent, 4 December 2003
3. O’Mahoney and de Boer 2002

Media contacts:

Rosalie Hunt, Hill & Knowlton 020 7973 4456
Kirstine Cox, Hill & Knowlton 020 7413 3762
Elizabeth Barrett, Hill & Knowlton 020 7413 3133
Helen Stokoe, LSC 020 7904 0918

Survey highlights



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