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The skills gap: what are the effects and how can you respond?

Carol Stubbings Global Tax and Legal Services Leader, PwC United Kingdom 14/06/19

What effect does the lack of key skills have on business performance?

This year’s CEO Survey found 79% of UK CEOs see the availability of key skills as a top business threat that will impact their growth prospects in the next 12 months. This skills shortage stifles innovation and raises workforce costs. But there are also more widespread implications. Companies are unable to pursue growth opportunities, key initiatives are cancelled and quality standards can slip.

So who’s responsible for tackling this skills gap?

With the right skills in short supply, CEOs are considering how to source the talent they need. Previous years have seen CEOs exploring the idea of hiring people from other sectors – particularly industries that are further along the innovation journey – and making use of contingent workers when the “gig economy” is appropriate. But this year, CEOs identified significant retraining, or upskilling, as the most important activity to close the skills gap, followed by establishing a strong pipeline directly from education and hiring from competitors coming in 3rd.

It’s understandable that organisations are focusing on reskilling – there’s certainly an appetite for it, with 74% of people surveyed in our Workforce of the Future report ready to learn new skills or re-train to remain employable in the future. This willingness to be adaptable as the economy changes will be critical as the workforce evolves in future and roles change alongside emerging technologies.

But the picture of who’s responsible for helping solve this skills gap is less clear. Skills mismatches directly affect organisations, making them less productive and holding back growth. But the effect goes much wider, having a direct impact on a nation’s GDP, tax revenues and social safety net bill.

As a result, reskilling programmes are being explored by both organisations and governments. But there are mixed views on where the responsibility for workers displaced by automation and AI should fall, with just over half of CEOs feeling that it’s government’s responsibility to protect those displaced by technology. If these opinions are to turn into an actionable strategy, we need an honest, collaborative conversation across every part of society about what automation means for businesses and society, how to manage the transition, and who should help those who are vulnerable or interested in learning.

Preparing the workforce for change

If we’re to tackle the skills gap and prepare the workforce for different ways of working in the future, we think a collaborative approach will be required between governments, organisations, and society at large. We’ve laid out 5 recommendations below that society can take to prepare for the workforce of the future.

Being responsible about adopting technology

Governments, organisations and society should work together to develop a responsible approach and policies that govern the impact of technology and automation on jobs – including a clear discussion on the ethics of AI. Government should engage with organisations developing the use of robotics and AI at all stages of policy making, to create a group that understands the interplay between technology and its effect on society.

Think about how to address unemployment caused by automation

All governments will need to address the issue of unemployment driven by technology. This needs to include a ‘Blueprint for skills’ that focuses on upskilling programmes to promote lifelong learning, adaptability and entrepreneurship. Policy makers should incentivise businesses and the education sector (including vocational training) to align with high-growth skill needs -- and to invest in targeted reskilling initiatives working with businesses, unions, industries and regions. Luxembourg’s Digital Skills Bridge provides one example of how stakeholders can align funding and outcomes successfully. Governments could also test social safety nets such as universal basic income and identifying new sources of income for citizens.

Encourage people to rethink what career means

As people live and work longer, the ‘typical’ linear career path may cease to exist. These longer careers cannot be based on today’s three life stages of education, work and then retirement. To be successful workers need to gain comfort with “change as a constant” and personal adaptability. Both will be crucial as they deal with more job mobility, continual upskilling and rotation. But many people currently feel tied to their career and job due to pressures of debt and ‘stickiness’ of employer benefits such as mortgages or loans or non-transferable benefits like employer-sponsored healthcare or pensions. This can trap people into roles which don’t have a future. Incentives to encourage mobility and the development of skills will be important to help workers prepare. Vitally, organisations owe it to their workers to share a clear narrative about what skills will be valued in the future.

Take action to prepare for an automated world

It can’t all be left to employers. We should all be making sure we understand what technology is being developed that might impact us and our current role. There’s no such thing as a future-proof career. Although automation may replace repetitive tasks, human workers with soft skills like creativity, leadership and empathy will still be needed. Identify the skills you need and start to concentrate on how to build them – and how to use them alongside technology.

Questions for businesses

  • Do you have a clear view of your emerging skills gap?

  • Are you providing a clear narrative to your workforce about the skills your business needs for the future?

  • Have you thought about how your employee experience combines with your upskilling programmes to unleash the workforce performance you need?

Chris Box Chris Box

Chris Box

EMEA HR Consulting Lead


Carol Stubbings Carol Stubbings

Carol Stubbings

Joint Global Leader, People & Organisation


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Kevin Ellis

Kevin Ellis

Chairman and Senior Partner, PwC United Kingdom

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