Addressing the skills shortage – act now and prevent a crisis later

25 September 2014

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Matchtech operations director Grahame Carter says there is still time to get on with workforce planning and avoid the panic buying of previous skills shortages.

Research released recently by the EEF, the manufacturers’ organisation, has highlighted strong wage growth in the UK manufacturing industry, with average pay rising by 2.6% in the six months to July, compared to a slump in wage growth across the wider economy.

"The UK engineering sector is handling talent attraction and retention more effectively. In-house HR teams are using their experience, contacts and new communications channels to target potential staff far more efficiently." 

Good news for UK engineering, you might think, but the EEF believes this wage growth is a result of a growing skills shortage, especially in the infrastructure sector as it recruits staff to meet the demands of major projects like Crossrail, HS2 and the AMP6 water framework.

The findings mirror the conclusions of an earlier, separate study conducted by The Prince’s Trust and HSBC which revealed that three-quarters of British businesses think a significant skills crisis is looming.

As an engineering recruitment specialist Matchtech has a better view than most as to the health of the jobs market for the UK’s engineering sector and we are certainly seeing growing signs of serious skills shortages. While we don’t believe now is the time to panic, it’s certainly the time to act.

In the years leading up to the past two significant recessions (in 1990 and 2008) we saw very serious skills shortages with many engineering and manufacturing organisations recruiting staff from overseas because that was the only way they could fill positions.

At peak, we reached the situation where contractors would move jobs for a 1% rise in hourly rates, and permanent salaries looked increasingly less attractive against contractor rates.

Today, we aren’t in the same situation because the UK engineering sector is handling talent attraction and retention more effectively. In-house HR teams are using their experience, contacts and new communications channels to target potential staff far more efficiently – particularly at entry-level to mid-management level.

Firms need to keep doing this. Cultivating industry contacts and a good alumni network can reap rich rewards in maintaining a pipeline of potential recruits,

In addition, firms need to look at how they use recruitment consultants more strategically. At Matchtech we seek to work in partnership with employers, focusing our expertise on helping them identify recruitment pressure points and reach hard-to-find candidates with niche specialist skills. 

This partnership approach helps firms develop recruitment strategies that foresee pinch points and plan around them. This is particularly important today for key sectors facing more acute skills gaps, such as rail and transport infrastructure, water and utilities, property and power and energy.

In the water industry, the recession coincided with the closing of the AMP5 and opening of the AMP6 framework periods, creating a perfect storm that saw many projects put on hold or dropped.

Now the industry is reinvesting in infrastructure to meet AMP6 requirements – only to find that many of the skilled engineers have transferred to other sectors.

Strategic planning means the skills gap can be mitigated by working smarter, e.g. by setting up ECI (Early Contractor Involvement) and pushing work out earlier, so there is less of a slump between cycles, to smooth demand for staff.

"Wage growth is a sign of the growing value that employers place on key engineering staff and these rising salaries should make engineering more attractive."

The highways sector is also experiencing skills gaps as a direct result of the recession, when graduate recruitment dropped sharply, causing a shortage of skilled engineers with 3-4 years’ experience. Now infrastructure investment is rising and the best graduates have a pick of jobs from eager employers and we are seeing firms increasingly turning to contractors in the absence of permanent staff. It’s a telling sign that Matchtech’s Highways department is seeing an increase in vacancies. 

On this basis, the wage growth highlighted by the EEF report isn’t bad news. Wage growth is a sign of the growing value that employers place on key engineering staff and these rising salaries should make engineering more attractive, enabling the industry to open up the supply of high-quality candidates it needs for the future. 

If the industry adopts a cohesive approach to long-term term recruitment planning: developing a network and pipeline of talent, promoting diversity, exploring skills transfer, looking at flexible working and career development to attract and retain talent; then I believe the UK is in a strong position to build and develop its engineering sector as a centre of excellence and to avoid the negative impact of a full recruitment crisis. There is much to celebrate for UK engineering.

Want advice?

You can contact Grahame at grahame.carter@matchtech.com or on Linked-in.