A similar proportion of employers were recruiting in Wales at the time of the survey as were in the UK as a whole (11 per cent in Wales compared to 12 per cent in the UK), and the proportion of these experiencing problems filling their vacancies was also matched at four per cent, a small minority of employers. However for those who were experiencing difficulties filling vacancies in Wales the problem was acute, with a third of vacancies in Wales at the time of the survey proving hard to fill. This compares to just under a quarter of vacancies in the UK as a whole.
Where hard-to-fill vacancies are being experienced, nearly all employers reported that the inability to fill these vacancies was having an impact on their business performance. Key impacts included increasing the workload for other staff, difficulties meeting customer service targets, losing business to competitors and delays in bringing new products or services to market. It is clear that where demand for skills is not met it can act as a brake on performance and innovation.
One of the main reasons for hard-to-fill vacancies is a lack of applicants with the skills, qualifications or experience the employer demands (a “skill-shortage” vacancy). Over a fifth (22 per cent) of vacancies in Wales were proving hard to fill due to skill shortages, compared to just 16 per cent in the UK as a whole. This figure across Wales is driven by skill deficiencies in Mid Wales, where three-fifths (59 per cent) of vacancies are hard to fill due to skill shortages; in the other regions the figure is similar to the UK figure (ranging from 15 to 18 per cent). This indicates a serious issue with skills availability in this region, and is likely to be a key factor holding back economic progress there.
Skills deficiencies are not evenly spread across the economy either. Concentrated pockets exist by sector with the Business Services sector most likely to suffer skill- shortage vacancies, and data suggests that employers in Wales find it hardest to find skilled staff to fill vacancies in Associate Professional, Machine Operative and Skilled Trade roles; the former two more so than employers in the rest of the UK.
Skills gaps, where existing employees are not fully proficient at their jobs, are reported at similar levels to that seen across the UK; a minority of establishments (13 per cent) reported having any skills gaps among their staff, equating to five per cent of employees in the workforce in Wales. Again some sectors are more affected by skills gaps than others, with establishments and staff in the Hotels and Restaurants sector more likely to be affected. Skills gaps were more prevalent in typically lower skilled occupations such as Elementary, Machine Operatives and Sales and Customer Services roles, and in Skilled Trade occupations.
Mid Wales stands out on a number of measures. As noted when discussing regional breakdowns, the size distribution of sectors across Wales is uneven, and the concentration of small establishments in Mid Wales should be borne in mind. Despite having the highest levels of skill-shortage vacancies, and the lowest levels of training, employers in Mid Wales were no more likely to report having staff who were not proficient at their jobs than the other regions in Wales. This could be because employers in this region, knowing they do not have the capacity or budget to train staff, are more selective about who they employ thus skill deficiencies in the region present themselves as skill- shortage vacancies, rather than taking people on who are not sufficiently skilled and causing a skills gap. It could however be indicative that employers in the region are less aware of employees skills needs and issues have passed unidentified. The survey findings can only report those employers that are aware of the skills gaps they face, and other evidence of a low-skill equilibrium within the UK (for example see the original paper on this subject by Finegold and Soskice, 1988) suggests that many employers not registering problems may be doing so because of a lack of desire to build up skills, innovate, grow and move up the value chain. Hence the survey results on the extent of skills gaps, in combination with the evidence that, for example, establishments in this region are the least likely to have annual review for staff or processes in place to identify talent supports this latter hypothesis.
It also needs to be borne in mind that having a skills gap can be a transient issue where some employees may be new to the role and developing proficiency, or where the nature of the role is changing to meet new business opportunities. In such cases skills gaps would be expected to decrease over time. This means skills gaps are not necessarily negative: they may reflect a business that is innovating and creating new products, processes or services and is noticing the need to upskill its staff as a result.
This is not always the case and, similar to hard-to-fill vacancies, where these skills gaps occur they have an impact on business performance, for example through increasing the
Manufacturing is an important sector in Wales, accounting for 139,000 jobs (12 per cent of total employment). This makes Manufacturing the third largest sector by employment (after Health & Social Work and Retail & Wholesale), so is an important sector in the Welsh economy. Manufacturing accounts for a similar proportion of establishments in all four regions: five or six per cent and it is notable that combined skills deficiencies in Manufacturing as a sector are higher than the average for each region. Although results are not presented for skills-shortage vacancies by occupation by sector due to a small base size, both Skilled Trades and Machine Operatives are occupations that have high densities of skills shortages, and both are well represented in the Manufacturing sector. Establishments in Manufacturing also show a slightly higher level of skills gaps among their current employees than the Wales average. This slightly higher level would not be commented upon were it not for the results of the follow-up question, which asked establishments what action they had taken to overcome skills gaps. Manufacturing was the least likely sector to have increased training in response to skills gaps. When combined with future employment projections showing Manufacturing’s continued decline in overall employment (see UKCES, 2012), this raises questions about the ability of the sector to stay competitive. Are Manufacturing firms taking sufficient action to address skills deficiencies?