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The Value of Soft Skills to the UK economy

 

 

In January 2015 the Backing Soft Skills campaign[1] was launched sponsored by McDonald’s and backed by companies including Tesco and Gelder Group, and supported by organisations such as CBI, FSB, CIPD, NIACE, learndirect and City & Guilds.
 

So what is the Backing Soft Skills campaign all about, and what does it mean for you and your business?
 

A report[2] was commissioned into the value of soft skills to the UK economy, and in this article I summarise key points from it, as well as provide my own commentary.
 

To quote the report summary, we know that as a nation we are not investing enough in skills such as communication, teamwork and time management, and now we have the stats to back this up.
 

During the length of the next UK parliamentary term (i.e. 5 years):
 

  • By 2020, more than 535,000 UK workers will be significantly held back by a lack of soft skills – an issue forecast to affect all sectors.
  • By 2020, soft skills will contribute £109 billion per annum to the UK economy – an increase of £21 billion more than in 2015.
  • 97% of UK employers believe soft skills are important to their current business success, and over 50% say skills like communication and teamwork are more important than traditional academic results.  However, 75% believe there is already a soft skills gap in the UK workforce.
  • UK employees say they struggle to sell their soft skills. 1 in 5 would not feel confident describing their soft skills to an employer and more than half (54%) have never included soft skills on their CV.

 

[Gary’s comment]:  It is time to change this for the better, and I urge you to become involved to change peoples’ perceptions of soft skills, and also to consider new ways on how to develop them within your workforce so that all your employees can benefit from them throughout their careers and lives.
 

At the end of this article I’ll talk about the consultation that you can contribute to, but for now I’m going to delve into the report and explore some of its significant findings.
 

 

6 key soft skill clusters

 

The 6 key soft skill clusters (also known as employability skills) defined in the report are:
 

  • Communications skills
  • Decision-making / Problem solving skills
  • Self-management skills
  • Teamwork skills
  • Professionalism skills
  • Leadership skills
     

It’s not just an issue for customer service orientated companies, but also for professional service organisations.  A survey of CFO’s found that 55% considered the biggest challenging in recruiting accountancy professionals was finding applicants with the necessary soft skills beyond the normal competences and qualifications expected[3].
 

Additionally, a UKCES[4] study confirmed the increasing importance and demand for soft skills in the Health and Social Care; Professional and Business Services; Retail & Wholesale; Creative Industries, Media and Entertainment; and Manufacturing sectors.
 

The CBI places particular emphasis on the soft (employability) skills of graduates and other young people[5]:
 

“Businesses want graduates who not only add value but who have the skills to help to transform their organisation in the face of continuous and rapid economic and technological change. All graduates need to be equipped with employability skills. Employability covers a broad range of non-academic or softer skills and abilities which are of value in the workplace. It includes the ability to work in a team; a willingness to demonstrate initiative and original thought; self-discipline in starting and completing tasks to deadline.”

 

 

The report goes on to say:
 

“A recent pan-European survey of Chief Executives also highlighted the widespread perception that many young people lack the soft skills to gain their first job and to progress up the career ladder.[6] The survey found that 54% of respondents felt that young people were lacking in soft skills. ‘Entrepreneurship skills and acumen’ were also considered to be lacking among young people by 24% of respondents.”

 

[Gary’s comment]:  It’s not enough for employers to state that young people lack the soft skills to gain their first job, and expect it is only the responsibility of Further Education (FE) colleges and Higher Education (HE) universities to train their students and undergraduates in soft skills.  With an improving economy and increasing demand for UK PLC products and services, it’s time for employers to step-up and recruit young people, irrespective of their soft skills competency, and put in place a soft skills training programme to address it.

 

 

11.6 million new employees needed

 

The report estimates that between 2012 and 2020 an additional 11.6 million workers will need to be recruited through a combination of replacing retiring employees (10.36m) and expanding the UK PLC workforce (1.25m employees).  Sectors that are likely to see the largest overall labour increase demand are:
 

  1. Health and social work
  2. Education
  3. Transportation
  4. Manufacturing

 

[Gary’s comment]:  There is concern that this increase in demand will be hampered by employers failing to recruit because of insufficient soft skills among available candidates for recruitment.  However, as mentioned above, if employers commit to putting a soft skills training programme in place then this need not become a reality nor an issue.
 

The risk is that if employers don’t do their part to address the soft skills shortage then by 2020 the cumulative level of unfilled vacancies could reach more than 1 million, according to the report.
 

 

Acute Skills Gap developing

 

As the report states:
 

Although the result of a soft skills shortage may be a failure to recruit, there is also the possibility where recruitment has taken place that the soft skills attributes of employees are insufficient to the extent that those employees operate significantly below required levels. A skills problem of this type is called a skills gap. Of course, skills gaps can occur because the needs of a role changes due to external or internal factors, and where investment in upgrading an individual’s skills lags behind.
 

This skills gap will be acutely felt by the following sectors (in descending order):
 

  1. Accommodation and food services
  2. Retail
  3. Health and social work
  4. Manufacturing
  5. Business administration and Support services
  6. Professional, Scientific and Technical
     

The loss of productivity due to the soft skills shortage – when combined with the cost of the skills gap – for UK PLC is quite significant, growing to over £8.4 billion per annum by 2020, if nothing is done about arresting it and will be acutely felt by the following sectors (in descending order).  Additionally, the cost of the skills gap will be borne by some industries more than others (shown in brackets):
 

  1. Manufacturing  (10%)
  2. Health and social work  (10%)
  3. Property services  (9%)
  4. Education  (8%)
  5. Transport and Storage  (8%)
  6. Financial and Insurance  (8%)

 

[Gary’s comment]:  Over the next 5 years – the duration of the next parliament – skills shortages and skills gaps could prevent employers from filling vacancies unless there is a change in attitude towards soft skills development, and more employers take on the responsibility for addressing the skills gaps in their employees by providing soft skills training development programmes for their workforce.
 

This doesn’t mean that every employer has to ensure they have internal resources to lead these programmes.  As the majority of companies will not have a large enough workforce to viably sustain such an internal service, they should consider outsourcing to an external training provider with business and soft skills programmes specifically designed for the development of new young and graduate employees, as well as the broader more-experienced workforce.
 

FE colleges and HE universities must also do more to develop soft skills in our future workforce while studying at their educational institutions.  The Government needs to allocate funding to support this, and not just prioritise work experience, as they are doing at the moment.
 

A strong workforce with well-rounded and developed technical, professional and soft skills strengthens UK PLC for long term economic output and growth.
 

 

 

How you can help make this change:
 

The Backing Soft Skills campaign wants to hear from employers and employees on how we can do more to improve the development of UK PLC’s workforce soft skills.  They have prepared a Stakeholder Consultation survey (available at http://www.backingsoftskills.co.uk/Backing%20Soft%20Skills%20consultation.docx) which you can download and complete by Friday 10th April 2015, and then email your response to consultation@backingsoftskills.co.uk.
 

 

You can also join the Backing Soft Skills campaign and become a partner by committing your company to making a difference.  Express your interest in joining and support the campaign by sending an email to consultation@backingsoftskills.co.uk.
 

 

Please make a difference to the development of soft skills in your workforce, and participate in this excellent and valuable campaign for the betterment of UK PLC.

 

 



[2] The Value of Soft Skills to the UK economy report prepared by Development Economics Ltd, January 2015 and data from YouGov Plc, September 2014. http://www.backingsoftskills.co.uk/The%20Value%20of%20Soft%20Skills%20to%20the%20UK%20Economy.pdf

[3] Grant Thornton: The evolving accounting talent profile: CFO strategies for attracting, training and retraining accounting professionals – Public Policy and External Affairs, Summer 2010. http://www.grantthornton.com/staticfiles/GTCom/Grant%20Thornton%20Thinking/Whitepapers/Accounting%20talent%20WP/Accounting%20talent%20-%20FINAL.pdf

[6] JAYE: Closing the Gap between business and education, March 2011. http://archive.ja-ye.org/Download/CEO%20Survey.pdf – p5 & 21