Hard to Fill Vacancies and Skill Shortages

This report presents results from the Employers Skill Survey 2004 and contains information from employers about vacancies, hard-to-fill vacancies and skill shortages.

Four key messages emerge from our analysis of hard-to-fill vacancies and skill shortages:

1. Just under half (46 per cent) of vacancies were hard-to-fill in 2004, equivalent to 1.7 per cent of employees and affecting one in ten workplaces.  This suggests that, in most instances, the market operates effectively to fill vacancies.
2. The number of skill shortage vacancies was small, equivalent to less than one per cent of all employees and just five per cent of workplaces.  However, most hard-to-fill vacancies (55 per cent) arose because of skill shortages.  This is a change from 2002 and 2003 where the majority of hard-to-fill vacancies were caused by reasons other than a shortage of skills.
3. Hard-to-fill vacancies and skills shortages were more common in growing businesses.
4. As in previous years’ surveys, it was ‘softer’ core skills such as oral communication, customer handling and problem solving which were most commonly cited as lacking in applicants in skill shortage vacancies.

Establishments with hard-to-fill vacancies and skill shortages

• One in ten establishments had hard-to-fill vacancies whilst 5.1 per cent of workplaces reported skill shortages.
• Larger establishments were more likely to report higher proportions of hard-to-fill vacancies and skill shortages.
• Hard-to-fill vacancies were higher than average in public administration and defence and health and social work.
• Skills shortages were highest in public administration and defence with around three times the average number of establishments reporting such vacancies.

The employee-based rate for hard-to-fill vacancies and skill shortages

• The employee based rate is defined as hard-to-fill or skill shortage vacancies as a proportion of all employees.• 33,500 of the 73,400 vacancies reported were hard-to-fill.  This is equivalent to 1.7 per cent of employees.
• The number of skill shortage vacancies was small in 2004 equivalent to less than one per cent of all employees.
• Hard-to-fill and skill shortage vacancies were highest in financial intermediation.  Public administration and defence had the lowest hard-to-fill vacancy rate and the lowest skill shortage rate was found in the education sector.• Hard-to-fill and skill shortage vacancies as a proportion of employees declined as establishment size rose.
• The employee-based rate for both hard-to-fill and skill shortage vacancies tended to be lower in jobs that typically require higher levels of skills or qualifications. 

Consequences of hard-to-fill vacancies and employers’ responses to them

• Three quarters of establishments with hard-to-fill vacancies reported that they adversely affected their business.  Effects included difficulties meeting customer service objectives or quality standards and delays developing new products or services.
• The most common response from employers to hard-to-fill vacancies was to change their recruitment practices, including using a wider range of recruitment channels than normal in order to find a suitable candidate.

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