Skill Gaps

This report presents results from the Employers Skill Survey 2004 and contains information from employers about skill gaps.  Skill gaps occur where existing employees are judged by their employer to be not fully proficient.  A skill gap is different from a skill shortage.  Whereas skill shortages refer to applicants for a job, skill gaps refer to those already in employment.

Four key messages emerge from our analysis of skill gaps:

1. Skill gaps are relatively uncommon affecting around a fifth of all establishments and less than ten per cent of employees. Around half of all skills gaps have arisen due to positive developments in the business such the introduction of new working practices, new technology and new products and services.
2. Most skill gaps are transitory.  Around two thirds arise because the employee has not been in the job long enough and/or because they have not yet completed their training.
3. Skills gaps were more prevalent in growing businesses.
4. Skill gaps were more common amongst those occupations generally requiring lower levels of skills and qualifications.

A summary of other findings is presented below:

Where do skill gaps occur?

• 21 per cent of establishments had at least one employee who was less than fully proficient.  This is a little lower than the figure of 24 per cent in 2003 but higher than the 16 per cent of 2002.
• Skill gaps affected 182,000 employees in 2004, or nine per cent of all employees.  The comparable figures in 2002 and 2003 were 187,000 (also nine per cent) and 123,000 (seven per cent).
• The proportion of establishments with at least one employee with a skill gap was greater as the size of workplace grew.
• Skill gaps were most common in the hotels and restaurants industry and in parts of the public sector such as public administration and defence and education.  Those industries were both the skill gap rate and proportion of establishments reporting skill gaps were low include: financial intermediation, real estate, renting and business activities and construction.
• A higher proportion of workers have a skill gap among those occupations which generally require lower levels of skills and qualifications such as elementary and sales and customer services occupations.
• Skill gaps were more prevalent among growing businesses.

Why do skill gaps occur?

• In general, around half of skill gaps have arisen amongst staff as a result of what could be viewed as positive developments in the workplace such as the introduction of new products or working practices.
• Skill gaps arise mainly because of weaknesses in the softer core skills such as planning and organising, customer handling skills and problem solving.  There was some variation by occupation.  Among higher skilled managerial and professional occupations, planning and organising was the most frequently cited skill deficiency whilst amongst lower skilled occupations such as elementary and customer services occupations, customer handling skills were most often cited.

What are the effects of skill gaps?

• Almost four in ten employers with skill gaps report that these have no impact on their business.  Of those who do report a negative impact, the majority (49 per cent) perceive the impact as minor.
• The most frequently cited implications in 2004 were the same as those cited in previous years’ surveys: difficulties meeting customer service objectives; difficulties meeting required quality standards; increased operating or running costs; and difficulties introducing new working practices.
• The majority of employers had taken some action in response to skill gaps.  Just 11 per cent had taken no action.  The most common responses to skill gaps was more investment in training for staff by either providing further training (undertaken by 87 per cent of establishments) and expanding trainee programmes (53 per cent).

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