Narrowing the skills divide: Labour’s fresh perspectives for the UKtech sector

In an exclusive for ETIH, Riaz Moola, Founder and CEO of HyperionDev, examines the pressing skills shortages within the UK tech sector. He explores Labour’s strategic initiatives to tackle this gap, focusing on the rise of skills-based hiring and the pivotal role of EdTech in preparing the workforce for the future.

High levels of international recruitment have highlighted the skills shortages in the UK labour market, particularly in technology and engineering. Recent Home Office figures reveal that hiring in the tech sector represents one in every six skilled worker visas, with programmers and IT business analysts in exceptionally high demand. 

This heavy reliance on skilled worker visas has led the Labour government to consider reevaluating overseas hiring practices to restrict the demand for non-UK labour. The objective is to reduce long-term reliance on foreign workers by upskilling the local workforce and improving their working conditions.

Understanding the skills gap in the UK tech sector

Numerous surveys and studies highlight the importance of strategic interventions and collaborations to address the growing skills gap. According to Forbes Advisor’s 2023 IT Skills Gap report, a staggering 93% of UK businesses acknowledge an IT skills gap within their organisations. Furthermore, 35% of these businesses report that competition in the job market poses a significant challenge, exacerbating difficulties in recruiting and retaining skilled staff due to a scarcity of qualified candidates.

Additionally, the 2023 Consumer Digital Index, commissioned by the Department for Education and conducted by Lloyds Bank, indicates a broader issue of digital literacy. It found that 7.5 million people, or 18% of UK adults, lack the essential digital skills required in the workforce, underscoring a critical need for enhanced training and education initiatives. 

These skills gaps represent more than just statistics; they present real challenges for businesses, such as diminished competitiveness, higher operational costs, and delays in implementing new technologies.

The rise of skills-based hiring

To counter the skills gap challenges, an increasing number of companies are prioritising skills over experience when assessing job candidates. According to key insights from the Hays UK 2024 Salary and Recruiting Trends Guide, 92% of employers face ongoing skills shortages, so many are shifting their workforce planning strategies towards skills-based hiring to develop high-performance teams. 

Skills shortages typically have detrimental effects on employers, such as lowering productivity for 52% of them, decreasing employee morale for 48%, and impairing project delivery for 42%. 

Skills-based is a bold step forward, offering more flexibility regarding education and experience levels. This approach allows employers to access exceptional talent that might have been previously overlooked. It’s a model that not only broadens the talent pool but better aligns with the dynamic nature of today’s job market, where emerging technologies and shifting business requirements can quickly transform the skills environment.

This shift towards valuing practical competencies above formal qualifications is reshaping the job market into a more dynamic and skill-focused environment, requiring adaptability from job seekers, employers, and educational institutions alike. Businesses open to adopting this change stand to gain a competitive advantage, unlocking new levels of talent, innovation, and productivity.

EdTech’s role in bridging the skills gap

Many individuals miss out on high-paying job opportunities because of the existing skills gaps. However, organisations can reverse this trend through increased investments in mentoring, training, and skills-focused recruitment. 

The launch of the government’s new training initiative, Skills England is a big win in bridging the skills gap. The initiative is committed to creating a dynamic environment for training and development by fostering partnerships between educational institutions, technology companies, and training providers. This collaborative effort aims to swiftly adapt to the needs of local and national workforce markets.

Skills England will work alongside the Migration Advisory Committee to ensure that training programs in England meet the broader labour market demands. Furthermore, the party manifesto pledges to transfer control of adult skills funding to Combined Authorities, empowering local leaders to take charge of skills development in their regions and boost their involvement in employment support. 

By facilitating cooperation across different local areas, Skills England aims to guarantee that all individuals can access the opportunities that arise. According to HyperionDev’s Graduate Outcomes Report 2024, 88% of graduates were employed within 6 months of completing a skills bootcamp. With this in mind, the appropriate support of Labour's policies could facilitate scalability and adaptability to rapid technological transformations while nurturing a collaborative and innovative culture that helps local businesses remain competitive globally.

The future of the UK tech sector

Overall, the emphasis on closing the skills gap in the UK is a promising development for both the educational technology industry and society at large. A well-trained workforce is essential for driving economic growth and fostering innovation. 

If the new government can effectively focus on upskilling individuals, there is substantial potential to strengthen public-private partnerships, boost employment rates, and accelerate technological progress. This strategic focus will benefit the current labour market while preparing future generations for emerging challenges and opportunities.