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‘This analysis is crucial for anyone involved in shaping the education and training programmes that will be essential to ensure workers, firms and the UK benefit and thrive in times of continuous learning and skills development.’ - Professor Stephen Machin, Director of the Centre for Economic Performance
The UK, along with other industrial countries, is experiencing rapid technological change associated with robotics and artificial intelligence, precipitating significant transformations in terms of how work is organised, what tasks are performed and what skills are essential for success.
Quantifying the scale and nature of these changes to skills requirements is important as we aim to better understand how the UK labour market is being impacted by these automation technologies. Without the right mix of skills, economies cannot respond and adapt, nor take advantage of new technologies that could increase productivity. This is why research into skills is a central part of the Pissarides Review into the Future of Work and Wellbeing.
Analysing data from millions of job ads, this report - published jointly with the Centre for Economic Performance - finds that:
This rapidly evolving skills landscape presents many challenges for businesses, policymakers, and education and training providers that seek to bridge the gap between skill supply and demand. The implications for policy are clear: not only must there be more opportunities for training, with skills demands in constant flux, the skills offered by education and training providers have to be better aligned with those demanded by employers in growth sectors and occupations.
Recent surveys consistently highlight that employers are grappling with skills gaps and shortages. According to a Forbes Advisor survey, 93% of British businesses believe that there is an IT skills gap in the UK market, with 42% attributing it to the fast pace of technological progress. Our publication of findings of a survey of 1000 UK firms revealed that the adoption of AI and automation technologies is expanding the skills sets expected from current workers. As recent developments in generative AI and other cutting-edge technologies translate into widespread adoption, it is expected that changes in skills demand will accelerate even further, potentially widening existing skills gaps.
But which skills should be focused on, and how can these be developed in both the current and future workforce? Seen this way, skills is a cross-cutting topic encompassing questions around economic policy, industrial strategy, education and models of training, as well as the deeper purpose of work.
The new report produced by the Pissarides Review into the Future of Work and Wellbeing (and in collaboration with Centre for Economic Performance) – funded by the Nuffield Foundation - sheds light on these recent trends of skills demand in the UK.
Surveying actual skills in use by workers across the country would be a near-impossible task. As a proxy for this, the report uses rich data from millions of online job vacancies between 2016-2022 to identify the skills being mentioned in job adverts, going on to identify which skills are experiencing rapid growth, which are declining, and which are at the core of specific jobs.
This rapidly evolving skills landscape presents challenges for businesses, policymakers, and education and training providers that are seeking to bridge the gap between skill supply and demand. The UK’s approach has been marked by fragmented policy and a lack of consensus on strategic focus areas. Until now, the emphasis has been on the supply side – particularly around participation in education and training and the types of skills and qualifications provided. However, recent statistics show that only around 1 in 5 adults participate in some form of adult education and training, a number that has been declining since the 2000s, along with a decline in public and private investment directed to it.
There is no guarantee that increased investments in skills and qualifications will automatically align with the skills employers are actively seeking. Broader policy changes, influencing the demand side and employers actions to close skills gaps, must also be considered. While 60% of UK employers funded or arranged training in 2022, data from the Employer Skills Survey reveals that many resources are being used for health and safety training compliance. While this type of training is undoubtedly important, it does little to address wider skills shortages.
If we are to navigate this technological transition successfully, it is essential to empower people in the UK workforce - and those soon to become part of it - with opportunities to strengthen their existing skills, learn new ones and engage in continuous learning. But if this success is to come, not only must there be opportunities for training, the skills offered by education and training providers have to be aligned with those demanded by employers in growth sectors and occupations. All this calls for a more intentional approach to skill development and improved coordination of supply and demand side policies. Integrating the skills agenda as a fundamental part of local, regional, and national growth strategies is no longer optional. A better matching of skills is key for advancing individual career paths, improving the living standards of households and harnessing productivity gains that benefit the wider economy.
'Understanding how skills demands are changing is vital if we are to navigate this technological transformation successfully and the benefits of it are spread most broadly. This report we are publishing jointly with the CEP is an important contribution to building this detailed picture, and will help policymakers, firms and training providers better understand how good work can be created and sustained, helping innovation and social good advance together.’ - Anna Thomas, Co-Director, IFOW
'New technologies are key to skill demands but can also become rapidly obsolete, making it important to know which skills are worth investing in. This report sheds light on how technology is changing the nature of jobs, rather than replacing them, and helps us understand which types of workers, firms and industries are most affected. This analysis is crucial for anyone involved in shaping the education and training programmes that will be essential to ensure workers, firms and the UK benefit and thrive in times of continuous learning and skills development.' - Professor Stephen Machin, Director of the Centre for Economic Performance
'The global race to retrain our society for the jobs of tomorrow is a critical national project. This report is an important contribution to our national understanding, helping inform policymakers on how best to use our resources for maximum social benefit and economic gain. At BCS, we know that digital skills and computational thinking are key to the ability of our children and young people to thrive in our increasingly digital-first world; how we build these across society at a sufficient scale and pace depends on meaningful engagement by policymakers with industry, the public sector, civil society and unions.' - Daniel Aldridge, Head of Policy and Public Affairs at BCS, the Chartered Institute for IT
'Focusing on which skills are mentioned in job adverts offers a real-time snapshot of skills demand at a particular point in time. We are delighted that Adzuna’s dataset – which offers comprehensive and detailed coverage of job vacancies – has been used to highlight the changes in skills over time demanded by different sectors. This rich report helps deepen understanding of how the UK labour market is adapting to technological disruption, and we hope that it provides policymakers and leaders across industry and education the actionable intelligence required to support job seekers back to work and throughout their careers.' - Scott Sweden, Head of Data Sales, Adzuna Intelligence
Rui Costa, Zhaolu Liu, Christopher Pissarides and Bertha Rohenkohl
Report
Future of Work Review
