Paying peanuts to get Einsteins – the skills shortage myth in the UK

There’s only three things for sure; taxes, death and trouble” wailed Marvin Gaye on Trouble Man back in 1972.  If he’d survived getting shot by his father twelve years later, he may have thought to add a fourth; inter-generational disappointment.  True, it wouldn’t be snappy and it would be hell to rhyme, but it’s a theme as constant as the British rain when it comes to employment.

On the one hand, smaller companies claim graduates can barely string a sentence together and that they don’t even have the most basic of skills like punctuality and communication. Lethargic and lacking in commitment, many employers consider graduates to be a risk to invest in. From the graduate perspective, they complain that they’re over-skilled and overworked in menial jobs with no career progression and no feedback on how to improve. It left me wondering, how do two groups, looking at the same problem, see two such fundamentally opposing views?

It’s the economy stupid

In case you missed the news over the last half decade, graduates have had a raw deal since the financial crisis hit. Five years, hundreds of thousands of applicants and millions of rejections later, graduate job availability has only just reached the same level it was in 2007. That’s only in total numbers though. In terms of real wages and job satisfaction the graduate job market continues to lag far behind what it was under the last Labour government. Worse still, the crisis has exacerbated a long term trend of only paying good wages to an ever smaller proportion of graduates.  Predictably, those working in finance have seen starting salaries rise to £45,000 but for most, wages have been depressed, with 6 in 10 graduates either unemployed or working in a non-graduate role as of 2012. That means at least 60% of our best and brightest each year are failing to find jobs that even require ‘graduate’ in the job description. How then, are we in the middle of a skills shortage?

The short answer is that it is the fault of both government and employers. As any Eurosceptic will tell you, the UK is not like Europe. One of the most fundamental ways it differs is that employers don’t really value their workers. As far back as 1988 economists described the UK economy as one trapped in a “low-skill equilibrium.” Unlike the rest of Europe, the English economy is designed to have a large number of low skill, interchangeable workers at each company, with only high level management and particular sectors such as engineering needing skilled workers capable of acting autonomously. Whereas in Germany, France or even surprisingly Scotland, entry level positions lead to additional training and a genuine career path within a company. For most UK graduates then, the pressure to “get on your bike” and get any kind of job is really pressure to spend a lifetime on low income as just another face in the ranks of the call centre precariat.  No wonder our depression rates are some of the highest in Europe.

Unsurprisingly, these graduates are bored out of their minds. The Work Foundation think tank has been investigating the causes of poor workforce productivity for a number of years now and their studies bear out the same results over and over again. The new “graduate opportunities” in sales and retail occupations have a created a generation that feels wasted in their job and cheated by the absence of opportunity to use the skills they spent £27,000+ to get. The table below shows how staggeringly large this problem is in the workforce.

graph

But somebody has to do these jobs right?  Well, yes, obviously, but the problem is government policy makes the situation worse. We already have too many highly skilled workers for our economy. Yet, successive governments of all colours and stripes have focused on a skills shortage on the supply side. “Education, education, education” sent millions more graduates to do jobs we’ve already outsourced to India or Ireland, leaving them with the low-skill dreck companies left behind.  It’s no surprise then, that only graduates who get on one of the prized training programmes with a big company such as Deloittes are enthusiastic endorsers of the current system.  They’re the only graduates getting to use their skills.  For the rest of us, we can look forward to endless phone calls from “graduate-calibre” recruitment consultants, desperately shilling yet another sales job like it’s the second coming. Little wonder then that we “lack commitment” to the cause. Nobody’s shown any in us to reciprocate.

Shiny Happy People

Bored, lethargic, demotivated, poorly organised, having trouble sleeping? Do me a favour and go to the doctors. Check yourself in and say you’re feeling depressed. Then after you’ve filled up on Valium, Citalopram or whatever the doctor feels like prescribing, go back and look again at employer complaints about their graduates. It’s not surprising that depression and an unmotivated workforce look like the same thing. It is the same thing.  As studies can attest to, the impact of underemployment is barely different from unemployment. It causes depression, anxiety and a palpable sense of failing to live up to your own ambitions.  Learning helplessness as they go, these very same workers are more likely to be ill, more likely to quit and more likely to be unproductive, costing businesses £26 billion a year. 

As far back as the 1960’s the Department for Education has known what will create a healthy, happy graduate workforce. They thrive on “challenge, to have an opportunity to learn, to use their initiative, and to have good working conditions in the widest sense”. The ideal candidates for a knowledge economy.  It’s a consistent theme throughout all their surveys’ since. Knowing this, it’s more than a little surprising that businesses have de-skilled occupations, removing the agency and motivation for work for the majority.  It’s a long term structural problem leading more and more to a helplessly lost, wasted workforce.

Fixing the issue

There’s a lot of positive steps that could be taken to fix the problem, and none of them involve increasing the number of graduates. Employers and the government have to start taking more responsibility to reach out an early stage to graduates. Employers complain that graduates “can’t write a cv,” yet only 15% of them have ever received any feedback on job applications they painstakingly put together. Presumably graduates are expected to be psychic in the modern workforce as well. Employers also complain that graduates have no work experience, yet they consistently fail to offer work placements for students with relevant degrees. If they can’t afford to pay for this work experience, then the government needs to step in and help with a new, useful version of the workfare programme. Place graduates in jobs that make use of their skills, don’t lock them in place as a shelf stacker. And most importantly, offer routes to advance in the company. Graduates aren’t stupid, they can tell the difference between a job and a career. Expecting them to be an enthusiastic work horse is ridiculous when they know they’ll be trapped in the same job until they are led to the knackers yard years later.

And employers should know it’s terrible for their own bottom line. Surveys of recent graduates have shown that nearly half of all people who receive no feedback will boycott the company products in future, convinced that this lack of care about their job applicants will be reflected in their products. And lest we forget, that’s hundreds of applicants per position, all spreading the bad word to their friends and families.

In fact, if businesses thought about that, the loss of productivity and the days off sick they incur from all this then maybe, just maybe, they might consider hiring some graduates just to sort out their hiring policies. After all, they love a challenge, they’re innovative thinkers and they have tons of experience in exactly how not to do it.

4 responses to “Paying peanuts to get Einsteins – the skills shortage myth in the UK”

  1. John says:

    Interesting article. Although it does go on a bit! As a graduate who does not find himself on graduate employment It really puts down in words my frustrations. 

  2. June Liggins says:

    Completely agree – and the article possibly doesn’t go on enough! I watched one of those ‘debate’ programmes the other night about the benefits system and this woman who has a TV programme where she is referred to as ‘The Fairy Job Mother’ when asked her opionion for worklessness in our society said that she thought there was too much job snobbery amongst the population – people should be prepared to accept anything. A Capitalist’s dream! A well educated workforce who can be manipulated and duped at will – people who have undergone tests and exams from the age of 5 only to be spat out the other end of the system and told to shut up and be happy with whatever they are given. Nightmarish, but reality.

  3. Mike Berg says:

    Great Article, you could replace the UK with Germany and it would fit a 100%. German Employers won’t even look at your CV if it does not fit a 100% the profile they are looking for. German Employers claim they have a skills shortage as well, but it is a pure Myth created by themselves. Another issue is the pay, how can they expect to get someone with either a degree in IT or a three year apprenticeship to work for €1400 before taxes as a 1st/2nd Level Support? The rest of Europe has the same problems as Britain has, skills shortage is a myth!!!!!!

  4. Steve says:

    I’ve spent the last 6 years studying for an engineering degree and I’ve been trying for the last 3 years to get an engineering job but I can’t get a) an engineering job b) any job. I too keep hearing about the supposed shortage of engineers but I believe it is a myth created for the sake of manipulating supply and demand and reducing wages. The UK treats engineering graduates like rubbish. It’s appalling!

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