At this year's CBI conference, CBI President Paul Drechsler called productivity the "magic ingredient" for improving living standards and boosting the UK's economic growth, underpinned by investment in technology, training and skills. Yet statistics show that we are still falling behind global competition in many areas that drive productivity. The UK currently ranks 7th in the EU for innovation, 34th in the world for procurement of advanced technology and in last place in the G8 for Government R&D spending.
If the UK is to become a leader in innovation, a key ingredient in the quest for improved productivity, then it is vital not only that we have the right levels of funding, but more importantly that we have a skilled workforce that can help businesses grow smarter, better and faster.
The current skills shortage in the UK is not only preventing business from finding the right people with the right skills, it is also leading to significant wage pressures as employers are forced to pay an ever higher premium for the best people. These two issues have the ability to severely limit the true potential of the British economy and damage our global competitiveness.
Hays' Global Skills Index, our annual report assessing the health of labour markets across 31 countries worldwide, has found that the UK's talent mismatch has worsened for the fourth consecutive year and remains amongst the worst in Europe.
With economic growth on the up and the jobs market outlook looking rosy, this mismatch is only going to get worse; there are more vacancies, but the nation does not have the right people to fill them. Our recent data shows that over three quarters of employers cite a lack of suitable candidates as one of their biggest challenges when hiring. The lack of STEM candidates - science, technology, engineering and maths - is well-known as businesses struggle to find engineers, coders, programmers and other high-skilled professionals, but this is now spreading into other sectors as well.
These highly skilled candidates will often get multiple offers from rival firms looking to offer the most attractive package; at the same time current employers are making counter offers, pushing up salaries even higher. Over 66% of employers we surveyed expect to increase their staff salaries in 2016 with construction and IT employees continuing to experience some of the biggest increases in salaries.
So how can the Government, businesses and education bodies take the lead in closing the skills gap and keeping our economic recovery on track?
Firstly, measures should include fast-tracking visas for roles that can't be filled by local workers and showing public support for the mobility of skilled labour. The CBI has publicly called for the government to remove the UK's net migration target. This is the best short-term solution to giving companies the world class talent they need if we are to build world class companies. Positive steps in this direction are however being made, such as the new tech team visa, which will allow UK technology companies to hire up to five people outside the EU at once, but a lot more still needs to be done.
We also need to see more emphasis and investment on vocational training and apprenticeships, which are vital in industries such as IT where almost a third of its workforce will retire in the next decade. Without taking proactive steps to train more young people to be skilled IT workers, we simply can't expect this skills gap to go away.
Addressing the skills shortages must be on the priority list if British businesses are to continue to play a pivotal role on the world's economic stage. Failing to do so will lead to potentially dangerous long term consequences for the UK's future recovery.