Evidence from the Employer Skills Survey 2022
The Employer Skills Survey 2022 is the sixth edition of the survey conducted by the DfE since 2011. The survey aims to identify the skills challenges faced by employers, in their existing workforce as well as when recruiting. In particular, the survey covers three main areas:
- Recruitment and skill-shortage vacancies
- Skills gaps
- Training and workforce development
The survey is a representative sample and is based on approximately 59,500 interviews of establishments in England, and 7,400 in London.[1]
This note particularly focuses on skills demand in London (both in general but also specific needs), how this translates into recruitment challenges, and the amount of training employers provide.
It should be noted that wider evidence suggests that 2022 was a period of particularly high labour demand, and this is likely to have influenced establishment’s responses. For more information see our latest Job Posting Analysis.
(1) Overall skills gaps
The Employer Skills Survey shows skills demands in terms of the number of skills shortage vacancies and the number of employees who are not fully proficient. Since 2011, skills demand in London has been rising both due to skill-shortage vacancies and the number of skills gaps.
According to the 2022 Employer Skills Survey, around two-thirds (66%) of London employers anticipated a need for new skills to be developed in their workforce over the next 12 months. Similar skills demand (67%) was recorded by employers in 2019. Additionally, higher rates of skills demand (measured as skills shortage vacancies and skills gaps) are recorded for larger employers (those with more than 250 employees) in 2022 compared to 2019.
Figure 1: Skills-shortage vacancies and number of skills gaps in London 2011-2022
The high levels of skills demand in 2022 are shown across all four of London’s[2] sub-regional partnerships. As shown by Figure 2, all four of the London partnerships have a similar proportion of establishments with skills deficiencies (defined as either any skills-shortage vacancies or skills gap).
Figure 2: Post-pandemic proportion of establishments with skills deficiencies (any skills-shortage vacancies or skills gaps), 2022
(2) Skills that require development in the workforce
The particular skills that are demanded are broad, ranging from technical and practical skills[3] to digital skills, and transferable skills. Generally, specific skills demands are proportionally higher in London than nationally.
The technical and practical skills that London employers highlighted for development in their workforce were similar to but slightly higher than the national picture. The single most-cited area was “knowledge of products and services offered by your organisation and organisations like yours”. The proportions needing these skills remained similar compared to 2019. More broadly, the main technical and practical skills that required development included a mix of:
• Operational skills (cited by around 57% of employers in London who anticipated a need for new skills in the next 12 months, vs. 51% nationally)
• Digital skills (51% in London vs. 44% nationally)
• Complex analytical skills (51% in London vs. 42% nationally).
Focusing on digital skills, most London employers said the IT-related skill needed improving was linked to new or updated company software or systems (cited by 29% of London employers who anticipated a need for new IT skills). However, employers in London reported the need for general and advanced digital skills – including Microsoft Office skills, but also programming and design skills.
Analysis of the evolving landscape for IT skills needs by employers reveals changes between 2019 and 2022, spanning the period during and post the global pandemic. This comparison is crucial for understanding the dynamics of skill development in the face of changes in work structures (such as the rise in remote working).
Notably, Figure 3 demonstrates that the shift towards remote work has resulted in significant enhancements in skills, particularly in basic Microsoft proficiency and efficient communication through emails. Concurrently, it illuminates areas of ongoing need, such as foundational digital skills and the use of specialist software or hardware/internal systems.
Figure 3: IT skills that needed improving (in roles with IT skills gaps), London, 2019 and 2022
The Employer Skills Survey also shows transferable skills demand in 2022 and this remained stable since 2019. The most common skill lacking in London was linked to managing time and task prioritisation. More broadly, soft skills gaps in London were linked to a need for:
• Management and leadership skills (cited by around 55% of employers in London who anticipated a need for new skills in the next 12 months, vs. 46% nationally)
• Self-management skills (54% in London vs. 48% nationally)
• Sales and customer service skills (46% in London vs. 40% nationally).
(3) Employer training levels
Despite the rise in employer skills demand, there hasn’t been a corresponding significant increase in employer training. The employer-provided training landscape in London closely follows the national trend. Prior to the pandemic in 2019, 58% of London employers had funded or organised training for their employees within the preceding 12 months (compared to 61% nationally).
However, during the pandemic, there was a significant decline in employer-provided training, especially in the case of off-the-job training. Between 2019 and 2021[4], the proportion of employers in London offering off-the-job training declined by 19 percentage points to 24%. However, in 2022, there was a rise in provision, signifying a potential recovery. 59% of London employers had funded or organised training (either on or off the job) for their employees within the preceding 12 months (compared to 60% nationally). Employers predominantly offered a blend of on-the-job and off-the-job training (constituting 27% of all employers).
Figure 4: Employers providing training over past 12 months, from 2017 to 2022
As shown by Figure 5 and Table 1, 2022 saw a large increase (19%) in the investment in training per employee in London; rising from £1,800 in 2019 to approximately £2,150 by 2022 (based on 2022 prices). At the England level, there was only a slight increase (+1%), reaching nearly £1,780 by 2022 from £1,760 in 2019. However, the general trend since 2015 has been a long-term decline in investment in workplace training. Additionally, firms are experiencing challenges in the context of the cost of living crisis (cost-push inflation). This might be associated with lower levels of in-work training in recent times.
Figure 5: Employers investment in training per employee, constant (2022) prices
However, despite the amount spent on training increasing recently, this has not led to a higher volume of training. The average days per year that employees spent on training decreased by 0.3 days in 2022[5]. Therefore, the rise in employer training spend could not be explained by greater training services offered.
Table 1: Employer-provided training in London, 2013-22
(4) Recruitment-related challenges
Hard-to-fill and skills-shortage vacancies
The rise in skills demand is seen in the number of skills-shortage vacancies. In 2022, 48% of vacancies were hard-to-fill vacancies and one-third (33%) of those hard-to-fill vacancies were due to skills shortages (or 16% of all vacancies). The 2022 Employer Skill Survey shows that the level of Hard-to-fill and skills-shortage vacancies increased by 9 and 11 percentage points respectively compared to 2019 in London.
This translates to an increase in vacancies due to skills shortages, with over 93,500 skills-shortage vacancies in London alone, up from 38,000 in 2019. For England overall, the number has risen to over 460,000, compared to 199,000 in 2019. This indicates a dual trend: a general increase in vacancies and a notable rise in skill-shortage-related vacancies.
Figure 6: Proportion of all vacancies that were hard-to fill due to skills shortages or other reasons, 2019 and 2022
The incidence of skills-shortage vacancies often reflects a lack of specific workplace skills. A lack of specialist skills or knowledge is the main cause of skills-shortage vacancies reported by employers in London. Figure 7 provides a breakdown of the types of skills that employers in London found difficult to obtain from applicants when reporting skills-shortage vacancies.
It should be noted that some of the wording has changed between surveys, so the findings presented here are not entirely comparable. However, the overall trend suggests that the demand for skills identified by employers in 2022 has increased since 2019 across almost all skill areas, particularly in problem-solving skills and customer handling skills.
Figure 7: Skills that employers in London found difficult to obtain from applicants
% of respondents reported that vacancies were hard to fill due to skills shortages, in 2019 and 2022 [6]
In conclusion, The Employer Skills Survey 2022 sheds light on critical aspects of workforce development and recruitment challenges. With data drawn from over 59,500 interviews in England and over 7,400 establishments in the capital, has highlighted significant insights into the challenges faced by employers.
From identifying overall skills gaps to pinpointing specific areas requiring development, the survey underscores the pressing need for strategic workforce planning and investment in training. Moreover, recruitment-related challenges accentuate the importance of aligning education and training initiatives with the evolving needs of industries.
As London continues to be a hub of innovation and economic activity, addressing these challenges head-on will be crucial in fostering a resilient and competitive workforce for the future. Through collaborative efforts between policymakers, educators, and industry leaders, London can capitalize on its diverse talent pool and thrive in an increasingly dynamic global economy.
[1]
Based on the unweighted base of establishments.
[2]
The survey is based on business establishments (rather
than at the organisation/company level), so geography is based on the postcode
of establishments.
[3]
Practical skills include job-specific skills.
[4]
2021 data is based on DfE’s employer pulse survey which surveyed a smaller
number of establishments than the skills survey.
[5]
Fieldwork for ESS 2022 was conducted between June
2022 and March 2023. Businesses were asked to report their training value and
volume over the last 12 months.
[6]
The ESS England Tables 2019 are used for analysis at an England and London
level and Local tables used for sub-regions in London.