Thursday, 31 July 2014
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The skills shortage paradox

With a skills gap apparently looming in engineering, why are engineering graduates are more likely to be unemployed and why are youth apprenticeships declining?

It’s the inevitable question raised every time there has been an announcement on the engineering “skills shortage” in the last few years. If the job market for young people is so difficult, why is engineering struggling to attract more much-needed new talent?

But the latest state-of-the-nation report from EngineeringUK highlights some even more intriguing – and worrying – paradoxes within this problem. Despite a major government drive, the number of young people taking advanced level engineering apprenticeships is falling and the overall number of apprentices is almost flat.

Upskilling existing employees is on the increase

There is an increasing trend to upskill existing employees, hence a rise in over-25 apprentices

Similarly the number of new engineering undergraduate students, despite a big rise in the last five years, has stagnated and even fallen more recently. And recent engineering graduates are actually slightly more likely to be unemployed than their peers.

These are difficult questions and though it’s easy to come up with potential answers – lack of engineering awareness, non-competitive salaries, an education system that forces students to narrow their options too early – there isn’t strong evidence that any one of these clearly illustrates what’s going on.

Certainly the difficulty young people seem to have in getting a job or apprenticeship points the finger at engineering companies, most of whom claim they find it hard to recruit experienced talent but could also be accused of not doing enough to train new engineers.

Paul Jackson

Paul Jackson, addressing MPs at the recent Big Bang at Parliament

The National Apprenticeship Service (which advertises 80 per cent of available placements on its website) says engineering and technology apprenticeships receive 14 applications for every place, suggesting the demand is there but the supply is not. Meanwhile, the number of over-25s taking apprenticeships is on the rise, which could mean companies are choosing to train up existing staff rather than take a risk on young people.

EngineeringUK’s chief executive, Paul Jackson, says the picture is more complicated than the data implies but offers some straightforward suggestions as to what might be happening.

‘If you were to advertise an admin position online you would get 100 applications in no time at all,’ he says. ‘So actually, 14 applications from something that’s not pre-qualified is not a good number. That system is not working.’ This certainly chimes with anecdotes from smaller, less well-known engineering firms that they struggle to get any applications while the well-known companies suck up all the talent. Jackson says this has even affected big international firms in less glamorous areas such as food manufacturing.

Part of the issue, he says, is that securing apprenticeships is a more difficult process than applying to university. ‘We do make it quite difficult for young people [to apply for apprenticeships]. If you’re on a graduate route you’ll get careers advice about which universities to apply for, support in your subjects, and then you have a nice system from UCAS where you put own five choices and they sort it out for you.’ By contrast, students must identify and apply for each apprenticeship separately and, anecdotal evidence suggests, they can often receive little guidance or encouragement in doing so.

So what about those who follow the university route? Why are 8.6 per cent of engineering graduates unemployed compared to 7.1 per cent overall if there’s such a skills shortage? Again, the issue isn’t as simple as it seems. Unemployment might be above average but so is full-time employment, meaning fewer engineering graduates are accepting part-time jobs or combining work with further study.

The explanation, Jackson says, may be that engineering grads are more likely to have a set idea about their career (hence their more vocational degree course) and therefore hold out longer for a particular job rather than applying for a wider range of roles.

”Young people make an application based on really very limited information each time, and hence we have got these shortages

Paul Jackson

‘If you’re willing to take a civil service job or accountancy – one of those jobs that you can take any degree and go into – we think if you’ve taken a history or classics degree, there’s that much broader group available to you. If you’ve taken a degree in mechanical engineering you probably want to get a mechanical engineering job. So we think some of the delay in employment is that people are looking for something really quite specific.’

Apprentices

Apprentices at Sheffield Forgemasters: the lucky few?

There’s also something of a mismatch within engineering, he adds. Electronic engineers, for example, are in particular short supply. ‘This is an imperfect market. Young people make an application based on really very limited information each time, and hence we have got these shortages.’

Jackson’s solution, as is so often mooted when it comes to the engineering skills issue, is a better careers support network, although not necessarily a return to the old-style advice service, that does more to put schools and students in touch with industry. He also says we need to ensure that recent additional government investment in higher and further education in STEM (science, technology, engineering and maths) education is wisely used to increase capacity. Applying industrial strategy to the whole of government and not just the business department could also help.

”There is an element of truth, at each stage of the recruitment of engineers, that the ideal is to recruit someone to slot in. The reality is we all know you’ve got to do some work

But what about the role of the engineering companies? Don’t they need to take more responsibility for training young people rather than expecting employees to arrive fully formed? ‘There is an element of truth, at each stage of the recruitment of engineers, that the ideal is to recruit someone to slot in. The reality is we all know you’ve got to do some work. So when I hear companies say they want someone who can instantly be 100% productive, I’m sceptical about that.’

On the other hand it can be financially difficult and risky for small firms in particular to take on apprentices. ‘Smaller companies can’t afford not to take part in training, but what it may be is that the whole apprenticeship is difficult to deliver,’ says Jackson. ‘Maybe they could contribute to overtraining of engineers without having every person on their premises for three years.’

EngineeringUK is calling for a doubling of the number of under-19 apprentices, graduates and GCSE physics students by the end of the decade. Jackson says he is cautiously optimistic about the targets. ‘The foundations have been laid. We’ve now got to accelerate.’


Readers' comments (32)

  • Jaguar land rover received 8000 applicants for 100 posts ,National grid receives 4000 applicants for 40 graduates. I do not understand where is the skill gap . Most of the engineering companies need specified well trained engineers. It is not possible any where in the world. Please give jobs to current unemployed engineers and show them some justice and respect rather than putting lot of youth into trouble.

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  • What is needed is a National Skills Bank, where the government takes the role of registering the skills set of EVERY graduate from EVERY registered educational establishment in the UK and matches them to employer needs.

    Additionally this would mean that 'newspaper adverts' for jobs become a thing of the archaic past, along with ads in trade papers and other imprecise methods of linking those with skills and no job to those needing skills and an employee.

    The entire 'employment' industry' needs to be brought into the 21st century. It clearly ain't working!

    Outlaw job ads and job agencies, put everyone and everything on a database jump-started by a PPI and send the job announcements directly to the smartphones of all the graduates in the catchment area, given local transport links, the moment the industry need is entered. Not everyone can afford all the trade papers or agency fees after going through the costly debt-based education system.

    I am sick and fed up of the under-employment of the UK's talented youth, with skills to give while industry positions sitting unfilled of months... all because some ideal graduate in Hull doesn't happen to read the 'Portsmouth Daily Herald' on our small island.

    It's 2013, for goodness sakes!

    Why not?

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  • The skills shortage paradox
    I've not read your full article yet as I am at work.
    But look at where we are. Cultures have changed.
    Children are more interested in 'game consuls' and mobile phone type technology these days.
    When I was young (58 now) I was engaged in airfix kits which then went on to full blown aero modelling. This has been a training ground to me as Engineering is problem solving. Children now don't make things, even kits models, as they can't be bothered. They can just switch on an game consul.
    That aside we have lost too many industries, steel manufacture, cars, ships our rail is crap, power producing will probably be chinese in the future, all gone or going abroad. And you/we ask what is wrong.
    I can see it, but who can change it?

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  • A large amount of supply of people means companies can suppress pay and cherry pick from those that haven't already gone into other sectors. it is not a sustainable habit as we are seeing. Many engineers don't go into engineering and those that do, many leave for other sectors or go abroad.

    There is also the issue that companies aren't willing to spend money to train people so they expect people with some experience even at graduate level. Placement years are a must. It is also useful to distinguish between accredited and non-accredited degrees. It is noticeable that graduates with degrees that are accredited by a body of the engineering council (IMechE, RAES, IOM3 etc.) are more employable. This increases further for students that have done a placement year. A lot of the universities that have higher employment stats meet these two criteria.

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  • Is there any breakdown of the size of companies which report a skills shortage? I can't imagine Jaguar Land Rover having any problem attracting applicants, but a 50 strong company based in, say, Great Yarmouth designing kit for the North Sea might struggle simply because it isn't seen as glamorous or long term enough. From my own experience working in smaller companies has been more rewarding and challenging than working in bigger ones, but working in engineering SMEs is usually not promoted as a good career path. I wouldn't have thought that this would be hard to change if taken through the existing channels.

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  • Anecdotally, this is thought to be exactly part of the problem. Indeed, other commenters on this site recently have described how recruitment drives by the big firms seem to make it harder for them to recruit. Perhaps one of the solutions would be better communication and cooperation among supply chains.

  • I interview graduates for positions as electrical engineers in the water industry and we face two main problems.
    1) Electrical Engineers want to work in transmission and distribution. Water simply isn't attractive to them. Thus the high fliers (always Brits) that we interview rarely accept the positions we offer and we can't compete on salary with say petro-chem because our margins are so tight.
    2) I am quite concerned about the quality of the majority of British graduates. They seem to leave with excellent degrees: 2:1 and 1st yet they demonstrate poor engineering sense. I’ve had to tell graduates that the mains frequency is 50Hz and many can’t remember the fundamentals of the discipline: such how to calculate I from S and V or when to use sqrt(3).
    In an economic climate like this we are getting applications from across Europe. Cut out the high fliers and the best candidates usually aren’t Brits. This worries me.

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  • Nathan, The decent engineers went elsewhere or into completely different sector that's why you have been left with what is effectively the bottom of the barrel.

    I see so many tremendous engineers leave to go into oil&gas, finance or even abroad. It is a real loss for British engineering companies as they lose out on great people.

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  • The idea that the City is sucking all the engineers away from industry may be a lot more mythological than most people think. Less than 3% of engineering graduates take jobs in financial services, according to the EngineeringUK report.

  • I agree. It is a minor figure. I know that a significant amount of engineering students have a close look at the city. It a contributor to a (much larger) total percentage of engineers that either cease to follow a path in engineering from university or change career paths after starting in engineering. Even within the engineering sector the only way to get even a reasonable salary is to stop engineering and become a manager.

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  • The image of "high-paid" City professionals vs "low-paid" engineers is a potent one. But average working engineer salaries are around £40k and average chartered engineers salaries are around £70k. Do you not think this counts as reasonable pay?

  • Dear Editor,

    I don't know of any engineers earning £70k in my company. Only divisional directors earn this sum and they don't do any engineering anymore. To earn more one needs to become a shareholder.

    Like all of these figures thrown around: the average is a poor reflection of the experiences of the majority. Which suggests when it comes to salaries there is a huge variance around the mean.

    Moreover engineering packages are reported in a wide variety of ways. If I look at my "package" as reported by my company, its around the £40K mark. When I look at my P60 its closer to £30K. Which do we think the company will promote?

    If we talk about take home pay, my younger sister with 1/2 my experience and a BSc in tourism was up until recently earning the same as me.

    Your little remark: "Do you not think this counts as reasonable pay?" doesn't bear the weight of experience.

    If I want to take home those kind of sums I will need to change industry and employer but we can't all work in petro-chem and we're not all overwhelmed at the prospect of jumping ship every two years to chase a bigger pay packet.

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  • Q: "With a skills gap apparently looming in engineering, why are engineering graduates are more likely to be unemployed" - I know from recruitment within Ford over the last decade, that all growth and replacement has been via low cost contract staff. These are typically from the Indian sub-continent who find the t&c relatively attractive. Great for keeping salaries down and I guess recent UK graduates will have to learn to compete with them - or if they're bright make a career change into something that better pays the bills. Probably not the most PC thing to say these days but unfortunately true.

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  • £70k is very reasonable pay. However many of those that are chartered engineers are also MDs of large corporations, or other non engineering roles etc. This does tend to skew the figure up much higher than what an engineer gets. In all my time in industry I have not seen a single engineer on more than £45k, unless they were a contractor or they were carrying out a non-engineering role.

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  • So £40k isn't a reasonable salary?

  • When you are nearing retirement and the engineers that have been "fortunate" to get to £40k will not consider that reasonable. Compare that to other sectors and abroad where graduates start on salaries higher than that, such as the US. It is uncompetitive, particularly considering this is a late career salary/package (engineer average age is very high). The calibre of people in engineering possess higher than average capabilities in mathematics and physics and these are typically attractive in other careers which pay significantly more. Unfortunately we lose a lot of engineers and potential engineers to other sectors and abroad.

    There are a number of studies showing that the UK suffers with engineering recruitment because of low salary. It is very painful to see accountants, IP lawyers and engineers abroad earning far more and increasing far more over the years. Many of my university friends have now left to go abroad and recently one of my colleagues is about to leave for east Asia. This was rampant at the previous company I worked at. I recently had a Christmas do with all my old friends from university. Every single one except two said salary was the main issue and they wanted to leave because of it. The one that didn't was working in oil&gas and he earnt a lot of money and the other was working in finance. Money doesn't bring happiness, but lack of it especially compared to other roles is breaking people in engineering.

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  • Dear Editor,

    by which standard are you defining the term "reasonable".

    Do you see this as a relative term compared to similarly qualified and experienced individuals in this country and abroad?

    Or is it some market based figure which states we get what we're worth? Which pretty much begs the question.

    Maybe when you refer to "reasonable" you talk about buying power compared to the average mean salary? Are we even talking about mean salaries? Are we even comparing like with like?

    Before you query any further whether other people's perceptions are worthy by your standard perhaps you could clarify what your standard is?

    Thanks kindly,

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  • The term 'reasonable' was introduced on this comments board. We're interested to hear your views.

    We'd also be very interested to see these studies that show salaries are a barrier to engineering recruitment. Do you have any links?

  • Some links to articles with some references to studies showing issues in the engineering sector.
    http://processengineering.theengineer.co.uk/uk-engineering-sector-facing-brain-drain/1015077.article
    http://www.nce.co.uk/news/business/students-shun-degrees-in-civil-engineering/8633266.article
    http://www.telegraph.co.uk/finance/newsbysector/industry/engineering/10474282/More-than-half-of-engineers-willing-to-leave-the-UK.html
    http://www.telegraph.co.uk/education/educationnews/9699524/Britain-being-hit-by-rise-in-graduate-brain-drain.html
    http://www.managers.org.uk/news/salary-lapses-causing-skills-shortages-engineering
    http://www.telegraph.co.uk/comment/letters/9719700/Engineers-need-higher-salaries-to-stop-them-leaving-the-profession-early.html

    I can look at digging more out that I have come across over the years.

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  • None of these studies show that engineering firms in the UK are struggling to recruit because of low salaries. Rather they show that lots of engineers and graduates in general claim they would consider leaving the country, often for more money.

    They don't show students are shunning engineering because it is a 'low-paid' job or that the third of engineering graduates who don't take a job in the profession do so because of pay. They don't even indicate the number of engineers who do leave the UK because they can secure higher salaries elsewhere (although undoubtedly some do).

    Salaries are clearly a factor in job decisions, and the industry needs to take a much more serious look at how it can use pay to counter the skills shortage - the issue is rarely addressed in the various industry reports we see eg Perkins. But we need more than stories about friends who've gone abroad to work out how much of an issue it really is.

    It's interesting to note that in the articles you link to, one of the few mentions of salaries actually says: '“Employers offer lucrative employment deals and pay packages to secure the best talent. If this information is not being channelled to our young people at an early stage, then we need to be looking at more innovative ways of getting this message across.'

    http://www.telegraph.co.uk/education/educationnews/9699524/Britain-being-hit-by-rise-in-graduate-brain-drain.html

    This person clearly thinks low pay is not the real issue: rather it's the image of engineering as a 'low-paid' job.

  • These comments about the level of salary are quite horrifying. In Australia, labourers on a mine are on $200k pa. This equates to about GBP 150k. Engineers are generally paid on the level of about $140k plus. Although, a downturn in resources has made things somewhat more challenging.

    Engineering professionals in the UK should be earning considerably more than GBP 40k pa. A shortage of engineers and technologists will push salaries up. Plus there is a need for engineers to be more business-like in their work - to be aware of business issues such as finance and law etc.

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  • Can we also add into the mix the catastrophic reduction in the quality of UK qualifications. A current MEng qualification is nowhere near the level of a BSc of twenty years ago, A levels are broadly similar to O levels and GSCEs are not even worth considering. In a recent test on graduates, two very basic first year Engineering questions were asked, and four out of fifteen got both right. Partly this is of course a result of the modular system where subject matter is only learned briefly for an assessment, and is then neither built on nor required further, so is forgotten. This applies from GCSE through to degree, and merely compounds the problem of reduced content with a reduced requirement for retention.

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  • Engineering pays reasonable to good salaries. You can find some better elsewhere and some better abroad, but not everyone will. Also, Engineers who deserve respect get respect.

    A large part of ur problem is wingeing idiots who seem to expect unattainable salaries and accolades, seem to be underserving of either, and in the main, have doubtful rights to call themselves Engineers.

    If members of the profession keep talking it down, Engineering cannot have the status it deserves.

    The message from me- grow up, and do something positive, even if it's just leaving a profession that can well do without you.

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  • Editor- I definitely agree. It has an image problem. Drawng comparisons with abroad then there is a clear gap in salaries.

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  • As the average age for an engineer is ever increasing and currently it is around/above 60 years old then there could be a big shift in future as a real shortage could occur.

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  • This article addresses the issues at graduate level. http://www.iom3.org/feature/closing-skills-gap-materials-graduates-shortage?c=3343
    From my own experience in industry they a very common complaint from most people in a whole range of companies.

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  • How many people have you met in any sector that thought they were paid what they deserved? And surely the issue is what do those people who choose not to go into engineering think, not what those already in it think.

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