Is there a digital skills crisis?
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DIGITAL SKILLS ARE KEY
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What are digital skills?
Is the UK facing a digital skills crisis?
Despite being one of the most technologically advanced nations in the world, the UK is potentially facing a digital skills crisis. As the economy rapidly changes, with an increase in the pace of technological change and rate of adoption, the digital economy is seen as critical to future growth and prosperity of the country.
Some of the requirements of a world class digital economy encompass excellent connectivity, including comprehensive access to fast broadband and improved mobile access (especially 4G and, soon, 5G) but it is the level of digital skills in the workforce (or relative lack of) which has attracted the most attention.
Failure to close the skills gap in the UK Economy:
80% of small firms face difficulty recruiting applicants with suitable skills.
Federation of Small Businesses
Negative impacts experienced by knowledge workers from lack of digital skills
26%
20%
13%
11%
11%
10%
10%
8%
The digital skills gap is felt by the majority of knowledge workers in the UK
AND Digital: The nature of the UK’s digital skills gap
Recognising the role of digital skills in business productivity
The economic dislocation of the last two years due to Covid has contributed to significant changes in the UK economy. Technology has enabled new ways of working. Zoom has become ubiquitous as the new Hoover in the lexicon of individuals and companies forced to create new work-from-home protocols and procedures, but these new ways of working have managed to keep the economy going to a remarkable degree.
By some metrics, the UK economy is a tech giant. Tech investment (especially Fintech, where the UK has a particular strength) saw a record breaking year in 2021, with £29.4bn raised, higher than any annual record to date. It was more than double that of Germany, and almost three times that of France, and was second only to the US in early stage tech investment.
The UK also has more than double the number of unicorns (tech firms worth more than $1billion) than Germany, and internationally is third only to the US and China. The UK tech start up and scaleup ecosystem is valued at $585bn, more than double that of Germany.
Skills and Productivity
Whilst digital skills were originally recognised within the technology sector, which was worth 7.7% of UK GDP in 2020 with a growth rate 6 times that of the rest, it has become clear during the pandemic that 'digital', and the required skills, are needed across every sector. Digital skills are now an essential entry requirement for two-thirds of UK occupations, 92% of businesses say that having basic digital skills is important for employees and 27% of employers say their workers require advanced digital skills.
Research by World Skills UK, the Learning & Work Institute and Enginuity (Disconnected: Exploring the digital skills gap) suggests that 60% of businesses believe their reliance on advanced digital skills is set to increase over the next 5 years, while 88% of young people realise that their level of digital skills will be an important driver of their careers. Three in four (76%) of businesses say that a lack of digital skills would affect the profitability of their business. They identify that advanced digital skills are important as they
-
help to grow the business
-
help to improve productivity
-
help the business innovate
There is consensus about both the need for digital skills, and their increasing importance in the future, as a driver of economic growth and productivity.
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A new digital skills benchmark
The latest Consumer Digital Index paints a complex picture
The index has found that 96% of the UK has been online in the last 3 months, up from 89% in 2016 but down from 99% in 2022. The pandemic over the last few years has been a significant catalyst for this, but, despite this, there are still some 13 million people, 25% of the UK, who still have very low digital capabilities. In addition, with inflation squeezing incomes, nearly 36% said that their ability to go online has been impacted.
Very High digital capability is not evenly spread across the UK either. London has the regional lead, at 31%, four percentage points above the UK average, followed by the North West and South East (both 28%). Wales and the North East lag behind all other regions and nations in Very Low digital capability, at 28%.
8.5 million
adults still lack the digital foundations needed for everyday life.
£442 a month
comparing individuals in similar jobs at similar levels, those with high digital capability are making up to £442 a month more in 2022.
96%
* engaged with the internet in the last 3 months
UK digital capability, 2022
Very Low
25% / 13 million
Almost half earn less than £20,000 a year
Low
10% / 5.2 million
Fewer than 40% earn less than £20,000 a year
High
38% / 19.8 million
Almost one third earn less than £20,000 a year
Very High
27% / 14.1 million
16% earn less than £20,000 a year
There are five categories of Essential Digital Skills for life and work
The framework, which helps inform the Lloyds Bank Consumer Digital Index, is intended to be used by everyone in the UK involved in supporting adults to improve their essential digital skills.
Communicating
Communicate, interact, collaborate, share and connect with others
Handling Information & Content
Find, manage and store digital information and content safely and securely.
Transacting
Administer, manage transactions, buy and sell, register and apply online
Problem Solving
Solve problems and find solutions using digital tools
Being Safe & Legal Online
Stay safe, legal and confident online using passwords and privacy settings
8 Foundation tasks
Around 10 million adults in the UK do not have all the Foundation level skills necessary to complete all eight tasks and around 2.8 million people are unable to complete any of these tasks i.e. they are completely digitally excluded. Having these skills allows access to the internet which provides a gateway to the digital economy.
Age continues to be the biggest factor: only 28% of those 75+ have all the Foundation skills whilst 97% of 18-24yr olds have them.
Fast Forward for Digital Jobs, techUK
supporting learners
supporting employers
delivering at scale
Essential digital skills for work
Online safety is a significant concern, as four of the top ten digital tasks the labour force can't perform fall within this category. Accessibility and availability of digital tools also play a role in these challenges. The digital skill gap threatens to create a social and economic divide, disproportionately affecting those without formal qualifications, on lower incomes, living with impairments, or from lower socio-economic backgrounds.
Unemployed individuals face even greater challenges, being more than twice as likely to lack digital skills compared to employed individuals. Industry, education, and income levels are the strongest determinants of a person's digital skills, with the construction sector being particularly disadvantaged.
No UK region has more than half its workforce capable of completing all 20 essential digital tasks. London, Northern Ireland, and the South East perform the best, while the North East and Yorkshire and the Humber lag behind. Organisations must seize the opportunity to develop digital skills, ensuring online safety, efficiency, and productivity to realise commercial value and growth potential.
Top ten workplace tasks that workforce adults are least likely to be able to do, 2022
UK Essential Digital Skills for Work
Data, insight and action to close the UK workplace digital skills gap
Lloyds Bank and FutureDotNow
The digital skills our economy needs
"In 2020 we published a report ‘Answering the call for digital skills excellence’, setting out the importance of providing high quality digital skills based on data from the consultancy EY on the rapid increase in international investors looking to invest in the UK’s growing digital economy. ‘Disconnected? Exploring the digital skills gap’ in partnership with Learning and Work Institute and Enginuity confirms the importance of digital skills to the UK economy and helps us understand the supply and demand issues around the digital skills gap, from the points of view of young people and employers."
Basic digital skills have become essential in the modern workplace. Over one in four (27%) say that the majority of their workers require advanced digital skills. Whilst many employers hope that that the current skills gap will improve in the future, despite increasing demand, it's not clear how much training employers are prepared to give to their workforce to meet this demand, perhaps preferring, as in the past, to either hire these skills in or develop them through on the job training.
The current pipeline of digital skills through the education and skills system is not providing the necessary skills, hence why improving digital skills is seen as a critical priority by the government.
How should companies approach improving their digital skills?
Digital Vision
Firms should plan and develop a long-term digital vision
Company-Wide Approach
The approach to improving digital skills should be across the whole company
External Collaboration
Look outside your firm to other local SMEs, your supply chain or local LEP
Next Generation
Work with schools, education providers and offer apprenticeships
Existing Talent
Find hidden talents in your workforce and invest in training
+42%
3 million
9%
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An estimated 78% of people have the Essential Digital Skills for work
Digital skills requirements in the tech sector
In an economy where the workplace is changing rapidly, it is vital to ensure that the workforce continues to have the right skills necessary to drive forward an advanced, 21st century economy.
According to the Digital Skills Academy, employers are changing their view on what they require from their workforce. They now recognise that a workforce with a wide variety of digital skills is vital, rather than having a majority of specialists. Employees with a wide-ranging skill set and broad experience add greater value to the bottom line.
So what are the key technical skills that tech employers are looking for in their workforce?
1. Programming, App & Web Development
Coding skills, knowledge and expertise are at the heart of any tech product or digital service. They're vital for new technologies like augmented reality and virtual reality.
2. Digital Business Analysis
Independent analysis of digital solutions helps companies make the right choices. Digital transformation is at the heart of many business models; getting it right is vital to help drive business growth.
3. Digital Design & Data Visualisation
Creating effective, dynamic user experiences is important to the success of a company or product. Utilising complex data to help management visualise issues and options helps them gain deep insight and value.
4. Digital Project Management
As digital transformation puts cost-effective and timely development at the heart of many businesses, so understanding the methodologies and tech required to achieve this is in demand.
5. Digital Product Management
With new digital products and services, especially for companies that sell Software as a Service, becoming central to most business models, managing their life-cycle effectively is vital.
6. Digital Marketing
Designing and building are important. Getting products and services to market, understanding where buyers are found and how to reach them, and utilising all the tools and networks available is critical.
7. Social Media
Getting direct access to customers is possible through the power and reach of social media. Understanding how to make the best use of these powerful tools is a skill much in demand.
8. Data Science & Data Analytics
9. Decision Making for Leaders
Managing a business has been helped in many ways with more effective, accurate digital tools. Understanding how best to deploy new technology, in a rapidly changing world, requires nimble, effective decision-making.
10. Something New
To help an employer choose between multiple candidates, it pays to stand out with a unique experience or skills that could be a professional qualification, or experience in a complex, multi-disciplinary project.
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UK Government: Our 10 Tech Priorities
Here are the 10 ways DCMS intends to deploy digital tech to build back better, safer and stronger from COVID, and shape a new golden age for tech in the UK.
1. Rolling out world-class digital infrastructure nationwide
Gigabit broadband and 5G are at the cutting edge of digital infrastructure, enabling us to connect at lightning speeds. We are spending £5 billion to make sure homes and businesses across the country benefit from gigabit broadband - including those in harder-to-reach areas. We will also keep working to ensure vulnerable people access the support they need to benefit from digital connectivity too.
2. Unlocking the power of data
Data is the driving force of modern economies. By removing barriers to responsible data sharing and use, we aim to become the world’s number one data destination: an open, welcoming and secure environment where companies from all over the world can innovate and grow, and where data improves life for people across the UK.
3. Building a tech-savvy nation
We want every adult to have a base level of digital and cyber skills so that no-one is left behind by the digital revolution. Our apprenticeships, digital bootcamps and the Digital Entitlement will help set people up for the highly-skilled, highly-paid roles of the future, and give them the confidence to use the internet safely and securely, while our £520 million Help-to-Grow scheme will empower 100,000 businesses to adopt the latest tech.
4. Keeping the UK safe and secure online
Our digital economy is world-leading because people have trust in the technology that underpins it. Our online harms legislation will hold social media companies to account for the safety of their users while protecting free speech and expression, and the freedom of the press. We will also implement measures to make our networks more secure against cyber threats, including by legislating to ensure that critical technologies of the future are “secure by design”.
5. Fuelling a new era of start-ups and scaleups
The UK is the tech powerhouse of Europe, attracting more investment than France and Germany combined. Our trailblazing pro-competition Digital Markets Unit will build on this incredibly strong foundation - opening up the market to new and innovative tech companies. By creating the right environment for companies to access growth capital at every stage of their cycle, we will secure our status as one of the most attractive countries in the world to start and grow a digital business.
6. Unleashing the transformational power of tech and AI
Artificial intelligence has the potential to fundamentally transform our lives. The UK already has a strategic advantage in this new frontier, and our upcoming National Artificial Intelligence Strategy, which we will publish later this year, will help us build on our world-class research and innovation base. We will also work to solidify our global leadership in the development of quantum computing and other transformative tech.
7. Championing free and fair digital trade
As an independent nation with a thriving digital economy, the UK will lead the way in a new age of digital trade. We will ensure our trade deals include cutting-edge digital provisions, as we did with Japan, and forge new digital partnerships and investment opportunities across the globe.
8. Leading the global conversation on tech
As technology alters our world, the UK is helping set the new rules of engagement. We will continue to lead global efforts to boost digital competition, strengthening our reputation as a pro-tech, pro-innovation business environment. We will use our international voice and G7 Presidency to shape the global debate on how we govern tech companies; to champion our democratic values; and to coordinate work on telecoms diversification, ethical AI and other global challenges.
9. Levelling up digital prosperity across the UK
As we turbocharge our tech sector, we will ensure long-term digital prosperity is evenly spread across the entire country. Many of our most exciting tech companies are already based outside of London, and we will continue to support these hubs by building on regional innovation, regional strengths and regional specialisms, while enabling businesses in every UK postcode to seize the opportunities of the digital economy.
10. Using digital innovation to reach Net Zero
British-built climate tech and conservation tech can help us address one of the greatest challenges of our time. In the run-up to COP26 in Glasgow, we will support the uptake of technologies that reduce carbon emissions and help us restore our biodiversity, and give British businesses the digital tools to reduce their own emissions as we drive forward a Green Industrial Revolution.We would love to welcome you on board
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