This article first appeared in Evening Standard on 19 November 2014.
London is thirsty for talent. It is an urgent truth that threatens its position as the world’s business superpower. Right now, it’s all capital gains.
The city is home to 17 of the nation’s top 20 start-up destinations; it created private-sector jobs 10 times faster than the rest of the country between 2010 and 2012, and received of a third of all foreign direct investment to the UK in 2012-13.
But in its quest for growth, just like any business, London is finding that success comes at a price.
The velocity of corporate expansion and demand is threatening the stability of the supply of skilled people. The talent tank is running low and the threat is of a sustained skills drought that could fast become an employment desert. The consequences of such radical, commercial climate change could be dire.
In September, the CBI surveyed London businesses, 66% of whom said they had difficulty recruiting highly skilled employees. Almost half (45%) of the same group agreed that the capital is suffering from a skills shortage. The CBI also found that 59% of its sample was positive about the economy, and 62% want to increase their headcount in the next six months.
The optimism and ambition have seen London surge into a growth phase that is the envy of cities around the world. Yet that ambition is also beginning to provide the first real post-recession stress test for the capital.
We are not nurturing or importing skilled people at the rate business requires them. When the Prince’s Trust surveyed 600 businesses in August, 73% said they expect a skills crisis to harm growth prospects in the next three years. The rapid growth of companies and the corresponding rise in employment has acted as a sponge for pent-up talent supply.
And yet, despite the resulting shortage, we face a competing issue that stands in stark contradiction, namely youth unemployment.
It’s an unhappy paradox. The demand of business for young and talented employees has never been more acute, yet youth unemployment remains a black spot on a fast-improving jobs market.
That is particularly true in London, where unemployment for 18- to 24-year-olds is 2.64 times as high as for the workforce as a whole and worse than any UK region except Northern Ireland, according to a Work Foundation report published in April.
Yet, according to Spanish telecoms giant Telefonica, the untapped digital capabilities of the UK’s young unemployed population could be worth as much as £6.7 billion to the economy.
How can this be addressed? It is well acknowledged that there is a long-term need to bring the education system more in tune with the needs of business. That process must start moving at the speed of light if it is to make a difference. Business requires the next generation of talent to be workplace-ready and able to fulfil the highly skilled positions upon which our digital economy depends.
Increasingly, this means the demand is for skills that are acquired through the study of maths and science. A study recently released by Nestlé suggested that 58% of new jobs in the UK will be related to science, technology, engineering or maths, and that 72% of British businesses rely on workers with these skills.
Nestlé is one of a group of major UK employers supporting a new Government-backed campaign to encourage young people to study maths and science subjects after GCSE.
Their research suggests that chemistry and physics A-level students earn an average of 30% more over the course of their careers than their peers. The message to the next generation from business could not be clearer: maths and science subjects provide the pathway to a successful career.
This all matters because the continued growth of the London economy, and the companies that are powering it, cannot not be taken for granted. London’s success is not a given and the journey to recovery has been hard fought. A sense of urgency needs to prevail.
There are other pressing issues — such as the approach to immigration — in this mix, but the shortage of home-grown talent is the iceberg beneath the surface.
Reversing this trend requires the collective campaigning clout of the capital’s business community.
From apprenticeships to entry-level and beyond, business has a pivotal role to play in securing its own, long-term prosperity and ensuring that the potential of a generation is not left to wilt on the vine.
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