In the News

What are the causes and effects of the UK's digital tech talent shortages?

Geoff Riley

15th July 2022

The news that the UK has a tech talent shortage isn't a surprise - however, students should immediately be able to see the implications of this for the macroeconomy.

If you think that success in the tech sector is vital to future economic growth, then you might expect that the UK is going to expand more slowly than its trading partners, as well as having adverse implications for other macroeconomic objectives. Additionally, you might think about this in terms of AD-AS analysis too.

The digital skills gap has reached alarming proportions according to a source quoted in the report.

"A sizeable chunk of the British workforce is nowhere near skilled enough to apply for positions like those, according to industry coalition FutureDotNow. It says that some 11.8 million workers lack basic digital skills - let alone more complex ones."

Despite well-paid jobs - the average tech salary is £62,000, which is more than double the average household income in the UK - there is not enough talent to fill vacancies

Supply-side weaknesses in the UK labour market ultimately hold back productivity growth and can also hold back businesses that might become leading exporters in the future.

The article has resonance for the performance of the economy as a whole, but you might also like to think about the regional economic implications. Investing in digital skills in areas of below-average economic performance will be critical as part of the levelling-up agenda.

Of course, before Brexit, the free movement of skilled labour across the EU single market might have helped address shortages of digital technology talent.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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