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Skills shortage is getting worse, bosses warn

Employers fear they will be unable recruit students with the skills they need as the economic recovery kicks in, a new survey reveals.

Nearly half of organisations told researchers they were already struggling to find staff with skills in science, technology, engineering and maths (Stem), while even more companies expect to experience shortages of employees with Stem skills in the next three years.

The Confederation of British Industry and the vocational qualifications body EDI surveyed 694 organisations across the public and private sectors, which together employ 2.4 million people.

Half are concerned they will not be able to fill graduate posts in the coming years, while a third said they would not be able to recruit enough employees with the right A-level skills.

"As we move further into recovery and businesses plan for growth, the demand for people with high-quality skills and qualifications will intensify," said Richard Lambert, director general, CBI.

"In the future, people with qualifications in science and maths will be particularly sought after, and firms say it is already hard to find people with the right technical or engineering skills. The new government must make encouraging more young people to study science-related subjects a top priority."

Two-thirds of respondents want the new government to do more to promote science and maths in schools, half said funding for Stem subjects in higher education should be protected, and 42% want capable pupils to study all three science subjects as separate GCSEs.

Asked what their top prioritywas, the majority of respondents said they wanted the government to ensure all young people leave university and school with the skills they need to succeed at work.

Two thirds said the government should focus on basic literacy and numeracy, 42% wanted more high quality vocational options for students and 46% said raising overall education standards should be a priority.

The survey found that young people would improve their job prospects if they studied business studies, maths, English and physics or chemistry at A-level. The A-levels that employers rate least are psychology and sociology. And while many employers don't insist on a particular degree subject, a third prefer to hire those with a Stem-related subject.

Starting salaries for science and engineering graduates are among the highest, with only graduate managers and lawyers earning more in their first job. New engineering graduates earn on average £22,000 and new science graduates £21,000 – more than those entering finance, IT, sales or human resources. Graduate employement organisations said salaries needed to be higher still.

"We need to make the careers that require Stem backgrounds much more attractive," said Mike Hill, chief executive of Graduate Prospects. "How can engineering firms compete against the salaries on offer at law and city firms?"

The research highlighted worries about the lack of progress in improving basic skills in the UK workforce. Half of employers expressed worries about employees' basic literacy and numeracy skills, while the biggest problem is with IT skills, where two-thirds reported concerns.

Despite the downturn, 72% of employers plan to maintain or increase spending on training and only 28% plan to cut training budgets. In the past year, 18% of organisations have provided remedial literacy and numeracy training for school-leavers, and 22% remedial IT.