Kevin Engel: Tackle skills gap to help growth

Youth unemployment remains a serious issue. Picture: Ian Georgeson

A potentially damaging set of trends is emerging in Scotland’s labour market. Firstly, productivity is low, and has been historically below UK averages – so when the UK’s productivity is suffering, as it is today, Scotland’s suffers too. In fact, a report last year by Durham University Business School suggested that our private sector has been 11 per cent less productive than the rest of the UK since the 1990s.

Secondly, the skills gap isn’t going away: a larger proportion of employers face skills gaps in Scotland than anywhere else in the UK – according to UK Commission for Employment and Skills, this is around one in five Scottish businesses.

Finally, youth unemployment remains a serious issue. Granted, the most recent figures showed youth unemployment falling to reach its lowest level since the second quarter of 2008, but it is still at 14 per cent.

These three component parts paint a dim picture of our commercial landscape and raise questions about whether long-term growth is sustainable, or even desirable in its current form.

While business confidence is rising, in some quarters concerns are being raised about the emergence of a two-tier labour market.

You may recognise this within your organisation: can you identify two groups, one much smaller than the other? The smaller of the two seems to matter a lot to senior management while the larger is fast becoming a disposable workforce, which doesn’t seem to matter much at all?

This may seem to be simplifying matters but the divergence between “top talent” and “the rest” has at least in part been caused by the trends I have already mentioned. The pressure on management to find and retain talented people is compounded by poor commercial performance and a struggling business environment. More time and effort is put into rewarding those perceived to be making the biggest difference.

It is also easy to blame circumstances and focus on powers beyond our control. The harder questions are found under the bonnet of business – to what extent are these factors actually within our gift to influence?

This is why we decided to sign the Scottish Business Pledge. Despite the criticism, its aims are ones I believe in – that growth is best achieved in a sustainable way. Sustainable growth has to be fair and equal, and provide opportunity for all. It is the right time to evaluate whether Scottish business can deliver sustainable growth. Scotland needn’t lag behind UK averages on productivity forever. We can solve the skills gap – but let’s do it in a sustainable way.

Two years ago, we became the first professional services firm to remove academic entry requirements for both our school leaver and graduate trainee schemes.

Since the approach was altered, we have seen a number of measurable changes in the diversity and background of our intake – and this has in turn created a better company to work for, and, I believe, a better company to work with.

Last year, 12 per cent of our UK graduate intake comprised people who wouldn’t have met the old criteria. This year, the figure will probably hit 20 per cent.

Extrapolate that throughout our industry and that’s a startling number of people who had been denied the opportunity to work in professional services. To diversify the sector and challenge the status quo.

Those who joined last year have comparable performance in professional exams as the wider intake – we are no worse off, and nor are our clients.

Relaxing our academic requirements has also led to an increase in applicants from state schools, and poorly performing schools as measured by Ofsted. While still looking at academics, the process takes in to account aspects such as leadership potential, cultural fit, initiative, work experience and impact made on others.

The question is: does diversity improve business performance? So far, so good for us – we are growing in Scotland and we are investing in a sustainable plan for growth. And I am firmly committed to preventing a two-tier system that rewards the few and ignores the many.

Scotland’s private sector should embrace these principles. While zero-hours contracts have their place, no worker should be left feeling under appreciated. Running a business is a team effort and every part of the team needs to function in order to succeed – at least it does in a sustainable, long-term plan for growth.

• Kevin Engel, managing partner Scotland, Grant Thornton