How the cost-of-living crisis has made it harder to bridge the digital skills gap

digital skills gap cost of living

This year has taken its toll on consumers and businesses alike, with both struggling amidst the financial pressures of the cost-of-living crisis.

As inflation has topped 11%, wage inflation is making the challenge of attracting and retaining staff that much harder for employers. Regular pay rose by 5.7% in the year to September 2022 – while this means salaries are not keeping up with rising prices, it nevertheless poses difficult questions for businesses on tight budgets.

Where the digital skills gap is concerned, these wider macroeconomic trends are worrying. Amid a talent shortage, filling digital roles will be challenging for employers unable to match increasing salary demands. Meanwhile, crucially, for people looking to improve their digital skills, the cost-of-living crisis risks creating more pronounced barriers – more on that below.

It is a rather bleak picture for employees, businesses and, more generally, the UK economy. Indeed, research has revealed that a shortage of digital skills is costing the UK economy £12.8bn

Just as the UK enters recession, we can ill-afford such losses. As more products and services digitalise, growth prospects are becoming dependent on a sufficiently trained, tech-competent workforce.

The tech industry has witnessed immense growth in recent years, yet the pace of innovation is outweighing the available talent needed to wield such technology. More than four in five (81%) UK managing directors say a lack of digital skills is negatively affecting their company. Unsurprisingly, employee retention has become a top priority for businesses, with many hiking prices in order to fund additional support for staff that falls in line with rising inflation.

That said, as noted above, it would be wrong to see the skills shortage purely in economic terms. This is a human issue, and the cost-of-living crisis has exacerbated it, particularly by highlighting digital inclusivity and training, which is harder to come by within less-affluent communities.

More barriers in disadvantaged communities

The problem of digital exclusion, which has been rising since before the pandemic, is only likely to worsen under economic turmoil.

Digital exclusion broadly refers to unequal access to information and communication technologies (ICT), where disadvantaged and marginalised communities are more likely to suffer from access to digital opportunities

According to the Good Things Foundation, two million households struggle to afford internet access in the UK today. This number is likely to rise if households make more financial concessions to keep up with escalating bills as the cost-of-living crisis deepens. Likewise, tightened finances will mean many cannot afford devices, such as a laptop, necessary for self-learning.

When we consider how crucial online connectivity is to learn and acquire new skills for the workplace, and generally going about our everyday lives, it becomes clear where skills shortages can begin to appear – among children and adults.

Digital exclusion has a particularly detrimental effect on the career or salary ambitions of many and further increases inequality. Recent research found that 31% of UK workers believe they were passed over for a promotion or pay rise due to their lack of digital skills, meaning individuals hoping to find a higher-paying salary to support themselves during the cost-of-living crisis will be unable to do so.

Overcoming the challenges of skills shortages should not end with economic growth – making sure no one is left behind is vital.

Digital skills providers offer a lifeline

More must be done to ensure a wider pool of people – regardless of their backgrounds – can access digital skills training. Yet we cannot look to employers alone; with budgets tightening, businesses’ ability to fund additional training for new and existing employees will be limited.

Digital skills bootcamps have a vital role to play.

The West Midlands Combined Authority (WMCA) recently secured a further £11.25m from the government’s National Skills Fund to expand bootcamp delivery in key sectors of our regional economy – digital, health and green. This means that, to date, more than £19m been invested in WMCA’s digital bootcamps.

The bootcamps are free of charge for learners and equip West Midlands residents with digital skills, giving them to access roles in areas like coding, cybersecurity and digital marketing.

They support the unemployed, those seeking a career change, as well as employed people looking to gain the digital skills required to secure more responsibility or a promotion with their current employer.

Bootcamps have been successfully delivered within the West Midlands region since 2019, with over 1,000 residents (70% of participants) achieving a positive outcome after receiving training. This includes 50% participants from Black, Asian and minority ethnic backgrounds.

Equally, employer engagement is crucial to the success of the bootcamps, and in turn, bridging the skills gap. Employers can establish their own bootcamps, where they help to design the training to give them precisely the digital skills and experiences they need. This means that employers can recruit directly through them – getting the people and skills that they need.

Disadvantaged and marginalised groups are being disproportionately impacted by the cost-of-living crisis, and therefore are acutely feeling the effects of the digital skills gap due to its close connection with socioeconomic factors. Digital skills bootcamps will play a significant role in remedying this by providing vital training and career opportunities to people that cannot otherwise acquire them through other means.

I would encourage all employers and those seeking new skills to search for digital skills bootcamps in their area. They have a significant role to play in facilitating digital skills training, while also creating career pathways and filling digital vacancies that exist across the UK – 2023 will be a key year to champion these courses.

In partnership with the West Midlands Combined Authority (WMCA).

Dr Julie Nugent is the executive director – economic delivery, skills and communities at West Midlands Combined Authority. Established in 2016, WMCA is a group of 18 local councils and three local enterprise partnerships (LEPs) working together to make the West Midlands region a better place to live and work.

The West Midlands Digital Skills Partnership brings together the region’s leading tech employers, digital entrepreneurs, Local Enterprise Partnerships, the Department of Culture Media and Sport, as well as universities, colleges and other training providers. Their aim is to identify what digital skills provision is needed across the West Midlands and encourage partners to work together to address these and emerging needs, and to attract and retain investment and talent in the region.