UK's insurance industry must tackle skills shortfall
19 April 2007
Action is needed to close a growing skills gap in the insurance and financial services sector or the UK faces the prospect of reduced international competitiveness, according to a study from the CII (Chartered Insurance Institute).
According to a major survey of the CII's membership, both employers and individuals believe that a 'disconnect' now exists in UK financial services between the skills employers require and those available in the marketplace. This situation, they perceive, has the potential to become more pronounced as the industry's demand for technical skills increases.
The study also highlights concerns about the level of basic skills that school leavers and graduates are equipped with when they start their careers. This is calling into question the UK's education system's ability to produce sufficiently qualified individuals to meet the financial services sector's needs.
Key findings of the CII study were:
71% of financial services employers now perceive a shortage in technical skills. A further 63% believe that the demand for technical skills will increase in the next five years leading to what one employer called 'a disconnect between skills available and skills needed'.
46% of employees believe that people joining the industry today are not as well equipped in terms of appropriate skills as entrants 10 years ago. Just under a third (31%) consider that new entrants are not equipped with basic communication, numeracy and literacy skills with 38% of employers now echoing this view. According to 46% of CII members, the UK's education system is poor at serving the needs of the financial services industry.
Almost half of CII members (47%) perceive the UK to be falling behind other countries in terms of skill levels with 55% warning that the UK will be left behind by 2020 if it fails to address the skills issues.
The study of the views of 659 CII members (103 employers, 556 employees) was conducted in March 2007 by independent research agency FWD. It forms the first stage of the financial services industry's response to the Government-commissioned Leitch Report published last December which examined the UK's long-term skills needs. Lord Leitch's report highlighted the need for increased investment in the UK's skills base if the international competitiveness is to be maintained. Government, employers and individuals must all share the responsibility for achieving the improvements required, argued Lord Leitch.
Commenting on the new study's results, Ian Templeton, President of the CII, said: "What this study shows is the opening up of a gap between the needs of the financial services industry in this country and the skills of the pool of people available to work in it.
"In this era of globalisation, financial services has long been seen as one of the UK's strongest cards. While industries such as manufacturing struggle to compete against cheaper labour and production costs elsewhere in the world, our financial services expertise cannot easily be replicated. But if this survey is right, unless we equip our workforce with the right skills it could lead to the erosion of our world-leading position in financial services.
"Over recent years, the CII itself has reorganised its approach so that we now offer bespoke training and competency solutions to employers. Our qualifications frameworks have been developed to meet today's need for flexible and modular examinations, while the CII Faculties are ensuring that we are fully engaged with the needs of employers. We will continue to develop in these areas and I am confident that this is providing the industry with the resources it needs to raise skill levels."
In terms of the future, 94% of employers agree that technical skills are essential if the UK is to maintain its competitiveness, while 90% believe there is a direct correlation between the level of investment in training and the profitability of a company.
38% of employees believe that the financial services industry itself is not doing enough to encourage employees to obtain professional qualifications. Employees rate developing technical skills and qualifications as the most aspects of skills training although the study shows that employers are placing a higher value on soft skills such as communication.
The CII is the leading professional development and education body in the UK financial services with over 90,000 members in the UK and worldwide.
