Equivalent of 380,000 jobs at risk in UK due to critical digital skills shortage, research says
A significant digital skills shortage is posing a critical threat to the nation’s economic stability and growth.
A significant digital skills shortage is posing a critical threat to the nation’s economic stability and growth.
A significant digital skills shortage is posing a critical threat to the nation’s economic stability and growth, with a potential cost of £27.6 billion to the UK economy by 2030, according to new research.
The government’s big pledge has been to get the economy growing again, after years of stagnation and contraction. But this might be even more challenging to achieve thanks to the crippling shortage of digital skills.
A new research report from the City-Region Economic Development Institute (City-REDI) at the University of Birmingham, has examined digital competencies across all occupational categories and has found that the UK could face economic losses of up to £27.6 billion by 2030 due to unaddressed digital skills shortages, with over 380,000 full-time equivalent (FTE) jobs potentially at risk.
We found that job postings requiring digital skills doubled from 2.4 million in 2012 to 4.9 million in 2022, with nearly 39% of all job postings highlighting the necessity for digital competencies.
The research was conducted by Dr Huanjia Ma, Dr Konstantinos Kollydas, Dr Matthew Lyons, Professor Anne Green at City-REDI.
Dr Huanjia Ma, who led the research, said: “It seems obvious to say now, but the vast majority of jobs these days require a level of digital skills. But the sudden growth has been huge. We found that job postings requiring digital skills doubled from 2.4 million in 2012 to 4.9 million in 2022, with nearly 39% of all job postings highlighting the necessity for digital competencies. And these skills aren’t just email, and word processing, the requirements are becoming more complex, which presents a challenge for regions which don’t have as much investment into bridging the digital skills gap.”
The researchers found that professional AI, machine learning, cloud computing, and interactive content creation are rapidly gaining importance. Specific skills in high demand include Agile methodology, Python, Microsoft Azure, and Amazon Web Services.
Our report outlines that digital skills shortages could’ve cost the UK £4.4 billion last year alone and could escalate to £27.6 billion by 2030. Professional and associate professional roles face the most severe constraints, with over 69,000 and 60,000 FTE job losses projected by 2030.
Professional occupations require the highest levels of advanced skills, but skilled trades and plant operators have also been experiencing consistent growth in digital skill demand. Lower-tech sectors like manufacturing and wholesale industries could face economic losses of up to £14 billion by 2030 due to shortages.
Dr Matthew Lyons, who also worked on the report, added: “The cost of this digital skills gap could prove to be a critical wound for a government pledging growth. Our report outlines that digital skills shortages could’ve cost the UK £4.4 billion last year alone and could escalate to £27.6 billion by 2030. Professional and associate professional roles face the most severe constraints, with over 69,000 and 60,000 FTE job losses projected by 2030.”
The report details that London and the South East lead in demand for digital skills, while regions like the North East lag in advanced skill requirements. Scotland, the North West, and the West Midlands show growing demand for intermediate and advanced digital skills.
London and the Greater South East are projected to bear the highest economic costs of the digital skills gap because that is where the most demand is. But regions like the North West and Yorkshire & the Humber will also face significant challenges relative to their economic size if the issue is not addressed.
The government cannot afford not to act on this issue if they are serious about delivering a growing economy.
The researchers conclude that there is an urgent need for a coordinated national strategy to close the digital skills gap and mitigate regional inequalities. This plan should include increased investment in digital education and training programs, targeted support for regions and sectors disproportionately impacted by shortages, and collaboration between government, businesses, and educational institutions to foster a future-ready workforce.
Dr Ma concluded: “The government cannot afford not to act on this issue if they are serious about delivering a growing economy. Technology is changing and developing at an increasingly fast pace and the requirements for workers will only get more complex. A serious and robust plan needs to be developed, and action taken now.”