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New research says one in five of job vacancies remain unfilled due to skill shortages

April 03, 2003

In the last decade, unemployment has halved and job vacancies have more than doubled. Now, nearly 15% of establishments have unfilled jobs and 2.7% of jobs are vacant. And according to research by Dr Andy Dickerson from the University of Warwick's Institute For Employment Research , presented to the Royal Economic Society's Annual Conference on Tuesday 8 April, one in five of these vacancies remain unfilled due to skill shortages among the job applicants.

Dr Dickerson's report examines the nature and distribution of job vacancies in order to understand why there are 'workers without jobs' and 'jobs without workers'. His analysis of a large survey of employers reveals that:

* There is now one vacancy available for every two people unemployed and looking for work - 10 years ago, this ratio was nearer to one vacancy for every 10 people unemployed.

* High levels of job turnover make it difficult to predict where vacancies are more likely to be found. At any point in time, two otherwise identical firms can have very different vacancy rates depending on their recent recruitment and resignations.

* Establishment size is obviously an important factor in that larger establishments are more likely to have some jobs available, although as a proportion of their workforce, vacancy rates are lower in larger than in smaller establishments.

* Overall, 20% of public sector establishments have some vacancies compared to 14% in the private sector. But the proportion of jobs unfilled is lower in the public sector (2.2%) than in the private sector (2.8%).

* Certain industries tend to have higher vacancy rates than others. For example, the vacancy rate in the hotels and restaurants sector is more than twice that in manufacturing.

* Even though the labour market is operating at or close to full employment, there are more jobs available where local unemployment is low, and fewer vacancies where local unemployment is high. This indicates that local labour markets are important, and that the matching process between the skills and attributes of the unemployed and those required for the jobs available appears to be operating much as expected.

* The relationship between skill-shortage vacancies and local unemployment is weaker than for other vacancies since these are the jobs for which the unemployed are least likely to be qualified and thus least able to fill. In this sense, there is a skill 'mismatch' between the unemployed and the vacancies available, and an important role for government-sponsored upskilling and retraining initiatives.

* For the majority of job vacancies, the vacancy-unemployment relationship conforms to normal labour turnover. One implication is that differences in vacancy and local unemployment rates are more a consequence of the composition of employment and of the unemployed than any systematic failure of the local labour market to operate and adjust in the expected manner.

Warwick, University of

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