Skills Shortages and Demographic Challenges Threaten Scotland’s Economic Future – Scottish Business News

A new report has revealed how significant challenges, including skills shortages and an aging population, pose a risk to Scotland’s economy.

The Skills for Today and Tomorrow thought leadership report conducted by the Fraser of Allander Institute (FAI) on behalf of international law firm CMS, looks at the current skills landscape as well as demographic and technological challenges facing Scotland analysing key labour market trends.

It highlights a marked increase in job vacancies and a growing mismatch between the skills available and those demanded by employers. It references one in four Scottish employers reporting vacancies with nearly a third of these (31%) classified as skill-shortage vacancies, a sharp rise from 2020. Skilled trades, associate professionals, and professionals claimed to be the most affected areas, with shortages in technical, analytical, and digital skills reported as most prominent.

The report also focuses on education and training, citing a lack of alignment between the skills taught and those required by rapidly evolving industries such as technology and renewable energy. As well as a lack in technical training, it raises concerns about deficiencies in soft skills such as adaptability, creativity, and communication within the current education system.

With the number of over-65’s in Scotland expected to rise by a third over the next two decades, Skills for Today and Tomorrow also highlights how an aging workforce is presenting a significant economic challenge. It refers to key sectors such as construction, health care, and transport which are under threat from workers retiring and highlights an urgent need for workforce planning to mitigate impending staff shortages.

The impact of migration and immigration policy on the labour market is also explored, with a focus on how post-Brexit immigration restrictions are making it increasingly difficult for employers to fill critical roles, especially within key sectors such as food and drink and tourism.

The Skills for Today and Tomorrow report was launched today at CMS’s annual On Point business conference held at Edinburgh’s EICC. Commenting on the report’s findings, CMS Scotland’s Managing Director, Allan Wernham, said: “We’re delighted to jointly launch this report with our partners at the Fraser of Allander Institute.

“It underscores the importance of creating a more agile and responsive skills system. Collaboration between government, industry, and educational institutions will be crucial in addressing current and future skill shortages, ensuring that Scotland’s workforce is equipped to meet the challenges of today while seizing the opportunities of tomorrow.”

Professor Mairi Spowage, Director of the Fraser of Allander Institute, said: ”As well as highlighting key economic challenges, this analytical report explores how Scotland can leverage its world-class education system, burgeoning tech hubs, and leadership in renewable energy to ensure its workforce can meet the challenges of today and seize the opportunities of tomorrow.”

The full Skills for Today and Tomorrow report is available here