Mind the gap: low pay to blame for STEM skills shortage

Low pay should take the blame for the STEM skills gap rather than inadequate training, new research suggests

Low pay should take the blame for the STEM skills gap rather than inadequate training, new research from the University of Warwick suggests.

A briefing paper conducted by Dr Thijs van Rens suggests that the lack of ‘soft skills’ and accomplished workers in the fields of Science, Technology, Engineering and Maths (STEM) is not due to the education system, but employers unwilling to offer higher wages to proficient candidates.

The Associate Professor in the Department of Economics told BusinessDesk.com: It is often taken for granted that the skills gap and skills mismatch is a supply problem and appropriate training is not available to workers. However, US data shows that market wages do not reflect the relative demand for different types of skills.

‘Businesses complain about the lack of workers with STEM skills, but are unwilling to raise wages for these workers or reduce wages for workers with skills that are less in demand.”

The policy briefing paper was discussed at an event in London by the Social Market Foundation, which examined how employers, policy-makers and educators can help to reduce the skills gap.

Concerns are growing about the skills gap in STEM; however, the focus is increasing on ‘soft skills’ such as problem-solving, team-working and communication.

Dr van Rens set out his analysis, which showed that the source of the market mismatch is that wages do not reflect the relative demand for different types of skills and that the position is often taken for granted. It was also highlighted that the skills gap being a supply-based problem is incorrect.

Dr van Rens’ research looked at job-finding rates, earnings and profits across states, industries and occupations to measure the skills mismatch (or gap on the US labour market) and the underlying factors that gave rise to it.

He suggests that the market can adjust either by the workforce adapting to the skills demand, such as acquiring training or changing occupation, or firms adapting to the skills supply.

For this to happen, however, wages must reflect the relative supply and demand for various skills.

Dr van Rens sets out three reasons why skills mismatches exist: wages do not adjust to changes in skills demand; firms do not adjust to changes in skill supply; and wages do not reflect skills shortages.

He also suggests that reform of the education system is not an answer to the perceived lack of appropriately-skilled workers. He adds that as long as wages do not reward skills, workers will be less likely to acquire them – and even if they do, they will find employment in higher-paid occupations that don’t utilise their skills.

He said: “While firms complain about a shortage of qualified physicists and engineers on the labour market, a very large number of graduates in these fields work in the financial sector, where they only use their STEM skills to a very limited degree.

‘Encouraging universities to educate more physicists and engineers will not make any difference if these additional STEM graduates look for jobs in investment banks.”

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