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The STEM shortage paradox

16 Oct 2014 Margaret Harris
Taken from the October 2014 issue of Physics World

The UK is believed to suffer from a shortage of scientists and engineers, yet unemployment rates for new graduates in these fields are high. Does that mean the skills shortage doesn’t exist, asks Margaret Harris

Is there really a shortage of STEM graduates?

It is a truth almost universally acknowledged that businesses in the UK are facing major skills shortages in science, technology, engineering and maths. In March the Daily Telegraph newspaper reported that the country’s manufacturing industry is being “starved of highly-skilled workers” in these so-called STEM disciplines. Later that month, the Financial Times picked up the theme, repeating the UK business secretary Vince Cable’s claim that the shortage of technology workers is “a massively serious problem” that could harm the country’s economic recovery. In May it was the Independent’s turn to call scientific subjects “vital for the economy”. And in June the BBC joined in, reporting on its website that technology firms are finding “too few graduates with digital skills…for the jobs available”.

Reports like these – all of which were based on studies by respected organizations – usually focus on areas that are big employers of physics graduates. The engineering, IT and scientific sectors, for example, collectively attract around a third of physics graduates who enter the workforce within six months of completing their degrees. From the tenor of reports on the STEM skills shortage, then, it seems like employers ought to be falling over themselves to employ people with a physicist’s numerical and technical nous.

Absence of evidence

Unfortunately, the economic data tell a more complex story, one that calls into question the nature of the UK’s STEM skills shortage, and perhaps even its existence. Although there is no universally agreed definition of what constitutes a skills shortage, in 2005 the economists Chandravadan Shah and Gerald Burke articulated a useful rule of thumb, writing that a shortage exists when “the demand for workers for a particular occupation is greater than the supply of workers who are qualified, available and willing to work under existing market conditions”. So if a shortage does exist, economists generally expect to see low and falling unemployment, high and rising wages, and a large number of unfilled posts as employers compete (and struggle) to attract workers with scarce and desirable skills.

On these three measures, the evidence for a broad, UK-wide STEM skills shortage is patchy. Take unemployment. Overall, prospects for UK graduates are good: according to the UK Higher Education Statistics Agency (HESA), which surveys thousands of graduates each year, only 8% of students who obtained their undergraduate degrees in the 2012/2013 academic year were unemployed six months after graduation. For recent graduates in the physical sciences, however, the picture is not quite so rosy: their unemployment rate was a shade higher than the average, at 9%, and graduates in the mathematical sciences, engineering and technology fared no better. Computer science graduates actually had the highest unemployment rate of any degree listed in the HESA survey: fully 13% of the 2012/13 cohort said they were still seeking work six months after graduation.

On salaries, the news for physics graduates and their STEM cousins is better, but only in a relative sense. After analysing HESA data, the Complete University Guide (a consultancy firm) found that starting salaries for graduates in nearly all subjects fell during the recent economic recession. Physics graduates were no exception: between 2007 and 2012, their average starting salaries fell by 6%. Mechanical engineers did a little bit better, down by 5%, but chemists were worse off, with a drop of 9%. These figures exclude the sizeable fraction of STEM graduates who enter occupations that do not require degrees, so the true overall decline is likely to be higher. They are also not adjusted for inflation, meaning that salaries have fallen even further in real terms. However, as bad as these figures are, they are generally better than comparable data for non-scientific fields: graduates with English degrees saw their starting salaries fall by 16%.

Finally, there is the question of job openings. Data on vacancy rates can be tricky to interpret (see “Hard to fill, but not always a shortage” below). Nonetheless, in November 2013 the UK Commission on Employment and Skills (UKCES) published a detailed analysis entitled The Supply and Demand for High-Level STEM Skills that included estimates of skill-shortage vacancies in STEM and non-STEM jobs. The report’s authors found that the available data “do not suggest a higher vacancy rate” for jobs that require workers with STEM skills. What is more, the authors found that this was unlikely to change much in the future: even under fairly optimistic economic scenarios, their model predicts an overall surplus of STEM graduates in 2020, not a shortage.

The idea that would not die

Some scholars have taken data like these as evidence that the STEM skills shortage is simply a myth. In March the economics Nobel laureate (and New York Times columnist) Paul Krugman called skills shortages a “zombie idea – an idea that should have been killed off by the evidence, but refuses to die”. The reason it doesn’t, Krugman suggested, is that “everyone important knows [it] must be true, because everyone they know says it’s true”. The American demographer and labour-market scholar Michael Teitelbaum takes a similar stance, arguing in his recent book Falling Behind? Boom, Bust and the Global Race for Scientific Talent that the US is not experiencing a shortage of scientists or engineers (August pp38–39). Conventional wisdom to the contrary is, he writes, “just the same claims ricocheting in an echo chamber”.

On the other side of the Atlantic, the debate about skills shortages also has a certain echo-chamber quality. In 2012, for example, the Royal Academy of Engineering (RAEng) predicted that the UK economy will require 830,000 additional scientists, engineers and technologists by 2020. At current graduation rates, the RAEng report noted, this equates to a shortfall of about 10,000 STEM graduates per year. Since then, similar figures have cropped up elsewhere. In 2013, for example, the government’s Department for Business and Skills (BIS) cited the RAEng data in its report on “The future of manufacturing”, but claimed that the manufacturing sector alone would need around 800,000 more skilled employees by 2020, including 80,000 managers and other professionals. In April 2014 a report by the manufacturers’ organization, EEF, gave the BIS figure an upgrade, turning “around 800,000” into “almost one million”. And in July this year, the chief executive of the Institution of Engineering and Technology (IET), Nigel Fine, went even further, claiming that “we need to find 87,000 new engineers each year for the next decade”. Based on today’s student numbers, this figure implies that nearly 30% of university students ought to be earning engineering degrees – more than five times the current fraction.

The echo-chamber effect tends to distort claims about skills shortages as well as amplifying them. One source of distortion is that definitions of “STEM” vary, with some groups limiting it to graduates in STEM disciplines while others expand it to anyone who uses scientific or technical skills at work – including plumbers and auto mechanics as well as skilled manufacturing technicians and apprentices. Naturally, the magnitude of predicted shortages depends on which definition is being used. “STEM is a very broad church,” agrees John Perkins, the chief scientific adviser to the BIS and the author of a separate 2013 review of engineering skills. “If you look at different parts of the spectrum, you come to different conclusions about whether there is a shortage, or indeed whether there are too many graduates emerging with those particular skills for employment purposes.”

Saying that the UK’s STEM skills shortage isn’t uniform is not, however, the same as dismissing it as a “zombie idea”. While Perkins acknowledges that the higher-than-average unemployment rate for STEM graduates is a “counterfactual” that merits further study, he is adamant that the shortage is real, and that data on unemployment, salaries and vacancies are not telling the whole story. Surveys of STEM employers tend to support his view. For example, the IET’s “87,000 more engineers per year” figure comes from a press release announcing their own survey of 400 IT and engineering employers in the UK. Around a fifth of these employers said they were having problems in recruiting engineering graduates. A separate survey of 160 employers conducted by the EEF found evidence of rising demand for graduates in technology and computer sciences as well as engineering, with more companies planning to recruit in the next three years than have done in the previous three. Even the UKCES report, which found no evidence for a shortage of STEM graduates per se, admitted that “there appears to be a shortage of the right candidates to fill specific roles”.

The leaky pipeline

The contrast between employer perceptions and economic data suggests that something more complex than either a zombie attack or an echo chamber is at work. One important complication is that the fraction of STEM degree holders who take jobs in STEM fields is actually rather small. In 2011, for example, data from the UK Labour Force Survey cited in the UKCES report indicated that only 45% of all people with “core STEM” degrees were working in sectors that required scientific and technical knowledge (as opposed to general numeracy and problem-solving skills). As for recent graduates, HESA figures show that among students who earned degrees in engineering, physical, biological, mathematical or computer sciences in 2012/13, only about 12% of those entering the workforce found jobs that involved “professional, scientific and technical activities” within six months of graduation, while fewer than 10% went into manufacturing. By comparison, 14% are working in retail. And while those figures leave out graduates who did higher degrees before seeking work, the pull of non-science careers remains strong even at the PhD level: a 2010 report by the Royal Society found that more than half of the UK’s PhD scientists pursue careers outside science.

The fact that relatively few STEM graduates go into STEM jobs is something of a double-edged sword for proponents of the shortage theory. On the one hand, it could explain why employers are struggling to find people with the right skills even though the number of people studying for STEM degrees in the UK has been rising in recent years – up 18% since 2002, according to figures published this year by the Higher Education Funding Council. But on the other hand, it could also indicate that shortages, where they exist, are not severe enough for employers to offer salaries and benefits that would tempt STEM graduates away from alternative careers. The fact that many STEM graduates do something else might even be a sign of an oversupply – for example, graduates might be turning to other fields after struggling to find jobs related to their degrees. Lack of interest does not seem to be a factor: a survey of final-year STEM students conducted by the BIS in 2011 found that seven out of eight wanted to work in related fields after they graduated. So what is keeping them out?

In Perkins’ view, part of the problem is that STEM employers “aren’t being as cunning as they might be” at attracting graduates. At careers fairs, he says, students say that representatives of banks and accounting firms are “all over you like a rash, trying to convince you to come into their world” whereas more traditional STEM employers are “shy and retiring and not as effective at persuading you that life could be exciting with them, too”. Many smaller firms avoid careers fairs altogether, and they are also less likely to advertise on “one stop shop” websites for graduate jobs, says Kirsten Roche, a careers consultant at the University of Edinburgh who advises physics and mathematics students. But the problem is not only on the employers’ side. “Sometimes there can be issues around what students want and what’s realistically available,” Roche says, noting that while geology students often want to work in renewable energy, a significant number of graduate geoscience jobs are in the oil and gas industry.

Not everyone, however, is convinced that the leaky pipeline is responsible for the “STEM shortage paradox” of relatively high graduate unemployment at a time when industry is crying out for more people with technical skills. Tom McLeish, a physicist and pro-vice-chancellor for research at Durham University, points out that it has always been common for physics graduates to leave STEM, and “there would need to have been a change in that flow” for it to explain the current situation. The tendency for graduates to leave STEM has actually become somewhat more pronounced over the past decade or so, but McLeish, who is also the vice-president for science and innovation at the Institute of Physics (IOP), which publishes Physics World, isn’t sure that’s a bad thing. The fact that STEM degrees open doors in many occupations is, he says, “one of the ways we advertise STEM to potential students. We say, look, it’ll leave you numerate, it’ll leave you articulate, it’ll give you group working skills and interdisciplinary skills and an ability to solve problems.” STEM graduates going into other fields, he argues, “cannot be both a bad thing and a good thing at the same time”.

Mind the gaps

Another possible explanation for the STEM shortage paradox is that universities are not giving students the skills they need. This explanation is popular among employers and it appears prominently in a recent report by the New Economics Foundation (NEF), a London-based innovation charity. In the report, NEF chief executive Sa’ad Medhat notes that “there is a profound disconnect between what STEM-based companies require in terms of skills; the technological changes that they see on the horizon and what many further and higher education institutions currently provide”. For some employers, it is “soft skills” such as communication and problem solving that are lacking. One software entrepreneur quoted in the NEF report, for example, complains that “students are too frequently ‘spoon-fed’ with information and are unable to break down problems into manageable chunks and solve them on their own”. Other employers focus on gaps in technical skills. Jo Lopes, the head of technical excellence at Jaguar Land Rover, told the NEF that she sees a growing demand for employees who can work with virtual reality software to create prototypes, something that requires “a strong grounding in maths and physics along with data modelling and analytical skills”.

For universities, comments like these are a challenge, and some are working with industry representatives to adapt their courses accordingly. Kate Lancaster, a physicist and industry liaison officer at the York Plasma Institute, says that York and Sheffield universities are setting up a new industrial physics academy to address both the “leaky pipeline” and employer concerns about specific skills, such as computer programming. While undergraduates in theoretical physics are usually required to take a programming module, for experimentalists it is frequently treated as an optional “extra”. That is a problem, Lancaster says, because “unless it’s credited and part of your course, students won’t really engage with it.”

McLeish agrees that universities can and often should do more to equip graduates with industrially relevant skills. While developing plans for a new doctoral training centre in soft-matter physics, he and his collaborators at the universities of Leeds and Edinburgh asked employers to list the attributes they’d like to see in the centre’s graduates (see box opposite). Communication skills were seen as the most important. “Employers want graduates who can walk into a boardroom one day and explain the science to executives, and then go straight away to the production plant and explain to an experienced technician why they need to change the cherished settings on the equipment,” McLeish says.

If you think that sounds like a lot to expect of a brand-new PhD graduate (never mind someone with a BSc or MSc), McLeish is sympathetic. “Some employers want the Archangel Gabriel on a good day,” he agrees. Small businesses can be particularly demanding, adds Steve Wood, project manager of Graduate to Merseyside, a careers programme based at the University of Liverpool. “A lot more is expected of individuals, particularly in terms of flexibility and general work experience,” Wood explains. Sometimes those high expectations are fair, he says, but “we do see some organizations that think, ‘Oh, we’re going to bring in a graduate and pay them 16 grand a year and they’re going to turn us around’. They’re the ones that generally we can’t help”.

When applicants do fall short of requirements, employers are increasingly reluctant to train them up to a higher level. In the UK as a whole, UKCES figures show that investment in employer-provided training fell by 17% between 2011 and 2013. In essence, McLeish argues, employers are asking universities to provide skills that companies used to take care of themselves.

For Perkins, the BIS science adviser, there is a drawback to asking universities to fill that gap on their own. A university education is, he says, just that – an education – and it cannot possibly meet the needs of every graduate employer. “There’s a responsibility of employers to enhance the skills of people they take on and train them in the specifics of their particular organizations,” he says. “It’s always going to be the case that graduates are not fit for particular employers immediately on day one. That’s just a fact of life.” Perkins also downplays the idea that ill-prepared graduates are a major contributor to the STEM shortage paradox. Criticisms of employee preparedness have been “a constant observation by some employers ever since I was a lad”, he says, and universities are getting better at providing training in soft skills.

Data from a much wider survey of employers tend to support the view that in terms of preparation, the kids are, in general, alright. A 2013 UKCES report on skills found that in England, 84% of the 17,770 employers who had taken on graduates in the past year regarded their recruits as “well” or “very well” prepared for their roles. Employers in Wales, Scotland and Northern Ireland reported similar levels of satisfaction, and throughout the UK, only 5% said that graduates lacked “required skills or competencies”. Poor literacy or numeracy skills were cited by just 1%.

The wrong kind of STEM

For physics students, the STEM shortage paradox is personal in a way that raw numbers cannot capture. Earlier this year, the IOP asked current physics undergraduates to answer questions about their future employment plans, including the companies and sectors that interest them. More than 300 students responded and the full results of the survey are still being analysed. A section for “free-form” responses, however, yielded some illuminating comments about challenges that physics students are facing in the current job market.

One common concern was that many of the jobs on offer are not suitable for new graduates. “The roles [I see on websites] look far more advanced than the level that I feel I will be when finishing university, which makes them seem unappealing,” one student wrote. Another student expressed frustration at being misled by claims of skills shortages. “When we go into physics, we are told that there are loads of jobs that want our skills,” they wrote. “We are not told that these will probably require a postgraduate qualification.”

The IET’s survey of employers provides some backing for the impression that senior vacancies are indeed more common than graduate-level ones. While almost 80% of employers surveyed said they had struggled to recruit senior engineers, only around 40% had experienced difficulties finding new graduates. However, HESA data suggest that if higher-level shortages exist on more than an anecdotal level, they take some time to materialize. In June 2014 the agency reported that unemployment rates among those who had graduated in 2008/9 had fallen to 3.4% by the winter of 2012/13, well below the UK’s overall rate of around 7%. But while physical science graduates were doing a little bit better than average, with 3.1% reporting that they were unemployed, computer scientists and engineers had some of the highest unemployment rates in the study, with 5.4% and 5%, respectively, seeking work at the time of the survey.

Levels of unemployment in other STEM disciplines might surprise some of the physics students in the IOP survey, several of whom seemed envious of their counterparts in other fields. “Most graduate schemes have few details on how they apply to physicists specifically, with many seeming to focus on engineering and materials,” one wrote. “It isn’t always clear what roles a physicist could adopt within the scheme.” In part, this is due to the relative rarity of physics graduates, but there is also some evidence that employer demand skews towards engineering and technology – more of a sTEm shortage, if you will.

The UK Migration Advisory Committee, which advises the government on whether foreign workers with in-demand skills should be allowed to enter the country, includes a large number of “engineering” jobs in its 2013 list of “shortage” occupations. In the physical sciences, though, only a handful of occupations made the cut. Among them are specialists in radiotherapy and nuclear safety, geophysicists working in the oil and gas industry, and secondary-school teachers in physics and chemistry – all important professions, but fairly specific ones, and hardly an indication of an across-the-board shortage.

Squaring the circle

So far, this article has considered four distinct explanations for the STEM shortage paradox. One is that the UK’s shortage of STEM skills is not as severe or as widespread as the conventional wisdom suggests. Another is that the shortage exists among STEM workers in general rather than graduates in particular. The third theory posits a mismatch between what employers demand and what graduates offer. And the fourth suggests that the shortage is tilted towards experienced workers or specific areas within the “broad church” that is STEM. The true explanation is likely to be a combination of the four, but it is also worth noting that much of the rhetoric on this subject is actually referring to future shortages – ones that will materialize a few years or decades down the line, unless we do something about them now.

Concerns about the future are nebulous by nature, and for what it’s worth, a July 2014 report by the UKCES on Skills for the Future reiterated that the UK is not predicted to experience shortages of higher-level STEM skills between now and 2022. Among industry leaders, though, such assurances do little to allay concern. “Inevitably, when you look to the future you have to make a guess about what it’s going to look like,” Perkins says. “One guess is, well, the future’s going to look like today. But I think a more sophisticated guess would be that technology is becoming more and more important, the world is becoming a more global place, and therefore the skills requirements of the future are going to look different from the skills requirements of today.”

Another important consideration is that the job market is not static. Because STEM graduates take a long time to train, the authors of Skills for the Future concede that it would be hard for universities and employers to react quickly to a sudden uptick in demand. After all, if the number of STEM graduates continues to grow, the economy may adapt by creating new jobs and even new industries to take advantage of their skills. On that basis, efforts to prevent a “STEM skills shortage” may not be in vain. But that is little comfort to today’s physics graduates, who must seek work in the economy we have, and not the economy we’d like to have in the future.

Hard to fill, but not always a shortage

When employers struggle to fill posts that require a high degree of knowledge or technical ability, skills shortages are a natural suspect. However, other explanations are possible. For example, a small firm might not have the resources to advertise widely. A brand-new start-up might not be able to pay a competitive salary. Geography can also be a factor, with companies in certain locations straining to convince highly skilled people to move there, while in areas such as central London, posts may go unfilled if the pay and working conditions are not good enough to balance out the high local cost of living. For employers, an abundance of these “hard to fill” vacancies may well feel like a skills shortage even when the labour market as a whole contains enough people with the right skills.

This graph – based on data from a 2013 UKCES survey of 91,000 employers across the UK – shows how the different types of vacancies relate to each other. Of the 15% of employers who had vacancies at the time of the survey, one in three reported that their vacancies were “hard-to-fill”. Within this group, around four in five cited problems with applicants’ skills as a reason why the posts were vacant.

Five 'soft' skills in demand

Illustration of business communication skills
Five ‘soft’ skills in demand

When Tom McLeish and his colleagues at Leeds and Edinburgh universities asked employers of soft-matter physicists about the non-technical skills they would like job applicants to have, the requests coalesced around five basic skills:

1. Communication. This was seen as the most important skill.
2. Breaking a complex problem into simple parts.
3. Working in an interdisciplinary environment. Employees need to understand how people from different technical backgrounds can contribute to a solution.
4. Working at multiple sites with non-local collaborators. This is something that larger companies, in particular, are demanding of their employees.
5. Being aware of the business context. While scientific answers are important, in an industrial setting they are only one part of the picture.

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