Why skills shortages pose the greatest threat to organization’s growth in the UK energy sector

The energy sector is one of the most vital and dynamic industries in the UK, providing essential services and contributing to the economy and the environment. As of the second quarter of 2024, there were approximately 561,000 people employed in the mining, energy and water supply sector in the UK.

However, the sector is also facing a serious challenge: a growing skills gap that threatens to undermine its future performance and competitiveness.

A key post-election legislative commitment in the UK is the introduction of Great British Energy (GB Energy), a publicly owned clean power company, due to be headquartered in Scotland.

The project's goal is to accelerate investment in renewable energy, with a focus on offshore wind. With £8.3 billion allocated for the current parliamentary term, GB Energy is set to work alongside industry and trade unions to co-invest in advanced technologies, back capital-heavy ventures, and develop local energy initiatives for the benefit of communities across the country.

This will add to existing known pressures for organizations in the UK energy sector. Even before this announcement, a report by the Energy and Utilities Skills Partnership, the UK energy sector will need to fill 277,000 vacancies by 2030, which is equivalent to 50% of the current workforce.

The report identifies 4 key factors that contribute to this skills shortage:

An ageing workforce: About a third of employees in the energy sector are over 50 and many of them are expected to retire in the next decade.
A lack of gender diversity: Despite making up 39% of the global labor force, women only account for 16% of the traditional energy sector. This limits the pool of talent and perspectives that the sector can draw from.
A skills mismatch: The energy sector is undergoing a rapid transformation, driven by innovation in technology, new and upcoming environmental regulations, and customer demand. This requires new skills and competencies that are not always available or aligned with the existing workforce.
A low attractiveness: The energy sector suffers from a low public awareness and perception, which affects its ability to attract and retain young and diverse talent.

These factors make the UK more vulnerable to the skills shortage than other countries, as it has a smaller and increasingly older population, a higher reliance on imported energy, and a stalling reputation internationally for innovation in energy and meeting environmental targets due in part to greater uncertainty in the UK’s economic and political situation. The skills shortage could have serious consequences for the UK, such as higher energy costs, lower quality of service, reduced innovation and competitiveness, and increased carbon emissions.

Therefore, it is imperative that organizations in the UK energy sector take urgent and coordinated action to address the skills gap and ensure its long-term sustainability and success.

One way in which leading energy sector organizations are achieving this is to pivot their sourcing strategy to be more proactive vs. reactive.

For one energy sector organization, we developed a new initiative for proactive direct sourcing, focusing on high volume and repeatable roles. By building an interactive talent community of engaged future candidates and using AI search and match functionality, candidates were easily identified, attracted and selected for new roles as they came up without the need to go out to market.

Shifting the attraction strategy to utilize the talent community and increase the level of direct sourcing, has provided cost savings for the organization of over £120k, and reduced the level of attrition.

UK Energy, Renewables, Oil and Gas: Talent Challenges Report 2024

If you want to learn more about what it takes to differentiate from the competition, Guidant Global’s new report covers the ‘people based’ challenges that the sector is facing and provides key recommendations and best practices for energy organizations to optimize their workforce management and talent acquisition strategies.

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