UK tech job vacancies soar, wages outstrip rest of economy - but it’s not yet an opportunity for all

Derek du Preez Profile picture for user ddpreez July 15, 2022 Audio mode
Summary:
A new government backed report highlights how the UK is transforming into a tech economy, with plenty of career and wage opportunities. However, those opportunities aren’t necessarily available to everyone.

Image of the UK

The UK is seeing its digital and tech economy boom, with a huge growth in job vacancies and wages for roles outstripping the rest of the economy. However, it’s not all good news, as opportunities appear to be mostly going to those coming out of elite education institutions - which make up a small percentage of the population - and there appears to be a shrinking number of vacancies lower down the ranks, making it harder for people to get trained up. 

The new data has been published in a comprehensive report by Tech Nation, a government-backed think tank, which outlines that nearly 5 million people now work in the digital tech economy, up from 2.18 million in 2011. That number is also up from just under 3 million in 2019, which highlights the structural shifts the UK economy has been through during the course of the COVID-19 pandemic. 

Tech Nation states that the report aims to fill a gap in data around skills in the digital economy, which could be leading to less informed decisions on the part of both employers, employees and the government. The report uses data from Adrian, Dealroom and the Office for National Statistics. It states: 

During the uncertain times faced by most people over the last two years, technology has been an enabler for individuals, companies and communities. It has facilitated new ways of working, and kept the economy buoyant. Tech has also been an important source of job creation as we return to a sense of normality. Nevertheless, we are not returning to the economy, or the labour market that we left in 2019. 

This significant ramping up of tech economy workers has been due, in part to the permeation and transformation of tech across the economy as a whole. Over 36% of people working in the digital tech economy are in non technical roles, and a further 30% of roles are in tech roles outside of the tech sector.

On the other side of the coin, the tech sector itself has continued to grow at an astounding rate. Between 2020 and 2021 venture capital investment into UK based tech startups and scaleups increased by 130%. This surge of investment creates employment opportunities, to spearhead growth in scaling firms.

The good news

What’s clear from the data is that the UK - both the private sector and government institutions - should be fostering the tech and digital economy, as it continues to grow. Jobs in this sector now account for approximately 14% of the UK workforce and more than 2 million tech vacancies were advertised over the last year - more than any other area of the UK labour market. 

Tech Nation said that the boom in hiring is reflective of the growth seen in venture capital investment into UK tech companies in 2021, which had a 130% increase to just under $41 billion. This is also being bolstered by an increasing permeation of tech roles across the economy. See the chart below: 

An image of job vacancies in UK by sector (a chart)
(Image sourced via Tech Nation report)

Over 36% of jobs in the digital tech economy are in non tech occupations, like product management, user experience, people and sales. Some 36.8% of roles are in non-tech positions, and a further 33% of roles are technical, but outside of the tech sector. 

Furthermore, tech vacancies have increased on a month by month basis over the last year, from 145,000 roles advertised in May 2021, to 181,000 roles as of May 2022. 

Large tech and professional services companies, many of which are based in the US, such as IBM, Oracle and Amazon, are leading the way in terms of tech job ads. However, ‘UK decacorn’ Ocados is third in the UK hiring rankings, with over 33,500 roles advertised last year. 

According to the report, data and architecture are the most in demand tech skills, jumping up the ranking after seeing growth in demand of over 1000% respectively from 2019 to 2021. 

And it’s not only vacancies and job roles that are on the up, wages too are higher than the rest of the economy. Tech jobs command an 80% premium on non tech jobs in the UK, with the average salary being £62,000 compared to £35,000 elsewhere. 

However, Tech Nation does warn that this could lead to problems, as it states: 

With growth in employment as we have witnessed over the last five years, on the one hand, is a good thing from an economic, and labour market perspective. Well paid jobs across the UK are being created. However, if left unchecked, this could pose a potentially problematic situation whereby tech becomes fragmented, or polarises the economy. In its own right, this is a fairly natural phenomenon, but consider that levels of gender, geographical, age and in some cases ethnic diversity remain entrenched in tech, with little movement over the last five years, and we start to see that a polarisation problem may be emerging. 

This is not a phenomenon that will inevitably occur if appropriate intervention measures are taken. We know that the tech economy is home to a variety of technical and non technical roles, offering a wide range of opportunities, and creating many new forms of work, and jobs. The message of opportunity for all must be something we collectively emphasise so that no one is left behind.

Words of warning

Despite all the positive indicators in the tech and digital economy, Tech Nation’s report does come with some fair warnings that the UK needs to ensure that the opportunities being seen are equitable. 

For instance, awareness of the opportunity to earn more is slim across the UK, as only 26% of people believe that developing a tech skill will allow them to attract higher wages. 

In addition to this, demand for senior tech positions have been increasing over the past three years. For every one ‘no experience needed’ role advertised, there are approximately eight senior roles advertised. This is a problem, as the report states: 

The sticking point in this dynamic is that demand for senior roles is burgeoning, whilst demand for junior and intermediate level roles has decreased. This may create a supply issue in future, with fewer prospective employees able to gain vital experience in tech, and companies struggling to hire for experienced people. A resolution to this situation will require a reconsideration of roles being hired for by firms, and an acknowledgement that responsibility must be taken to contribute to the skills and experience development of staff.

In addition to this, a huge proportion of senior leaders are highly qualified individuals. The majority of people including this information in their profile have a bachelors degree (74.6%) and just under half have a Masters degree (46.3%).

But what’s particularly interesting, is that world leading educational institutions top the charts for tech C-suite education - highlighting a potentially problematic position. The University of Cambridge and the University of Oxford top the leaderboard for educational institutions making up a combined total of 4.6% of educational experiences. However, just 1% of UK students get a place at Oxbridge. Other red brick institutions make up a big chunk of the education found in the tech C-suite. 

Dr George Windsor, data and research director at Tech Nation, writes that the UK needs to be careful of these trends to really take advantage of the opportunity. They said: 

This report highlights that senior leaders in tech, those in C-suite and director roles, are overwhelmingly Oxbridge and red brick university educated. This leads to a potentially problematic disjunction in the messaging around opportunity for all, versus the impression leaders often from elite higher education institutions provides.

The financial rationale exists more patently than ever, to pursue a career in the tech economy. On average, tech jobs now command an 80% premium on non tech jobs in the UK, up from around 60% only a year ago.

Yet, only 26% of people surveyed believed that acquiring or developing a new tech skill would position them well to earn more in the future - highlighting an information gap. 44% of UK respondents believe having tech skills are essential for job security and 64% of those working in tech agree. With the fast pace of change in tech, it will be essential to encourage upskilling throughout all people's careers.

Demand for tech roles has never been higher, as the report points out, over 2mn vacancies last year, and ever growing employment in the tech economy has only accelerated over the last year. In parallel, demand for senior tech positions have been increasing over the past 3 years. For every one “no experience” role advertised, there are approximately eight senior roles advertised.

This is again a potentially challenging position. If demand for senior roles is burgeoning, whilst demand for junior and intermediate level roles has decreased this may create a supply issue in future. It will lead to fewer prospective employees able to gain vital experience in tech, and companies struggling to hire for experienced people. A resolution to this situation will require a reconsideration of roles being hired for by firms, and an acknowledgement that responsibility must be taken to contribute to the skills and experience development of staff.

In conclusion, growth inevitably brings challenges - without the right mix of people, capital and innovation, we will not see realised the positive growth trajectory for UK tech we all hope . As such, it is a responsibility of employers, hiring organisations, individuals and support organisations to raise awareness, promote upskilling and in work training, and open doors to those with less experience in tech to pave the way to a brighter tech future for all

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