Skills shortage threatens growth of tech industry - and society

Recruitment needs in the labor market as a whole are back to pre-pandemic levels - and in some industries the need is greater than ever. This year's results of the Confederation of Swedish Enterprise's recruitment survey published on March 28, which provides a picture of member companies' skills needs and recruitment patterns. The results show that jobs are plentiful, but that we face major challenges in finding the skills to do the job. This is particularly true in the tech sector, where the demand for skills and labour has escalated with the increasing impact of digitalization.

Unlike many other industries, the tech sector has grown during the pandemic, both in terms of service production and employment (Almega in Tjänsteindikator Q1,2022). During the pandemic years, a total of 18,000 new jobs have been created in the tech sector in Sweden. The digital transformation that has been underway for a long time, but accelerated as a result of the corona crisis, has led to a sharp increase in demand for digital expertise.

More than half of the tech companies that responded to the Confederation of Swedish Enterprise's survey say that the pandemic has changed their skills needs. More than 8 out of 10 companies say they have tried to recruit new employees in the past six months. At the same time, 65% say that it is difficult - or very difficult - to find the right skills and that one in three recruitment attempts fails. It is particularly difficult to recruit system developers, technicians, IT architects, engineers and software developers.

Lack of people with the right professional experience, followed by lack of people with the right education, are cited as the main reasons for recruitment difficulties. Higher education is most sought after, but almost three quarters of tech firms find it very or fairly difficult to recruit university graduates. The supply of tertiary graduates is too low, especially for technical degrees with high relevance to tech jobs. Although the number of new entrants to IT programs is increasing, the increase is slow and from a low level. This is reported by UKÄ & Tillväxtverket (2022) in a new report.

The number of women enrolling in IT education is still low. There are also fewer women than men working in the IT and tech sectors after graduation. Employers have a lot to address here. The image of the tech industry and tech jobs needs to be broadened and clarified to attract a wider range of job seekers. Employers also need to do a better job of communicating that they represent an attractive industry with good career opportunities and good working conditions.

Another challenge affecting the supply of IT graduates is the low graduate throughput. Among students who start IT training, less than 50% graduate. The right prerequisites combined with support measures during training are possible interventions to increase graduation rates. More research is also needed to understand the reasons for drop-outs.

Another important conclusion in the UKÄ & Tillväxtverkets report is that university graduates alone cannot provide the supply of digital excellence. More routes into the tech industry will be needed. Programs need to be adapted to different target groups and their purposes - as does the resource allocation system for higher education and universities of applied sciences. Cooperation between academia and business also needs to be strengthened. This will ensure the quality and relevance of education to working life, which can contribute to fewer dropouts and higher completion rates.

There are also many private training programs as alternatives to public ones. These need to be more widely valued and recognized in the labor market. If Sweden is to be able to compete globally, rules and systems that facilitate labor immigration are also needed.

In the Confederation of Swedish Enterprise's recruitment survey, almost half of the companies state that the consequences of skills shortages have led to reduced sales and to companies having to turn down assignments. An equally large proportion state that the lack of skills has put a stop to planned expansion. The skills shortage that prevents tech companies from growing is thus not just the challenge of the tech sector - but of society as a whole, as it risks slowing down societal growth.