Salaries for tech workers in the UK are continuing to rise despite economic uncertainty, according to Tech City UK’s annual report Tech Nation 2017, published today.
The report surveyed 2,700 people working and investing in the industry. It found there are 1.6 million people employed in the digital tech sector in the UK and the average salary for a tech worker now stands at £50,663 (€58,000), 44% higher than the average salary of £35,155 for a non-digital sector role.
The tech sector is growing twice as fast as the rest of the economy and employees in the sector contribute £103,000 a year in Gross Value Added to the economy, the report said.
It found that between 2011 and 2016 over £28 billion has been invested in UK tech, more than France (£11 billion) and Germany (£9.3 billion). In 2016, London attracted £2.2 billion in VC and private equity investment but the report notes that last year digital tech investment around Europe was 34% lower than in 2015. The authors of the report attribute this to “heightened economic and political uncertainty” on both sides of the Atlantic.
There were however “record levels” of M&A deals in the UK in 2016 with a number of high-profile deals making up the lion’s share.
Softbank’s acquisition of ARM for £24 billion was the largest acquisition and there were several other major deals: China’s Ctrip acquiring Skyscanner for £1.4 billion; Microsoft’s acquisition of SwiftKey for a reported $250 million; Accor Group buying Onefinestay for $170 million; and Twitter acquiring Magic Pony.
London and hubs like Cambridge, Bristol, and Bath are still the apple of UK tech’s eye but, according to the report, there has been solid growth in cities and regions outside of the south east.
Newcastle for example has experienced a jump of 39% in the number of new businesses started (compared to London’s 42%) while the city’s average tech salaries have grown 25% over the last five years. Similar salary growth was recorded in Sheffield and Leeds.
According to Tech City UK, regions outside of London and the south east are drawing more investment than ever before. The regions have attracted 68% of all VC and private equity investment in the UK, it said.
Prospects for the future
Survey respondents highlighted six key areas, or prospects, that they believe need to be addressed in the near future to ensure the UK’s positioning in the European and global tech industry. They are:
- Skilling up the nation: Over half of those surveyed said that finding talent with the right skills was a major challenge and supply was not keeping up with the fast pace of the industry.
- Attracting the best and brightest of global talent: On a similar note, respondents raised concerns about the UK’s access to talent post-Brexit.
- Gender diversity: Men outnumber women three to one in more than half of all the companies that were surveyed, an imbalance that still needs to be addressed.
- Access to finance: Regardless of stage of growth, UK investment is still behind the US and the major Asian markets.
- Digital connectivity: Respondents identified that staying ahead in connectivity was vital, especially in the development of 5G.
- Developing co-working spaces: According to those surveyed, co-working spaces are a vital cog for tech businesses and they recommend changes to rates and leases to foster these kinds of spaces.
The report is published the same week that Theresa May’s government confirmed that it will trigger Article 50 on March 29 to begin formal proceedings for the UK’s departure from the EU. Brexit and its uncertainties have been a constant cloud over UK business since last summer’s vote. The tech sector in particular has grappled with the prospect of losing access to the single market for selling products and services as well as hiring foreign talent.
Tech City UK believes the UK is on the right path for securing its future post-Brexit but admitted that it still needed to address skill shortages.
“These foundations will be crucial as we prepare to leave the EU. We need to maintain access to skilled workers while doubling down on home grown tech talent,” said Gerard Grech, CEO of Tech City UK. “And we need to think big. This report is all about working together on a common vision: the UK as a global leader in tech.”
“There are some big challenges ahead of the British digital tech sector, not least finding the skilled staff to continue growing at this rate, as the UK prepares to leave the EU,” added Wendy Tan White, general partner at Entrepreneur First. “London in particular has benefitted from migration, with 20% of startups staffed by EU nationals. Whatever happens in the coming months, the UK must continue to be an attractive place for investors to want to put their money, prioritising support and infrastructure for the startup economy.”
In the report’s foreword, Prime Minister Theresa May said the government is committed to greater funding for AI, robotics, 5G, and smart energy as well as digital education for young people. Earlier this month, the UK government published its Digital Strategy for developing the country’s tech sector and infrastructure over the coming years.
“Tremendous momentum and results have been achieved in and by the UK’s tech community in recent years but we must continue to ensure that we have the best possible ecosystem in place to help the sector achieve its full potential,” commented Passion Capital partner and chair of Tech City UK, Eileen Burbidge. “In addition, we must also commit to ensure that our young people have the skills and aptitude needed for a career in this industry that is having an impact on every part of UK life.”