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New data signifying a worsening skills shortage should serve as a "wake-up call" to employers, individuals and the government, according to the Chartered Insurance Institute.

Lord Hunt of the Wirral, president of the CII, also warned that cuts to training budgets in the face of mounting economic pressures would "prove to be a false economy" in the long run. His comments follow the CII's second annual skills survey which showed three-quarters of employers reporting a shortage of technical skills, a 5 per cent increase on 2007.

The CII said that the issue has become so critical that it is now on the agenda in four out of five boardrooms, which represents a substantial increase of 20 per cent on last year's data. The online survey reached all UK qualified CII and Personal Finance Society members, some 3511 respondents, 834 of which are employers.

Lord Hunt said: "The UK financial services industry is world renowned for its commitment to improving the skill levels of its staff. Yet we cannot be complacent and must continue to commit time and resources to training and development if we are to remain competitive in the face of intense global competition."

He said: "The industry needs to continue to embrace the vision for UK skill levels as set out by Lord Leitch and contribute to meeting the challenging targets he set. We must continue to work at attracting the highest calibre of individuals into our sector. The CII's Talent Initiative is a good example of a scheme that looks to address the problem, but we must not neglect those already working in the industry. As Lord Leitch points out, much of the future workforce is already in place and should be encouraged to develop further. The CII's Broker Academy is designed to help in this regard."

More than half of employers, 57 per cent, blamed the educational system for the lack of skilled workers reaching the workplace, with only 3 per cent describing basic levels of education as "more than adequate". Employers reported that in their opinion, 61 per cent of graduates struggled with even the basic skills like grammar and numeracy. These findings coincide with an increase of 14 per cent to 73 per cent of employers who believe that employees will need higher qualifications in the future.