Three in four employers with skills shortages report negative impact on staff

It has ‘never been more important’ for businesses to have a skills plan, experts say, as research reveals continued effects of turbulent labour market

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Nearly three-quarters of firms experiencing a skills shortage say the issue is impacting on their existing workers’ wellbeing.

A poll of 1,300 employers, conducted by the British Chambers of Commerce (BCC) in partnership with The Open University, found more than two-thirds (68 per cent) were experiencing a skills shortage.

Of these organisations, almost three-quarters (72 per cent) said there had been an increased workload for other staff as a result, and almost four in five (78 per cent) have seen reduced output, profitability or growth as a result.

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This was an increase on 2021, where just 56 per cent of respondents experiencing skills shortages said the problem was placing additional pressure on existing staff.

Across the board, 28 per cent of all businesses surveyed said they had to turn down work or were not able to bid for work because of staffing shortages. 

Jane Gratton, head of people policy at the BCC, said it had “never been more important” for businesses to plan for skills. “It’s time for employers, training providers and policy makers to work together to ensure the skills system delivers for individuals, businesses and the economy,” she said.

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“The country can ill afford this drag on the economy as we recover from the pandemic and grapple with the impact of geo-political events.” 

The poll revealed that more than two-thirds (68 per cent) of SMEs and 86 per cent of large organisations were facing skills shortages. In comparison, last year just a quarter (24 per cent) of all businesses polled said finding staff with the right skillset was the single biggest challenge facing firms.

In this year’s report, more than half (52 per cent) of large organisations and 47 per cent of SMEs said they planned to increase investment in staff training over the next year.

In addition, 90 per cent of large organisations and 43 per cent of micro-organisations (those with fewer than 10 employees) reported they had implemented some form of written plan around recruitment, training, addressing skills shortages, environmental, social and governance or inclusion and diversity.

Lizzie Crowley, senior skills policy adviser at the CIPD, said it was encouraging to see that many organisations, and particularly larger employers, were taking a strategic and long-term approach to tackling this growing challenge. 

But, she warned: “This research emphasises the need for additional support for smaller firms to help them understand their current and future skills needs and enable them to adopt a more strategic approach.”

Kate Palmer, HR advice and consultancy director at Peninsula, said one way managers could combat the negative impacts of skills shortages was by gaining a better understanding of their workforce’s current skill set. “It’s unlikely that all employees will excel at everything, so identifying key areas that they do excel in and having them focus on these will be most beneficial for both the employee and the business,” she explained.

She added employers asking candidates to have a minimum qualification level could be missing out on talent, specifically younger talent that has the relevant experience and motivation to succeed but lacks a degree certificate typically associated with a role.

“Investing in the development of new talent can reap long-term benefits and boost internal skillsets by building long-term relationships and shaping young careers,” she advised.