Nearly all businesses struggling to hire skilled staff, research reveals

16 Jul 2018 By Maggie Baska

Skill shortages costing organisations over £6.3bn a year, as experts urge employers to ‘build not buy’

More than nine in 10 (91 per cent) UK businesses have struggled to find skilled workers in the past year, according to research published today. 

The Open University Business Barometer, which surveyed 950 senior business leaders to monitor the UK’s skills situation, found shortages are now costing businesses £6.3bn a year in recruitment fees, inflated salaries, hiring temporary staff and training workers. 

David Willett, corporate director at the Open University, warned “buying skills and not building them” was a short-term view and businesses should take a more sustainable approach by using training to address skills gaps. 

“Investing in work-based training, which allows workers to earn while they learn, will help organisations to bridge the gap between skills available in the labour market and the skills they need, allowing them to focus on stability and growth in the future,” Willett said.

“Simply put, better training and development will result in more agile, loyal, motivated and productive workforces that are fully equipped to rise to new challenges and drive organisations forward.”

The majority (70 per cent) of senior business leaders surveyed said their recruitment processes were more drawn out than they hoped, taking on average one month and 22 days longer than expected. Nearly two-thirds (64 per cent) reported spending £1.2bn more this year on recruitment. 

Two-thirds (67 per cent) of employers said they felt obligated to increase the salary on offer for talented workers with in-demand skill sets, resulting in an additional spend of £2.2bn.

Meanwhile, many organisations said they had resorted to either hiring workers with lower skills than they had intended (63 per cent) or leaving the role unfilled (51 per cent). The research also found employers spent £1.5bn on employee training and an additional £1.5bn on temporary staffing last year. 

Lizzie Crowley, skills advisor at the CIPD, said the research highlighted the “challenging environment” UK employers face when “accessing talent in a tight labour market”.

“Now, more than ever, businesses must shift from a ‘buy’ to a ‘build’ strategy,” Crowley said. “UK employers invest less than many other EU nations in training and developing their staff. With an ageing workforce, alongside the potentially reduced access to migrants in the future, it is critical that businesses focus on building the skills of their existing workforce.”  

More than half (53 per cent) of business leaders thought their skills gaps would worsen over the next year, and 44 per cent expected their organisation to struggle financially during that time. 

But, three in five (61 per cent) employers said the apprenticeship levy should “help to reduce the skills shortage in the next five years”. 

However, recent Department for Education figures revealed that apprenticeship starts were down 34 per cent compared to this time last year. 

The latest apprenticeships and traineeships statistical release, published late last week, showed that 290,470 apprenticeships started between August 2017 and April 2018, compared to 440,300 during the same period in the previous year. 

Anne Milton, apprenticeships and skills minister and conservative MP for Guildford, said the overall decrease in apprenticeship starts was “not unexpected”, but was pleased to see the number of people starting new, higher-quality apprenticeships increased “by almost 1,000 per cent this year”. 

“Quality is more important than quantity, and our shake-up of the apprenticeship system has been all about making sure apprenticeships, developed by businesses themselves, give people the skills they need to get the career they want,” Milton said.

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