Skills shortages are holding back growth

Companies are struggling to find suitably skilled candidates at all levels, according to recent research by the Federation of Small Businesses (FSB).

In a study of 800 SMEs, the FSB found that “22 per cent of small companies said a shortage of skilled workers would be a “stumbling block for growth in the upcoming year”, with the information, communication, and technology sector reporting one of the largest skills gaps.”

In its report it said “Successful and growing small businesses are essential to the UK’s economic success. Only when business owners and their staff are equipped with the right skills can their enterprise grow.”

It has called on the Government to maintain an apprenticeship levy which covers the bulk of a company’s training costs.

It also said “lifelong learning must be more widely adopted. Effective support should be readily available to allow small business employers to support their staff to learn new and pertinent skills.”

A separate study from the Institute for Fiscal Studies found that high-paid and high-skilled graduate jobs were becoming more concentrated in London and the south of England, forcing graduates in other parts of the country to work in jobs that were below their skills levels.

The CBI has also reported on the issue:

Matthew Percival, CBI director of Future of Work, said: “Pay decisions in the last 12 months have been difficult for businesses and workers with companies having to put up prices to afford pay rises that still didn’t match inflation. Fewer than half of companies expect to be able to match inflation in the next 12 months suggesting another difficult year ahead. Employers will need to invest heavily in relationships with their workers and trade unions to minimise disputes and maintain employee engagement.”

The report found that:

  • 65% wanted reforms to the apprenticeship levy whereby employers could use the funds more flexibly.
  • 59% of businesses support making all skill levels eligible for the shortage occupation list.
  • 62% thought the financial support available through the Access to Work scheme for people with disabilities should be increased.
  • 54% thought there should be incentives for businesses to invest in workplace health measures.

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