Skills and staff shortages still a challenge for UK businesses

Almost three quarters of medium-sized businesses report that skills and staff shortages are currently a problem
A quarter have increased starting salaries to attract more applicants, with others enhancing benefits and offering more remote working
Businesses are calling on government to introduce new policies to ease the skills gap

Skills and staff shortages remains a problem the UK’s medium-sized businesses, according to new research from accountancy and business advisory firm, BDO.

BDO’s bi-monthly ‘Rethinking the Economy’ survey of 500 medium-sized businesses revealed that 71% of those surveyed say skills and staff shortages are currently a problem for their business. As a result, a quarter of businesses are increasing starting salaries across the board to attract more applicants. and

More than a fifth (22%) are introducing new benefit schemes such as private medical cover or discounts on childcare with a similar number increasing remote working in order to expand the locations they are recruiting from.

As well as attracting new recruits, businesses are also focused on retaining existing staff. A fifth of businesses have or will offer pay rises in line with or above the rate of inflation and 19% are offering one-off bonuses.

Despite many reporting staff shortages, 10% have a pause on hiring and almost a quarter (23%) reported that they are planning to make redundancies and reduce their workforce overall. In the manufacturing sector, this number rose to almost a third (29%).

Of those still hiring, 28% are recruiting staff at a more junior level, with almost a quarter planning to hire more apprentices (23%).

The survey asked businesses what support they’d most like to see from the Government next year. Almost a quarter (24%) want to see new policy frameworks in place relating to recruitment and upskilling, including access to overseas workers. Over a fifth (21%) want to see new investment in apprenticeship and skills programmes specifically.

A fifth would also like to see new education and skills policies at a local level to align qualifications with businesses' needs and ease skills shortages. This increases to more than a third for businesses in the West Midlands (36%) and 30% for those in the North East.

Ed Dwan, partner at BDO, commented:

“Businesses certainly aren’t short of challenges as we approach the new year and this looks set to continue well into 2023.

“Rising costs are an issue across the board, with businesses now forced to spend more money on recruiting new staff and retaining their existing people. Employment has remained resilient during recent economic shocks including the pandemic and current cost of living crisis, however, almost a quarter are planning to reduce their workforce and make redundancies, a sign that recessionary pressures are beginning to make an impact.

“It comes as no surprise that business leaders want to see action from the Government when it comes to skills and access to talent, particularly for those in areas outside of London and the South East. It is positive to see a quarter of businesses looking to recruit more apprentices to help ease their staff shortages, particularly with rising costs potentially making a university education a less accessible option for many young people.”

ENDS

Note to editors

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.

The organisations we work with are Britain’s economic engine –entrepreneurially-spirited, high-growth businesses that fuel the economy.

We understand the ambitions and entrepreneurial mindset of those we work with and have the global reach, integrity and expertise to help people and businesses succeed.

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