Skills shortages risk stalling mid-market growth

Almost a third of mid-sized businesses (30%) say difficulties recruiting and retaining people with the right skills are one of their biggest barriers to growth over the next six months, according to the latest research from accountancy and advisory firm BDO.

Coinciding with the publication of the latest ONS labour market data, out today, BDO’s bi-monthly survey of 500 mid-sized businesses shows the issue is widespread across the UK.

More than a third (37%) of businesses in the Midlands cite skills shortages as a key constraint on growth, with similar levels reported in the South West and Yorkshire (33%). This suggests the challenge is systemic rather than confined to specific regional economies.

Looking across sectors, some of the UK’s most economically significant industries are being hit hardest. Retail (32%), hospitality and leisure (32%) and manufacturing (30%) businesses are all struggling to find and keep staff with the right skills. This comes at a time when the cost of hiring is rising, driven by increases to National Minimum Wage and National Insurance Contributions.

Despite these pressures, many mid-sized firms are taking proactive steps to strengthen their future talent pipelines. Earlier research from BDO found that more than half of mid-sized firms plan to invest in apprenticeships in the next 12 months, while the latest data shows that 70% are actively engaging with potential recruits through careers fairs and similar initiatives.

Commenting on the findings, Richard Austin, Partner at BDO, said:

“These figures show just how acute the skills challenge has become for mid-sized businesses.

“This isn’t a new problem for businesses, but it is becoming more serious at a time when firms are already facing rising costs and ongoing economic uncertainty, exacerbated by the conflict in the Middle East.

“Mid-sized businesses employ one in three private sector jobs across the UK. Their contributions to economic growth should not be overlooked. What’s needed now is a more joined-up approach, ensuring business can access the skills they need in the short term, while continuing to invest in training and education to build a stronger long-term pipeline.”

In response, BDO is calling for closer coordination between government, local authorities and Skills England to identify the businesses at risk of stalled growth due to persistent skills shortages and to provide faster, more targeted access to training provision and recruitment support.

ENDS

Note to editors

Findings are based on a survey of 500 C-suite executives in UK mid-market businesses (revenue £10m–£500m). Some questions allowed multiple responses. The sample was quota-controlled by region and sector, with maximum targets in specific company types (e.g. PE-backed/AIM-listed) also.

BDO LLP operates in 18 offices across the UK, employing 8,000 people. It has UK revenues of £1bn.

It provides Audit, Tax, Deals, and Consulting, Risk & Outsourcing services predominantly to mid-sized, entrepreneurially-spirited, high-growth businesses that are driving growth in the UK economy. BDO calls this segment of the market the UK’s economic engine.

BDO LLP is the UK member firm of the BDO international network.

BDO’s global network

The BDO global network provides business advisory services in 166 countries and territories, with more than 119,000 people working out of 1,800 offices worldwide. It has revenues of US$15bn.

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