Skills shortage to cost small businesses £145,000 in the next year

The current skill shortage has encouraged business leaders to upskill their teams and avoid rising costs associated with lower productivity.

The UK’s skills shortage will cost small and medium-sized businesses £145,000 on average in the next year, according to an independent study from Robert Half UK.

That figure is expected to rise to £318,000 in the next five years.

The skills gap – the difference in skills required within a business or organisation and the actual skills the workforce of the organisation has – is part of the reason that the UK has the lowest productivity among the G7.

Macro challenges like a shrinking talent pool due to Brexit, increased digitalisation and economic influences are behind the widening skills gap. They’re also stifling innovation and preventing SMEs from entering new markets.

Essential skills that are needed to help close the gap include data analysis and digital skills as well as softer skills such as resilience, adaptability to change and critical thinking.

The research, commissioned by Robert Half’s 2020 Salary Guide, highlights that SMEs are worried about the potential impact of macroeconomic events on the skills gap in their businesses.

Negative impactPositive impactNo impact
General Election pre-202015pc26pc47pc
Digitalisation/Industry 4.012pc44pc32pc

Three in five (59pc) said that a recession would negatively impact their business, followed by Brexit (47pc). A quarter of SMEs (26pc) said that Brexit wouldn’t have any impact on their skills gap and almost half (47pc) said the same thing about a General Election before 2020.

What are business leaders doing to tackle the skills shortage?

The majority (94pc) of CFOs believe they need to develop the resilience of their teams to ensure that staff continue to thrive in the current geo-political climate.

Almost two thirds (63pc) of business owners intend to train and upskill existing staff while 42pc are planning to hire permanent staff and 27pc are hiring temporary staff.

Constant change and skills shortages have also encouraged SMEs to consider a more flexible recruitment model. Seven in ten business leaders believe that change can be successfully managed using a mix of permanent, interim and temporary employees. Around three quarters (74pc) plan to use temporary workers to upskill existing teams.

Matt Weston, managing director of Robert Half UK, commented: “The nation is gripped by the current skills shortage. The desired skills remain specialist which means those who possess them are in demand. The resulting war for talent could cause even more headaches for SMEs.

“For SMEs, the priority for the next year should be identifying and filling gaps within their organisation. Training and development initiatives, with a focus on upskilling existing staff, are the obvious starting point. At a time when change is the only constant, adaptability and resilience will be the key soft skills to develop.

“The solution to the war for talent is a blend of permanent, temporary and interim employees.”

Read more

Bridging the Brexit skills gap

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Anna Jordan

Anna is Senior Reporter, covering topics affecting SMEs such as grant funding, managing employees and the day-to-day running of a business.

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