According to a survey of 6,000 businesses by the British Chamber of Commerce, 45 per cent say that it is very or quite difficult to find the right employees for a position.

Despite unemployment reaching 2.57 million, and expectations that this could increase due to public sector cuts, many firms claim candidates do not have the right skills.

Companies report poor levels of literacy and numeracy, but also deficiencies in softer skills such as timekeeping and communication.

Only 45 per cent of businesses are very or fairly confident in recruiting graduates, but just 29 per cent feel similarly about recruiting a school-leaver with A-levels or equivalent.

Just 20 per cent of respondents are very or fairly confident in recruiting an ex-public sector worker, and only 10 per cent feel confident in taking on someone who has been unemployed for six months or longer.

John Longworth, director general of the British Chambers of Commerce says that people are at the heart of every successful business. ‘Developing the capability of our workforce is crucial for individual companies as well as the UK’s economic competitiveness. Our survey results prove what we have known for some time: UK companies continue to invest in their workforce, and they still want to take on staff and expand despite a difficult economic climate. However, the results also confirm that many firms looking to recruit are stymied by the poor skills available within the local labour pool,’ he says.

‘Even at a time of record youth unemployment, firms lack confidence in our education system’s ability to deliver basic literacy and numeracy skills. But employers also want to see young people with a strong worth ethic, and those ‘softer’ skills like timekeeping, and communication, which are fundamental in the work environment.’

Skills shortage a concern for SMEs

Around four in ten (38 per cent) UK companies are struggling to recruit the right people, with nearly three quarters (72 per cent) citing a lack of technical skills as the primary problem, according to a study by the Grant Thornton International Business Report.

The concern is that a lack of talent will dampen business productivity, potentially threatening future growth and profitability.

Nearly one in five businesses (18 per cent) is concerned that skills shortages will impact 2013 expansion plans.

Scott Barnes, CEO of Grant Thornton UK says, ‘While the number of people employed in the UK hit a record level in 2012, businesses are still finding it hard to recruit for roles requiring technical skills.

‘Investment in internal training programmes, aligned closely to business need, is needed to broaden these talent pools. By developing their people, companies will be able to deliver on strategy, innovation and, ultimately, growth.’

The reported shortage of technical skills is an EU-wide issue with 68 per cent of businesses surveyed citing this as a significant challenge for recruiting talent, compared to the global average of 64 per cent. In the UK, 40 per cent of businesses report a low number of applicants compared to 51 per cent in the EU.

In the UK, a lack of both work experience (55 per cent) and qualifications (40 per cent) are also contributing factors.

Staff retention is also presenting an increasing problem to UK businesses. According to the Q1 2013 results of the ICAEW and Grant Thornton Business Confidence Monitor, staff turnover is on the rise again after a period of stagnation in 2011, having increased from 7 to 10 per cent.

The IBR report finds that almost one fifth (19 per cent) of organisations believe that staff retention issues have contributed to a loss of business or orders to competitors, increased operating costs (28 per cent) and an inflated workload for remaining staff (40 per cent).

Barnes adds, ‘We have seen some evidence of improved dialogue between educational institutions, governments and business leaders but this research should give fresh impetus to their discussions.

‘There is clearly a disconnect when, on the one hand, UK business leaders are crying out for more skilled labour, and on the other, there are still lots of people out of work. Efforts to boost skills should be high on the public policy agenda.’