Skills shortages remain threat to UK competitiveness say firms
SKILLS shortages remain as the top threat to the UK’s attractiveness as a place to do business, a new study has shown.
It is the second year in succession that the problem has topped the list of concerns in the CBI/Accenture Employment Trends Survey.
The annual survey – now in its 18th year, and with 342 respondents employing nearly 1m employees – found that more than two fifths (43%) of companies will grow their workforce next year, with permanent jobs outstripping temporary roles.
The survey, carried out between August and October 2015, found jobs growth has continued across the whole of the UK.
But despite the upbeat picture on job creation, firms are concerned about rising labour costs through the planned National Living Wage (NLW) and the apprenticeship levy, and against the backdrop of an unreformed business rates system.
Although companies expect to create more graduate jobs and apprenticeships next year, the rate of growth for both is easing. One in six businesses (16%) believe the new apprenticeship levy is the right approach to tackle the UK’s skills challenges, with almost half (47%) anticipating it being costly and bureaucratic (the survey was carried out before the details of the apprenticeship levy were confirmed in the Autumn Statement).
Carolyn Fairbairn, CBI Director-General, said: “The UK’s labour market has continued to outperform expectations with businesses delivering jobs in every region of the UK. But there’s a danger of Government complacency, with companies facing multiple increasing costs, through the apprenticeship levy, the national living wage and unreformed business rates, these are acting as a cumulative drag that could hamper growth.
“Given the uncertainty surrounding the effects of the National Living Wage, it is critical that an independent, evidence-based Low Pay Commission plays the main role in assessing its true impact and recommending future rate rises accordingly.
“The Government must be careful not to sacrifice prosperity for political expediency by saddling businesses with costs that could harm investment, which is critical to increasing productivity.”
More than half of businesses intend giving staff a pay award next year at or above the RPI rate of inflation, but nervousness remains about the impact of the NLW. Half (51%) of service sector respondents indicated they will raise their prices, 27% will employ fewer people and 18% will make changes to their reward packages as a result.
As the economy heads towards full employment, there is a risk that skills shortages continue to worsen. Further restrictions on skilled migration would hamper business activity, with 29% of companies affected reporting they would fail to meet customer demand if they were unable to get the right person, in the right place at the right time. And more than a quarter of respondents said they would look to move certain functions or activities overseas.
“Skills shortages remain a problem, so both the Government and businesses must contribute to building a higher skilled domestic workforce as well as allowing British companies access to the most capable people from overseas,” added Ms Fairburn.
“Ultimately, we want to see the Tier 2 visa cap raised and for the UK to establish a longer-term and more realistic immigration policy that recognises the economic benefits of skilled migration.
“We know there are significant public concerns about the social impact of high levels of immigration, which should be addressed. But we also need an economy that is thriving and growing to pay for the public services of the future.”
