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Tuesday, 11 July 2017

UK skills gap costing UK business £2.2 billion a year

Research from the Open University has found that the skills gap is costing UK business more than £2 billion a year in higher salaries, recruitment costs and temporary staffing.

This comes at a time when the UK has the lowest unemployment rate since 2005 and many of those in work are staying put due to concerns about Brexit. Uncertainty around future immigration rules is also deterring some EU nationals from working in the UK.

The Open University’s ‘Business Barometer’, which monitors the skills landscape
in the UK, reveals that 90% of employers have struggled to recruit staff with the right skills in the last year and almost 70% remain concerned about recruiting the right talent in the next 12 months.

As a result, more than half are choosing to hire at lower levels and are using training to bring new employees up to the level required.

Others report having to inflate salaries to attract the right talent, with the Open University calculating this cost at £527 million. Those with strong skill sets are in demand and can accordingly command a higher salary. More than half of businesses report increasing salaries well above market rates to attract the right skill set. Average increases amount to around £4,150 per hire for SMEs and £5,575 per hire for large organisations.

Management roles are particularly difficult to recruit to, with 40% of businesses reporting difficulty hiring mid- and senior level managers with the right skills.

Almost half of employers are concerned about finding appropriately skilled IT workers, despite the critical role digital skills play in the economy.

The number of businesses planning to change the type of training they offer is expected to double, with 59% (up from 31%) planning to offer apprenticeships as a result of the recently introduced Apprenticeship Levy. More than half expect the Levy to reduce the skills gap in the coming year, while more than 60% view it as an opportunity for their organisation.

The skills gap is also lengthening recruitment processes for 75% of employers, on average adding almost two months, incurring additional costs in the form of recruitment fees and temporary staff.

This figure alone is estimated to be around £1.7 billion.

The Open University research also finds that 58% of employers say the skills shortage has damaged their business and advises that employers must ensure training programmes provide staff with the right skills and enable them to put them into practice as soon as possible.

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