Severe skills shortages in the UK cost businesses more than £2 billion in higher salaries, recruitment costs and temporary staff bills, according to research by the Open University.
Its inaugural Open University Business Barometer found that 90% of employers found it so tough to hire people with the right skills that they had been forced to inflate salaries above the market rate, costing £527 million.
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Respondents estimated that the extra costs involved in attracting and recruiting temporary staff to fill the skills gaps came to “at least” £1.7 billion.
This was exacerbated by the fact that, for three-quarters of employers, the recruitment process itself took longer than expected – on average one month and 24 days.
The survey also found that 56% of businesses had to increase the salary on offer for a role “well above” market rate to get the skills they required in the previous 12 months.
The average increase was £4,150 per hire for small and medium-sized employers, and £5,575 per hire for larger organisations.
Just over half (53%) of employers were unable to find a candidate with the required skills and chose to hire at a lower level as a result, the Open University found.
Steve Hill, external engagement director at the Open University, said employers needed to focus on training their existing workforce, particularly with the UK’s exit from the EU likely to leave many businesses short on talent.
He said: “The UK challenge of finding talent with the right skills means that businesses need to look at recruitment, development and retention differently,” he said.
Reflecting this, the number of organisations likely to offer apprenticeships in the next year is expected to almost double from 31% to 59%, the Open University found.
However, 69% of companies still expected to struggle to hire people with the right skills in the next year.
The Open University’s report comes in the wake of numerous reports predicting that businesses could be affected by skills shortages due to Brexit.
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Earlier this month, the CIPD found that one in 10 employers had seen a drop in the number of EU nationals being hired since the referendum last year.
Another survey, by law firm Baker McKenzie, found that 56% of skilled workers in FTSE 250 companies from EU countries were either quite likely or highly likely to leave the UK before the outcome of the Brexit negotiations is known.
