A third of businesses believe skills gap is their biggest threat

A third of firms feel a shortage of quality staff is the biggest threat to their business, a Lloyds TSB poll has revealed.

The bank’s Corporate Markets Business in Britain survey of more than 2,200 businesses with turnover between £1m and £750m showed 33% cited the skills gap as posing a massive threat to their profit margins over the next six months.

In comparison, just 4% believed avian flu represented their biggest challenge, while the same percentage considered terrorism to be the main threat.

The scarcity of skilled labour is now so acute that 48% of all firms surveyed experienced difficulty recruiting skilled staff this year.

A further 17% have had similar problems recruiting unskilled labour, despite the influx of workers from Eastern Europe.

The problem seems to be particularly acute in Scotland, where 56% of Scottish businesses are struggling to recruit skilled workers, compared with 47% of firms in England and 46% in Wales.

A continued knock-on effect of this skills shortage is on pay pressures.

When asked about their next salary review, 33% of employers said they would be offering pay rises above the rate of inflation. Wage pressures were highest in London and Scotland where, respectively, 42% and 40% of firms were planning to offer inflation-busting salaries.

Manus Fullerton, director of corporate and business banking for Lloyds TSB Scotland, said: “All the signs are that the skills gap is deteriorating, putting additional strains on the management of Scottish businesses as they try and attract talent ahead of overseas competition.

“It is a sensible time for managers to focus on their people management as well as their financial management.”

The problem was most intense in the transport and construction industries, with 57% of firms in both sectors reporting difficulties attracting skilled workers. Correspondingly, 47% of construction firms and 39% of transportation companies view this shortage as their biggest threat.

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