More than three-quarters of UK businesses think access to skills is harming labour market competitiveness, according to the annual employment trends survey from the CBI and Pertemps.
Almost seven in 10 (69%) employers are investing in training to upskill their current workforce, and 71% have been hit by labour shortages in the last 12 months.
Sixty per cent are investing in technology and automation to improve productivity and reduce their reliance on human labour in response to the skills gap, the survey found.
The gap is materially affecting more than a third of UK businesses, with 38% reporting they have been unable to respond to new business opportunities in the past year.
More than a fifth (22%) said they have had to hold back investment in other parts of their business, and 12% have shrunk due to skills shortages, the report found.
Skills gaps
UK employees focus on current, not future, skills
In five years’ time, 82% of survey respondents thought the difficulties would continue to dog employers and threaten labour market competitiveness.
In terms of investment, 65% are building up their leadership and management training, while 60% plan to invest in base pay to attract and retain talent.
More than two-thirds (68%) wanted to see the government introduce incentives to help organisations invest in technology that would boost productivity, however.
“It is crystal clear that while labour shortages are making it more important than ever to focus on productivity, they are also making it harder to invest and grow, stifling the economic transformation needed to deliver sustainable growth,” said Rain Newton-Smith, CBI chief executive.
“Businesses have been helping people get into work by increasing flexible working and making proactive investments in employee health, but with government support like expanding tax-free health support and subsidising the cost of occupational health services for SMEs, they can do even more.”
She added that technology would help to improve people’s living standards, but not without adding to employees’ skills.
“That’s why the government needs to go further with their skills reforms and turn the apprenticeship levy into a skills challenge fund, unlocking firms to invest more capital in improving the skills of more workers than apprenticeships alone,” she said.
Carmen Watson, chair of Pertemps Network Group, added: “Hiring pressures are likely to continue for some time, with more people economically inactive or likely to retire in the next decade than join the workforce.
“This is compounded further by the record number of people in long-term sickness or disabled and lacking support to enter the workforce.”
Other key findings of the CBI/Pertemps report included:
- 65% wanted reforms to the apprenticeship levy whereby employers could use the finds more flexibly
- 59% of businesses support making all skill levels eligible for the shortage occupation list
- 62% thought the financial support available through the Access to Work scheme for people with disabilities should be increased
- 54% thought there should be incentives for businesses to invest in workplace health measures.
Despite concerns over skills shortages, the balance of employers planning to expand their workforce in the next 12 months is +37%, up from +28% in 2022.
Investing in basic pay, training and development opportunities and developing and communicating a strong purpose and company values were seen as the top three elements of an employment package, respondents said.
Almost half (47%) of those surveyed said they would have to increase prices to offset the cost of the rising national living wage, and 53% thought that the Low Pay Commission should look at how productivity gains can help employers absorb wage rises.
Matthew Percival, CBI director of Future of Work, said: “Pay decisions in the last 12 months have been difficult for businesses and workers with companies having to put up prices to afford pay rises that still didn’t match inflation.
“Fewer than half of companies expecting to be able to match inflation in the next 12 months suggests another difficult year ahead. Employers will need to invest heavily in relationships with their workers and trade unions to minimise disputes and maintain employee engagement.”
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