Training costs water down optimism about future prospects for businesses

Businesses feel more upbeat about future prospects than they did six months ago, but the cost of training and employing staff is cutting into profit margins, according to the CBI.

Research by the employers’ group in conjunction with the Regional Development Agencies (RDAs) showed that orders, output and jobs have continued to improve over the past year.

The latest Regional Survey of UK Economic Trends, however, shows that more companies have experienced a fall in their profits compared to the previous survey.

Staff costs were identified as the biggest cost pressure by companies, with 41% saying it was their major issue – rising to more than half of firms in London and the East of England.

The research said the importance of a more highly skilled workforce to company competitiveness was reflected in the fact that training and retraining remains the most significant area for increased investment.

The same proportion of firms is funding training for employees as six months ago (66%) but a greater number of companies intend to invest in training over the coming year (19%) than in September (14%).

Terry Hodgkinson, spokesman for the RDAs, said it was right for companies to value a highly-skilled workforce and welcomed plans for greater investment in training.

“We support the drive to raise skill levels across the regions and will continue to work with the government to ensure that business gets the training it needs to compete in the fast-moving global economy,” he said.

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