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BCC/Totaljobs: Budget must address critical skills shortages to ‘level up’ UK growth

4th February 2020

Over half of UK firms attempted to recruit in the last quarter of 2019, but almost three quarters have struggled to find the right talent, the largest survey of UK employers has found.

  • Labour market remains stable as over half (55%) of UK businesses attempted to recruit in the final quarter of 2019.
  • Skills shortages continue to impact growth as 72% of firms reported recruitment difficulties in Q4 2019.
  • With greater political stability, one in four (26%) businesses expect to increase their workforce in Q1 2020.

The latest Quarterly Recruitment Outlook from the British Chambers of Commerce, in partnership with Totaljobs, revealed continued skills shortages in the UK workforce ahead of the government’s first Budget next month.

While over half of UK firms (55%) were looking to hire, the report revealed that 72% of businesses had difficulty finding the right talent.

The figures illustrate a critical skills deficit across the UK workforce, with shortages most apparent in the construction and hospitality sectors, with 79% and 77% respectively struggling to recruit. Two thirds (67%) of construction businesses attempted to recruit in Q4, up from 62% in Q3. In both these sectors – and others – uncertainty over the UK’s future immigration regime continues to be a concern.

Looking ahead, 26% of UK firms say they plan to increase their workforce in the first quarter of 2020. The construction industry reports the highest proportion of firms looking to grow their headcount (34%).

The report’s findings highlight the need to address critical skills shortages in the upcoming Budget, including commitments to long-term funding for vocational education and for apprenticeships in small and medium-sized businesses – both of which are crucial to the government’s ambition to ‘level up’ opportunities across the UK.

BCC and Totaljobs are also calling on the government to review the Apprenticeship Levy, which hits every firm with a payroll of over £3m, to ensure companies can use the funds to train their staff. Greater flexibility for employers on how funds can be used towards vital non-apprenticeship or accredited training could help to make better use of this budget and upskill the UK workforce.

Adam Marshall, Director General of BCC, said:

“Although it is encouraging that businesses are looking to take on people, the prolonged skills shortages they’re facing are not sustainable as they try to shake off years of political uncertainty and pursue growth.

“Training has got to be at the heart of the upcoming Budget if the government wishes to demonstrate that it is serious about ‘levelling up’ opportunity all across the UK. Funding boosts are needed for vocational and technical education, for apprenticeships, and for incentives to help more employers provide high-quality job-related training.

“As the UK forms new economic relationships with the EU and partners across the world, businesses also need clarity on who they can recruit. As things stand, businesses don’t know who they can hire, and under what conditions, from New Year’s Day 2021. That’s unacceptable. The Government needs to act swiftly to deliver a fast, flexible new immigration system that allows firms to access staff at all skill levels, and limits upfront fees, delays and costly red tape.”

Jon Wilson, General Manager of Totaljobs, said:

“The market is very much active and hiring intentions remain strong, with Totaljobs seeing 640,000 jobs advertised alongside over 12 million job applications in Q4 2019. Yet, skills shortages continue to impact many UK businesses, as one factor contributing to the UK’s low productivity rate.

“UK businesses need to ensure they have robust training opportunities to keep the people they need. Totaljobs research shows that two thirds of UK workers have left a job due to a lack of learning and development. Clearly, learning new skills is very much tied up in job satisfaction. For SMEs particularly, training budgets can be an issue, which is why dedication and support from the government is essential in order to help the UK workforce upskill.”

View the full report