Skills shortages affecting productivity and wellbeing

More than three quarters of organisations are seeing reduced output, profitability or growth as a result of the current skills shortages, according to a study by the Open University and the British Chambers of Commerce.

The Open University Business Barometer study, based on a survey of 1,310 organisations from all business sectors, sizes, and UK regions and nations, also showed almost three-quarters (72%) of organisations saying the impact increases workload on other staff.

This statistic has crept up dramatically year on year, when only 56% of respondents from 2021’s report claimed their staff were experiencing additional pressure.

To address the problem, more than half (52%) of large organisations will increase investment in staff training over the next year, compared to 47% of SMEs.

The study says the knock-on effect of these shortages is also impacting company growth as 28% of businesses say they have had to turn down work or are not able to bid for work due to staff shortages.

The report also revealed more than two-thirds (68%) of SMEs are currently facing skills shortages. This rises to 86% of large organisations, a big increase on last year. Organisations reported they were feeling the full impact of complex socio-economic issues such as Covid-19, Brexit, the war in Ukraine and rising business costs – all feeding into the skills shortage.

But while 9 in 10 of large organisations are looking at a long-term strategic approach to skills gaps and have a written plan to address this, only 43% of micro organisations (with fewer than 10 employees) said they have some form of plan to address workforce issues.

Similarly, more than half (53%) of large organisations will increase investment in staff training over the next year, compared to 39% of micros, showing that large organisations are currently better equipped to tackle recruitment challenges, despite reporting larger skills gaps.

Jane Gratton, Head of People Policy at the British Chamber of Commerce, says: “We need an agile skills system that can respond quickly to the evolving needs of businesses, supporting the transition to a more digital, automated, and net zero workplace and giving firms the confidence to boost investment in training and development.

“Planning for skills has never been more important and it’s time for employers, training providers and policy makers to work together to ensure the skills system delivers for individuals, businesses, and the economy.”

SMEs

The study comes as a survey of 500 recruitment agencies, 500 SME employers, 2,000 office workers by NatWest Rapid Cash shows 34% of SMEs are struggling with the costs of staffing, which has led to more vacancies across the job market. 85% of recruiters say businesses are struggling to employ the talent they need, with the challenge starkest in Greater London (92% of recruiters), the East of England (90%) and Wales (93%). The research also identified that the shortage of candidates is particularly affecting the Healthcare, IT and Technology sectors.

It says increasing pay cannot solve the problem on its own and looks at how other ways of working could help, in particular the four-day week [working four days on 100% pay in return for a commitment to retain the same productivity rates]. It found that 79% of recruiters think the four-day working week will become the norm before 2030 and 86% think the four-day working week is a good thing. However, there was concern about potential effects on output and workload. Also, only 21% of recruiters believe that the four-day working week will change the job market considerably in the next year, but this jumped to 61% when looking at a five-year scenario.

Meanwhile, the NHS Confederation has written to the Prime Minister to urgently call for the introduction of a £10.50 per hour minimum wage for care staff funded through local authorities. Care homes have been left with “skeleton staff” due to low pay in the sector, the organisation said, with care jobs now paying less than jobs in retail.

The NHS Confederation says the care sector is “haemorrhaging” workers, with a tenth of posts vacant, an an average of 12,000 patients unable to be discharged from hospital each day due to a lack of social care provision. NHS Confederation chief executive Matthew Taylor said: “A decade ago, the average hourly wage for a care worker was 13p more than those working in the sales and retail sector. By last year that had plummeted.”

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