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Skills gap ‘costing UK businesses £2 billion a year’

News | Skills gap | Uk businesses | Open University

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The skills gap is costing UK businesses more than £2 billion a year in higher salaries, temporary staff and recruitment costs, new research from the Open University has shown.

The Open University Business Barometer has revealed that 90 per cent of employers have found it difficult to recruit workers with the required skills in the last 12 months, while some have had to increase salaries above the market rate to attract talent. This costs UK firms at least £527 million.

A study by the Open University has revealed that UK businesses are spending more than £2 billion a year in an attempt to combat the skills gap.

At present, the UK has the lowest unemployment rate since 2005, while workers are reluctant to change jobs due to continued Brexit uncertainty, said the Open University researchers. This is combined with the fact that European nationals are increasingly unwilling to take up roles in the UK due to the lack of clarity about immigration rules once the country leaves the EU.

This has resulted in an extended recruitment process, with 75 per cent of employers reporting that it is taking them longer to find new hires. According to the Open University study, this means many businesses will see extra costs in the form of recruitment fees and hiring temporary staff. This is estimated to be at least £1.7 billion.

Top talent is therefore in very high demand, with the most skilled now able to command a higher salary. In the last 12 months, some 56 per cent of businesses reported having to boost the offered salary for a role well above market rate to obtain the skills they needed. The average increase was £4,150 per hire for SMEs and £5,575 per hire for larger organisations.

Managerial and IT roles are proving the most difficult to fill, according to the Open University, with one in five struggling to hire both senior managers (21 per cent) and mid-level managers (19 per cent), while 47 per cent of employers said they are struggling to attract talent with the right IT skills.

Steve Hill, external engagement director at the Open University, said: “Organisations need an agile workforce that can embrace change and meet new challenges. The cost of the skills gap to the UK economy shows it must become a business and government priority to build the skills and capabilities of each individual through investing in talent at all levels.”


Posted by Jon Aspinell on 4th July 2017

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