Staff turnover ticks up as UK businesses struggle with skills gaps

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Four in ten UK businesses are reporting increasing difficulty in holding onto staff, in the aftermath of the EU Referendum, with 40 per cent of companies saying turnover has increased since June 2016, according to a new employment and skills study1 from London First and Lloyds Banking Group.

It seems applicants are still coming through the door: 42 per cent of respondents said their experience of recruitment hasn’t changed over the past 18 months, whereas 33 per cent said it was easier and 24 per cent said it was more difficult.

But skills shortages are proving to be an ongoing headache for recruiters, with two thirds (62 per cent) of firms nationwide saying they face challenges in hiring the people they need, rising to three out of four companies in London (76 per cent).

Impact of skills shortages

Nearly one in three businesses (30 per cent) said skills shortages were stopping them from growing revenue or expanding, while a quarter (27 per cent) say the problem is hindering their ability to compete effectively. But, for many businesses, it’s the impact on their employees that concerns them most: nearly half (46 per cent) said that skills shortages meant increased workload and stress for existing staff.

The biggest skills gap appears to be technical and job-specific skills, with 38 per cent of respondents saying these were the most difficult skills to source, closely followed by management (30 per cent) and data analysis skills (28 per cent). Many thought these gaps would persist over the next 18 months, reflecting the UK’s long-term challenge in tackling its skills shortages.

Jasmine Whitbread, chief executive of London First, said:

“The most important thing to business is being able to hire, retain and train the talented people we need. The UK’s employment landscape is changing, with signs people are thinking about their long-term plans as Brexit approaches and the oncoming impact of automation. Companies are stepping up to re-train and re-skill the people we have but, as we prepare to leave the EU, business, government and the education sector need to work together to fill the massive skills gaps currently holding UK businesses back.”

Edward Thurman, Ambassador for London, Lloyds Banking Group, said: “The skills gap in the UK is one of the most pressing economic issues of the moment. It risks hindering businesses growth, competitiveness, and productivity and needs urgent attention.”

“The next few years are critical. As our survey shows, businesses are facing unprecedented changes in the nature of roles and the skills they require; and firms across all sectors have a part to play in addressing the problem.”

Automation and skills

Most businesses expect job automation to impact within the next seven years, when many pupils beginning secondary school now will enter the workplace. Three out of four companies are planning for an impact on their staff numbers or a change in their need for skills.

Amongst those who are planning for automation, one in five existing roles (22 per cent) are expected to be replaced, with manufacturing (25 per cent), administrative (24 per cent), sales and customer services (23 per cent) most likely to be affected, as well as one in five managerial (19 per cent), professional (19 per cent) and skilled trade (22 per cent) roles.

Nevertheless four out of ten respondents (44 per cent) expect to increase their headcount over the next 18 months, with a notable focus on long-term planning. Nearly half of companies (46 per cent) are looking to hire to improve their skill-set and four out of ten (39 per cent) are thinking about succession planning.

And companies are expecting to fill a quarter of roles (24 per cent) by re-training staff, through on-the-job or full-time training. One in five (21 per cent) think they will have to look for new hires to fill any skills gaps.

Apprenticeships and engagement

To help generate a pipeline of future talent, two thirds of companies (66 per cent) are already engaged with local schools, colleges and universities and many want to do more (60 per cent). Concerns about time and cost are holding businesses back with around one in five companies find it difficult to partner with or engage a local school.

Apprenticeships are proving to be a popular route for employers, with nearly two thirds of companies surveyed employing apprentices (63 per cent) and, of these, eight out of 10 planning to either hire more or maintain current levels over the next couple of years. Only one in 10 were planning to reduce the number of apprentices they take on.

But only a third (30 per cent) of respondents thought the apprenticeship levy was working well, with many wanting increased flexibility in how the levy is spent, enabling investment in further training or a contribution towards the cost of recruiting, training and employing apprentices.

The Skills and Employment Commission

London First has established the Employment and Skills Commission, chaired by John Allan CBE and made up of business leaders from sectors including construction, finance, transport, technology, engineering and professional services to bring a strong business insight to tackling the UK’s skills gap.

Today, the Commission has published its consultation for employers, available here, and it will publish a business-led skills strategy, with clear calls to action for government, education and business, later this summer.

John Allan CBE, Chairman of London First and the Employment and Skills Commission, said:

“Too many Londoners are missing out on the skills they need and not sharing in our capital’s success. Business is ready to step up and tackle the skills gaps head on, making the most of the talent we have. But government will need to make changes to policy, helping us challenge weaknesses and secure the step-change we need on skills. With Brexit rapidly approaching, London First’s Employment and Skills Commission could not come at a better, or more needed, time.”

 

If you are interested in the future of work you may be interested in our Future of Work Summit held in London on the 18th October. Click here for more details.

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