Despite unemployment reaching 2.57 million, and expectations that this could increase due to public sector cuts, many firms claim candidates do not have the right skills for the job - this includes poor levels of literacy and numeracy, but also softer skills such as timekeeping and communication.
Businesses also lack confidence in qualifications at all levels. Only 45% of businesses are very or fairly confident in recruiting graduates, and just 29% felt similarly about recruiting a school-leaver with A-levels or equivalent.
Only a fifth of businesses (20%) were very or fairly confident in recruiting an ex-public sector worker, and only 10% felt confident in taking on someone who has been unemployed for six months or longer.
With increasing levels of youth unemployment and businesses unable to get the right staff, the UK's education system must better equip young people with the skills needed for the workplace. While the survey found that two thirds of businesses engage with schools, colleges and universities, more can be done to ensure that the skills system supplies the kind of workforce needed by businesses.
For example, teaching business economics at school alongside theoretical maths to complement the existing syllabus, and ensuring young people can display professionalism and good communication skills in the workplace.
The survey also found only a minority (20%) of businesses have taken on an apprentice between March 2010 and April 2011. Despite the prime minister David Camberon urging businesses to take on more apprentices, even fewer firms (15%) plan to over the next 12 months. Of those businesses that had not taken on an apprentice, over half (54%) stated that apprentices are not relevant to their sector, suggesting that the current apprenticeship system is not tailored to the needs of business.
But employers that offer apprenticeship programmes view them as beneficial to their long-term development. Most businesses (82%) took on an apprentice to build the skills capacity within their businesses. Firms that have taken on an apprentice are more likely to want to expand their staff numbers than those that have not taken on an apprentice.
Apprenticeships are an important way of improving the UK's skills base, and giving young people opportunities beyond the classroom. However the government must work to improve the perception of the apprenticeship system among businesses, and improve its structure. Many businesses find that the frameworks for apprenticeships are too rigid and can't keep up with the developments in some industries. More flexible frameworks would allow apprentices to choose from different modules that could better mirror their career paths, and the needs of more businesses.
The report also found that the majority of businesses have a staff training budget. Only 14% of businesses have no training budget, showing that companies of all sizes are investing in staff even in strained economic times.
John Longworth, director general of the BCC, said: "People are at the heart of every successful business. Developing the capability of our workforce is crucial for individual companies as well as the UK's economic competitiveness. Our survey results prove what we have known for some time: UK companies continue to invest in their workforce, and they still want to take on staff and expand despite a difficult economic climate. However, the results also confirm that many firms looking to recruit are stymied by the poor skills available within the local labour pool.
"Even at a time of record youth unemployment, firms lack confidence in our education system's ability to deliver basic literacy and numeracy skills. But employers also want to see young people with a strong worth ethic, and those 'softer' skills like timekeeping, and communication, which are fundamental in the work environment. "We applaud the government's commitment to apprenticeships. Yet our statistics show that the quality level of many apprenticeships is not high enough, and too few businesses see apprenticeships as relevant to their sector. More must be done to put apprenticeships at the heart of workplace-based training and future economic growth."