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Skills shortages still a top concern, finds CBI

The annual survey found once again that skills gaps were the most cited threat to competitiveness, with this a growing threat

Skills shortages remain the top concern for firms and represent a growing threat, according to the latest annual CBI/Pertemps Network Group Employment Trends Survey.

The survey (now in its 19th year) found that ongoing skills gaps ranked as the most commonly-cited threat to competitiveness (64%) and for a second year topped the list of worries for the future (58%).

It found that uncertainty about the UK’s future relationship with the EU has shaken overall business confidence in the labour market. Future access to skilled migrants was cited as a threat to competitiveness by 58% of respondents, up from 31% in 2015. When it came to access to non-graduate migrants, as many of this year’s respondents as last year’s (50%) were concerned.

Meanwhile, the balance of respondents expecting the UK to be a more attractive place to employ people in the next five years has flipped from +16% in 2015’s survey to -21% this year.

“Businesses need the confidence they can employ the right people at the right time,” said Josh Hardie, CBI deputy-director general. “They will continue to invest heavily in skills and training, working with the government to grow the skills base needed for a thriving economy. But having an immigration system that provides access to both skills and labour while addressing the public’s concerns is essential.

“As we enter a new phase of UK-EU relations it is imperative that employers are supported effectively so our labour market continues to perform. There is a clear opportunity for the government to work in partnership with business to position the UK as an attractive global hub and strong economy.”

The importance of access to skills was underlined by the survey’s finding that four in 10 (41%) UK firms intend to grow their workforce in the year ahead. While the pace has slowed in comparison to last year’s survey, the positive balance of firms expecting to add employees over those expecting to shed jobs stands at +28%. This continues a trend seen in each survey since 2011.

“With record employment levels, more people than ever are now in work and the strengths of the UK labour market look set to yield positive results over the course of 2017,” Hardie commented. “Businesses are 100% committed to making the best of Brexit. However, this year’s survey does show a greater sense of concern about the UK’s long-term attractiveness as a place to create jobs. Getting our industrial strategy right and understanding what the UK’s future relationship with the EU will be will help ensure that this worry does not negatively impact the future performance of the labour market.”

For the fourth year running growth in permanent job opportunities is set to outstrip temporary recruitment in the year ahead.

The survey also covered pay. It found that, in response to the National Living Wage, 41% absorbed the cost, while 26% passed this on through increased prices.

Looking ahead, 28% will look to pass on costs over the next four years, while the same proportion expect to increase automation to boost productivity and offset the cost of rising wages. Nearly a fifth (18%) report they will look to reduce employment or restructure their business model to manage the scheduled NLW increases.