Three in five employers report impending skills crisis

As Brexit threatens the pipeline of skilled workers, employers are facing recruitment challenges, according to The Open University

In its latest Business Barometer, which monitors the skills landscape of the UK, The Open University found that three in five (61%) employers believe the skills shortage has worsened in the last year, and over half (53%) expect it to deepen over the next 12 months.

The lack of readily available talent is already affecting the vast majority of employers (91%), who reported spending £6.3 billion last year to plug the gaps. This included £2.2 billion on inflated salaries, £1.2 billion on extra recruitment fees and £1.5 billion on temporary staffing.

Because of these costs, more than two in five (44%) business leaders expect their organisation to struggle financially in the next year, as they attempt to make up for the shortfall in skilled workers.

While the number of citizens coming from the European Union has increased since Brexit, uncertainty around visa arrangements and the 'right to remain' has left many employers concerned about access to skills from abroad, the report noted. Almost half (48%) of those surveyed said they expect Brexit to further restrict the talent pool available to their organisation.

Filling managerial roles seems to pose the biggest challenge, with 56% of senior business leaders saying that the role they had struggled to recruit for most recently was a management position, particularly at a senior or intermediate level where applicants are expected to have high-level skills combined with significant experience.

David Willett, corporate director of The Open University, said that organisations need to tackle potential skills shortages by training staff.

"With employment at an all-time high, which means there are fewer workers available for low-skilled roles, and many workers sticking in their jobs due to uncertainty around Brexit, our labour market has become stagnant – and is leaving organisations without the skills they need to achieve their goals and targets,” he said.

"Essentially, we have a supply and demand issue, which is seeing employers pay more to recruit or plug gaps with temporary workers – at a total cost of £6.3 billion. But this approach is treating the symptoms rather than the illness; the reason business leaders are forced to spend so much is down to the fundamental lack of high-level skills. Organisations need to take a more sustainable, long-term approach, building talent through training rather than buying it in."

He added that the decision to cut funding for management degree apprenticeships could also damage businesses’ talent pipelines.

"Cutting the funding for the Chartered Management Degree Apprenticeship will not help anyone. Employers need talented managers and leaders to steer their organisations through different and uncertain times, like the present, but this change will act as a deterrent for business leaders looking to invest in higher-level training, particularly those within small and medium enterprises,” he warned.

The news comes as the Labour government has announced it would bring in a simplified visa system for foreign workers after Brexit.

In a speech, shadow home secretary Diane Abbott pledged a "new, integrated work visa" which would allow "anyone with specified bona fide skills [to] come here to work". She also pledged to scrap the government's target of reducing net migration to below 100,000 a year.

Conservative immigration minister Caroline Nokes responded that Labour had "no interest in getting control of our borders as we leave the EU".

"Only the Conservatives will end free movement and build a fair and controlled immigration system," she added.

The Open University’s Business Barometer surveyed 950 senior business leaders across all regions and sectors in the UK.