Employers turn to training as one way to alleviate recruitment woes. 

Training and recruitment spend rise.

The Open University Business Barometer 2019, an annual report on the skills landscape of the UK, has found more than two-thirds (68 per cent) of UK employers have struggled to find skilled workers this year, with Brexit uncertainty making talent scarcer. The research also shows organisations spent £4.4 billion on temporary staff, recruitment fees and increased salaries in the past 12 months due to difficulties finding employees with the right qualifications and experience.

Nearly half (48 per cent) hired temporary staff to plug gaps, while 44 per cent spent more than intended on recruitment fees. Others (38 per cent) took a different approach, increasing salaries in order to make roles more attractive, and nearly a third (31 per cent) were forced to hire at a lower level than intended.

 

Approach to addressing the skills shortage Expenditure

2019

Expenditure

2018

Percentage change
Extra spending on recruitment fees £1.6 billion £1.2 billion 33 per cent
Training to boost skills of those hired at a lower level £1.2 billion £1.5 billion -20 per cent
Increasing salaries on offer £0.9 billion £2.2 billion -59 per cent
Spending on temporary staff while role remained vacant £0.8 billion £1.5 billion -47 per cent
Total £4.4 billion £6.3 billion -30 per cent

 

The skills shortage comes as the UK employment rate stands at the highest level since 1971, while unemployment is at its lowest since 1974. The dearth of skills in the labour market means that recruitment is taking one month and 27 days longer than anticipated, forcing many to seek external help – leading to a 33 per cent rise in spending on recruitment fees in total.

Three in five (63 per cent) employers report that their organisation is currently facing a skills shortage (up from 62 per cent in 2018). And while spending on recruiters is on the rise in an attempt to attract necessary skills, there is also a greater focus on re-training existing staff, with more than half (53 per cent) of organisations increasing their training and development budgets in the past year – by an average of 10 per cent.

In the past, many employers have relied on buying talent rather than building it, but with more than three in five (62 per cent) expecting it to become harder to find the right skills in the next year many are now looking internally.

Three in five (61 per cent) think that they will have to focus on developing talent from within their organisation if they want to guarantee access to the skills they need in order to be productive and efficient. And the benefits of this approach can be felt throughout an organisation, with the Department for Business, Innovation and Skills citing training as one of the most commonly cited channels through which spillovers of knowledge and productivity can occur.

While one in five (21 per cent) employers think that Brexit will open up new growth opportunities for their organisation, the current uncertainty surrounding the UK’s departure from the EU may be a key driver of this sudden change in gear. Three in five (59 per cent) senior business leaders agree that the skills shortage will worsen after the UK officially leaves the European Union, which may explain the shift to focus on home-grown talent.

While seven in 10 (71 per cent) employers agree that developing the skills of the existing workforce is a more sustainable approach, it is crucial that any training helps to support business objectives, while offering as much as value as possible. The Open University’s flexible, technology-enabled degrees and apprenticeships, allow employees to fit learning around work and personal commitments, whilst being able to stay local and contribute to their community – and at the same time nearly three in five (58 per cent) employers believe is less disruptive than other forms of training.

“It’s encouraging that employers are looking to invest in the talent of their existing workforce, with businesses increasingly turning to strategies that will serve their skills requirements for the years to come,” said David Willett, corporate director at The Open University. “While many are starting to focus more on building up skills from within, rather than buying them in, it is essential that training ultimately delivers results, while fitting around employees’ existing commitments.

“Current uncertainties may see businesses understandably focusing on the short term, but initiatives like work-based training are essential for those looking to remain agile and competitive throughout in a rapidly changing business environment,” he added. “Training, such as apprenticeships, provides a long-term solution to UK organisations looking to adapt to challenges on the horizon such as Brexit, digitisation and new technologies.”

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