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Is Britain's skill shortage limiting small businesses?

In requests made to Chancellor George Osborne ahead of his 8th of July Budget statement, the Federation of Small Businesses (FSB) expressed concerns about a perceived skills shortage in the UK workforce.

Ready for growth

The FSB’s latest research shows that small business productivity grew by 1.4% in Q4 2014, a figure that dwarfs the UK average of 0.3% and has sparked small businesses to gear up for growth. Three machinists in workspace by machine talking

According to the latest CIPD/Hays resourcing and talent planning survey, 44% of companies plan to increase their staff in 2015. However, if they are to meet their goals and find suitable hires, the FSB believes that more must be done to address a skills shortage.

Finding and building skills

The suggestions made by the FSB focused on two key areas. Firstly, promoting the message to schools and young people that apprenticeships are valuable. This forms part of the broader belief that a vocational training system which effectively prepares young people for work is crucial.

Secondly, putting greater emphasis on developing leadership and management skills. The FSB identifies this as an area “where the UK lags behind its competitors”, and calls for a management component in proposed ‘degree apprenticeships’.

Affecting business strategies

The CIPD has suggested that focusing on developing existing staff would be a better strategy for building a skilled and sustainable workforce in the long-term, but this strategy requires significant investment and comes with a certain amount of risk.

PwC’s 2015 global CEO survey shows that 75% of the 1,300 chief executives surveyed believe that finding the right staff is a ‘major concern’. That’s 10% more than last year and 46% more than six years ago. Worse still for small businesses, it seems that mergers and acquisitions are increasingly being driven by the need to buy in talent. Around 25% of deals last year were motivated by the desire to bring the right skills on board.

This means small businesses not only have to worry about acquiring talent, but retaining staff: a problem 77% of businesses admit to struggling with. Solving the skills shortage is therefore not just about fuelling growth, it’s about maintaining stability.

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