Understanding the skills challenge

Businesses’ inability to hire skilled workers may prevent them realising their aspirations for growth, including international expansion

Understanding the skills challenge

Britain’s businesses will need to resolve a serious skills shortage if their ambitions for expansion, both at home and abroad, are to be achieved. This is the warning from our latest Trade Barometer research. And while these problems can be managed, the study also suggests the cumulative effect of concerns over Brexit, as well as other headwinds, has made it more difficult to confront the skills gap.

Our Trade Barometer research identifies successful recruitment and retention as a vital ingredient in future growth. Overall, 50% of businesses surveyed now say their ability to attract skilled staff will be a crucial factor in their ability to grow over the next three years; this means skills are the most important current issue after the UK’s economic prospects, the research found.

Understanding the skills challenge

Finding skilled workers for overseas expansion

Moreover, for businesses seeking to exploit international opportunities, closing the skills gap is a particularly vital – in many cases, a failure to do so has been holding them back.

Among domestic businesses and those aspiring to trade in international markets, some 31% say that a shortage of skilled labour or staff for internationalisation has been a barrier to their overseas growth during the past three years.

Established international businesses are struggling too. Asked what challenges they face when operating in international markets, 37% of businesses point to recruitment – the single most often-cited obstacle. The need to close the skills gap is pressing. The Trade Barometer suggests that, in the short term at least, resolving these difficulties will be highly challenging.

Overcoming the confidence gap

In fact, many firms concede they do not currently have enough confidence to hire new staff – the Trade Barometer reveals a worrying decline in planned investment levels across the board, including a drop in the numbers planning to recruit. Just 47% of businesses expect to take on staff in the next 12 months, whereas this time last year, 78% of businesses anticipated recruiting over the year to come.

Brexit uncertainty has clearly been a major contributory factor in this decline. Some 24% of businesses say that Brexit has already negatively affected their hiring plans. And 33% have either already reduced or frozen their headcounts as a direct consequence of Brexit or have plans to do so.

However, there are broader issues too, with deteriorating business sentiment amid slowing global growth also contributing to depressed investment plans. Many businesses are struggling to find recruits with the skills they require, a problem that may be compounded by Brexit if firms find it more difficult to take on overseas workers. Our latest results suggest that 34% of businesses are facing recruitment difficulties as a result of reduced inflow of EU employees related to Brexit. Also, as Santander’s recent Trailblazers research into the UK’s high-growth businesses has found, organisations which have a more rigorous and far-sighted approach to recruitment and meeting future skills challenges significantly increase their chances of success.

Overcoming these problems will not be straightforward, but businesses with the confidence to invest in high-quality recruitment and retention – and to embrace initiatives such as apprenticeships – stand a greater chance of securing a vital competitive advantage in the months and years ahead.

It will be important to leverage every possible opportunity. For example, Santander Universities SME Internship programme places talented students from leading universities with growing businesses. Taking advantage of schemes such as these can help businesses to begin to tackle the talent issue and ultimately to thrive on both the domestic and international stage.

 

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