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Employers turn to training as businesses struggle to recruit

More than two-thirds (68%) of UK employers have struggled to find skilled workers this year, with Brexit uncertainty making talent scarcer.

An annual report on the skills landscape of the UK, The Open University Business Barometer 2019, reveals that 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%) hired temporary staff to plug gaps, while 44 per cent spent more than intended on recruitment fees. Others (38%) took a different approach, increasing salaries in order to make roles more attractive, and nearly a third (31%) 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%
Training to boost skills of those hired at a lower level £1.2 billion £1.5 billion -20%
Increasing salaries on offer £0.9 billion £2.2 billion -59%
Spending on temporary staff while role remained vacant £0.8 billion £1.5 billion -47%
Total £4.4 billion £6.3 billion -30%

The skills shortage comes as the UK employment rate stands at the highest level since 1971, while unemployment is at its lowest since 19741. 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%) employers report that their organisation is currently facing a skills shortage (up from 62% 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%) 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%) expecting it to become harder to find the right skills in the next year many are now looking internally.

Three in five (61%) 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, Energy, Innovation and Skills citing training as one of the most commonly cited channels through which spillovers of knowledge and productivity can occur2.

While one in five (21%) 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%) 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%) 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%) employers believe is less disruptive than other forms of training.

David Willett, Corporate Director at The Open University, responded to the findings: “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. 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. 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.”

Further findings, including specific skills shortages by region and sector and employers’ expectations for the year ahead, as well as details of The Open University’s offering, are available in The Open University Business Barometer 2019.