Skills shortages are continuing to bite with firms identifying this as the top threat to the UK’s attractiveness as a place to do business for the second year running. That’s according to the latest CBI/Accenture Employment Trends Survey.
The annual survey - in its 18th year, and with 342 respondents employing nearly 1m employees - found that more than two fifths (43%) of companies will grow their workforce next year, with permanent jobs outstripping temporary roles. The survey, carried out between August and October 2015, found jobs growth has continued across the whole of the UK.
But despite the upbeat picture on job creation, firms are concerned about rising labour costs through the planned National Living Wage (NLW) and the apprenticeship levy, and against the backdrop of an unreformed business rates system. Although companies expect to create more graduate jobs and apprenticeships next year, the rate of growth for both is easing. One in six businesses (16%) believe the new apprenticeship levy is the right approach to tackle the UK’s skills challenges, with almost half (47%) anticipating it being costly and bureaucratic (the survey was carried out before the details of the apprenticeship levy were confirmed in the Autumn Statement on 25 November 2015).
Carolyn Fairbairn, CBI director general, said: “The UK’s labour market has continued to outperform expectations with businesses delivering jobs in every region of the UK. But there’s a danger of Government complacency, with companies facing multiple increasing costs, through the apprenticeship levy, the national living wage and unreformed business rates, these are acting as a cumulative drag that could hamper growth.
“Given the uncertainty surrounding the effects of the National Living Wage, it is critical that an independent, evidence-based Low Pay Commission plays the main role in assessing its true impact and recommending future rate rises accordingly.
“The Government must be careful not to sacrifice prosperity for political expediency by saddling businesses with costs that could harm investment, which is critical to increasing productivity.”
More than half of businesses intend giving staff a pay award next year at or above the RPI rate of inflation, but nervousness remains about the impact of the NLW. Half (51%) of service sector respondents indicate they will raise their prices, 27% will employ fewer people and 18% will make changes to their reward packages as a result.
As the economy heads towards full employment, there is a risk that skills shortages continue to worsen. Further restrictions on skilled migration would hamper business activity, with 29% of companies affected reporting they would fail to meet customer demand if they were unable to get the right person, in the right place at the right time. And more than a quarter of respondents said they would look to move certain functions or activities overseas.