HR · 4 July 2017

Skills shortage costing £2.2bn a year as employers turn to underqualified staff

Underqualified staff
Three in five business owners believed hiring underqualified staff had damaged their company

Over half of UK business owners have filled vacancies with underqualified staff in the last year, as new research reveals how employers have responded to a drop in available skilled candidates.

According to The Open University’s Business Barometer, 90 per cent of surveyed organisations experienced difficulties finding candidates for open positions in the last year.

The study suggested company decision makers increased wages by a collective £527m as a result of an over-competitive job market, while the average small business owner added an extra £4,150 to each salary to secure the right hire.

As well as bringing in workers less qualified than desired, inflated wages, use of temporary staff and higher recruitment costs together amounted to an extra £2.2bn in costs for British businesses, the university claimed.

Some three in five business owners admitted hiring underqualified staff had damaged their company.

Meanwhile, a skills shortage had extended recruitment times for three-quarters of all employers – on average almost two months longer than expected.

Looking forwards, 69 per cent of respondents expected the coming year to be equally difficult in finding suitable and qualified hires.

Commenting on the study, Steve Hill, a director at The Open University, said a change of strategy could help employers overcome the skills gap.

“The UK challenge of finding talent with the right skills means that businesses need to look at recruitment, development and retention differently,” Hill said.

“Now faced with a shrinking talent pool, exacerbated by the uncertainties of Brexit, it is more important that employers invest in developing their workforce.”

Recent job market data from CV-Library showed average salaries rose by four per cent between April and May 2017, as business owners competed among a declining pool of applicants.

As wages were forced up, the number of vacancies also rose significantly – employers created 17.7 per cent more job openings in May than the previous month. Growth is on the mind for founders, but Britain’s skills gap threatens to undermine the confidence of businesses.

The implications of Brexit have also weighed heavy, with uncertain immigration policy preventing business owners from putting long-term recruitment strategies in place.

Lizzie Crowley, skills advisor at the Chartered Institute of Personnel and Development (CIPD), agreed the solution to a shortage of qualified staff could be through internal investment.

“Not enough businesses are actually looking strategically at the skills that are available in their current workforce, how to best utilise those skills and also what type of training interventions they need to put into place to address any gaps,” Crowley said.

Don’t miss our definitive guide to hiring your first staff member:

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

Q&A

If you’ve found the article above useful, but have a more detailed and bespoke question, then please feel free to submit a query to our expert. We at Business Advice will get in contact with them on your behalf and arrange for a personalised response. These questions and answers will then be collated on the site for any other readers who have similar queries.

Ask a question

From the top