Staff skill shortage dilemma
SMALL business confidence remains robust and firmly in positive territory, according to the first quarter results of our latest Small Business Index survey.
Lower business costs and current economic conditions are relieving pressure for firms, giving them the confidence to take on new staff, reward staff with pay increases, and successfully access finance from their banks to invest in and build their business.
Many businesses have also finally been able to reward staff with improved pay packets, which the results suggest have been supported by rising productivity growth, with the highest pay increases in the accommodation, food, manufacturing and construction sectors.
Low inflation is helping businesses’ bottom lines with the lowest-ever proportion of businesses reporting a year-on-year increase in costs, as well as putting more money in consumers’ pockets to spend in these businesses - thereby boosting confidence.
But it’s not all good news. Against a very positive set of results, businesses continue to struggle with skill shortages, which is hampering growth.
Thirty-seven per cent of businesses tell us that employing someone with the right skills is a barrier for them to grow their business.
This number is on the increase, a sharp rise from 25.4 per cent recorded 12 months ago.
It’s crucial that new and existing small firms have appropriately skilled staff and targeted support at a local level to grow their businesses.
Better skilled workers are critical for the UK to close the productivity gap and achieve long-term economic growth; as well as compete with other countries in the G7, such as France and Germany. That is why we must put in place a quality, employerled apprenticeship system to widen our skills base.
Increasing exports against tough trading conditions in Europe is also proving to be difficult for businesses.
Despite these headwinds, they nonetheless remain optimistic about prospects to increase exports in the coming months. We want to see the next government build on current momentum and create conditions which promote further growth and rebalance the economy.
It is important that a new government follows through measures outlined in our Business Manifesto to provide a stable environment for small firms, with measures built for the long-term to provide the stability businesses require.
Learn more about our election manifesto at ibacksmallbusiness. com.