The Courier & Advertiser (Fife Edition)
Firms getting on with the day job despite pressures
The Scottish Chambers of Commerce Network surveys its members to better understand business conditions, the challenges they face and expectations for the next quarter.
Our quarterly survey, the longestrunning of its kind, is designed to complement official ONS statistics and provide additional insight into business sentiment and optimism.
The release of economic statistics over the last few weeks has highlighted the challenges employers are facing, particularly in attracting and retaining talented staff.
The latest official labour market data has the UK-wide employment rate at the highest level since records began in 1971.
Inactivity and unemployment rates have dropped to similarly recordbreaking levels, with both at their lowest levels since the 1970s.
Despite this positive data, policy makers are concerned with several key points which continue to be expressed in official labour market statistics.
Firstly, the rate of pay growth, while above inflation, has slowed somewhat in the most recent figures.
Secondly, vacancies – as reported by employers – are at the highest level since 2001.
The vacancies challenge is reflected in our recent survey. Despite a downturn in recruitment difficulties for many sectors in the first quarter, this metric is rising again for the majority of our analysed sectors in Q2.
At a national level, 48% of all firms were experiencing difficulty finding the right people to fill key roles.
Although the official data suggests wage growth is slowing, it is continuing to outpace inflation.
Our survey suggests the continued competition to fill these record vacancies is beginning to have a further effect on pay levels, with 40% of our surveyed firms looking to increase pay.
Evidence for growing pay pressures has also been observed in the monthly PMI surveys.
Pressure to increase wages will present challenges for Scottish businesses, especially in areas like manufacturing, which are already grappling with rising raw materials costs and a volatile pound.
Despite recruitment difficulties, the broad results of our survey suggests business resilience in Scotland, with many remaining optimistic.
Only 15% of firms were less optimistic than last quarter, with tourism in particularly experiencing a turnaround from a disappointing Q1.
Furthermore, 48% of firms reported their revenue had increased on the quarter and 89% of firms have maintained or sought to increase business investment.
External factors continue to press on firms, with the UK’s exit from the European Union cited as one driver of concern by the minority of firms who reported a more pessimistic outlook.
However, what’s clear is that the majority of businesses are getting on with the day job in spite of this relative uncertainty.
Skills shortage was a persistent challenge across much of last year and it’s clear that it may continue to be in 2018.
The Scottish and UK governments need to do all they can to assist businesses in tackling this challenge.
In particular, more programmes such as the DYW initiative, which represents effective partnership between government, agencies and the private sector, would ensure that our skills system remains deeply focused on outcomes.
This allows future workers to find the jobs that are right for them, while providing firms with the skills they urgently need to grow.