Skills shortages leapfrog transport as biggest issue

A shortage of skilled staff is now the biggest barrier to business in the capital, overtaking transport problems for the first time, the latest CBI/KPMG London Business Survey reveals.

Sixty-one per cent of employers are facing skills shortages, a rise from 49 per cent last year, with firms in the property, professional services and transport sectors worst affected.

The biggest problem is recruiting staff with specialist skills, but general skills such as communication and team-working, as well as basic literacy and numeracy deficiencies are also a concern, say employers.

The difficulty in recruiting skilled staff may also be having an effect on off-shoring, with the proportion of companies moving research and development (R&D) work overseas doubling in a year.

Overall, after skills, concerns over the transport network are the second biggest barrier to business in the capital, with regulation in third place, and lack of office space in fourth.

However, despite these concerns, businesses are increasingly positive about London as a place to do business with half saying it is still 'very good'
and 45 per cent 'good'.

Sir Digby Jones, CBI Director-General, said: "Our success, not only in the capital but nationally, increasingly relies on our ability to function as a highly skilled, hi-tech economy. While it is positive news that London is still seen as a good place to do business, employers are right to be concerned about the difficulty in finding staff equipped with both basic and more advanced skills.

"Business does not expect young people to have all the skills to do a specific job but surely it is not asking too much of the Government to ensure school-leavers have, at the very least, the ability to add up, read and write."

Two-thirds of companies (62 per cent) in the survey said staff training is the most worthwhile and rewarding form of business investment. Forty per cent aim to increase their spending on recruitment and training in the next six months. Last year, nationally, employers spent £33bn on staff training.

Ian Barlow, London Senior Partner at KPMG said:

"The skills shortages in the capital are worrying and if left unaddressed will affect London’s competitiveness. Business needs to be allowed to help shape the provision of skills training so that it becomes demand-led and equips people with the skills that employers are looking for. A key step is to restructure the London Skills Commission with strong business leadership.

“Individual businesses are already playing a significant role in helping schools prepare young people for the world of work. Partnering with schools can be beneficial in raising awareness of what business needs from today's young people and the opportunities it can provide for them.

"Addressing the skills shortage issue needs to be a priority for policy makers, whilst London's employers also have their part to play. If we want to continue to build world-beating companies, which deliver so many jobs and so much prosperity to Britain, then employers need to have access to a skilled workforce."

The survey also reveals three out of ten of the capital's companies (29 per
cent) have transferred some of their activities off-shore or are considering doing so. India is the most popular destination, followed by EU partner countries, China and the Far East.

Of businesses already off-shoring last year, just 15 per cent of them were transferring R&D work but, indicating the increasingly sophisticated skills and services on offer overseas, this has leapt to 34 per cent this year. IT and financial services remain the activities most companies off-shore.

Sir Digby added: "With an increasing pool of highly qualified graduates in emerging economies such as China and India, and costs often far lower, it is understandable that businesses are sending more activity overseas. The skills challenge for the UK is becoming more and more pressing."
 

Members of the Work Place Learning Centre team are available to provide journalists and media organisations with expert comment on all aspects of learning at work.

View our editorial policy click here.