Brexit threatens to worsen skills shortage as three in five firms report more difficulty hiring staff

More than half of businesses expect problems to deepen over next 12 months

Three in five firms says the UK’s skills shortage worsened in the last year and more than half expect the situation to further deteriorate, according to research from the Open University.

It found that 53 per cent of UK businesses expect problems with recruitment to deepen in the next 12 months as the country leaves the EU.

Official figures released on Tuesday revealed that unemployment remained at a 40-year low of 4.1 per cent, giving firms few options when it comes to hiring. Meanwhile, net migration from the EU has dropped to a four-year low.

The lack of available talent is already affecting 91 per cent of employers surveyed. Collectively, those businesses said they spent £6.3bn last year to combat a shortage of required skills. This included an extra £2.2bn on higher salaries, £1.2bn in additional recruitment fees and £1.5bn on temporary staff.

More than two in five business leaders said they expect their organisation to struggle financially in the next year, as they attempt to make up for the shortfall in skilled workers.

Uncertainty about future visa arrangements and the “right to remain” for EU citizens has left many employers concerned about access to international talent, with 48 per cent of those polled saying they expect Brexit to further restrict availability.

Senior positions have so far presented the most difficulty for companies looking to hire - 56 per cent of those polled said they had struggled to fill management positions over the past year.

David Willett, corporate director at The Open University, said uncertainty caused by Brexit was further deepening problems for companies looking to recruit because employees are choosing the safety of their existing role rather than entering the jobs market for a move.

“Essentially, we have a supply and demand issue, which is seeing employers pay more to recruit or plug gaps with temporary workers - at a total cost of £6.3bn,” he said.

“But this approach is treating the symptoms rather than the illness; the reason business leaders are forced to spend so much is down to the fundamental lack of high-level skills.

“Organisations need to take a more sustainable, long-term approach, building talent through training rather than buying it in.“

Despite the severe shortage of skilled managers, the Institute for Apprenticeships recently announced that it is considering slashing funding for management apprenticeships.

“Cutting the funding for the Chartered Management Degree Apprenticeship will not help anyone,” David Willett added.

“Employers need talented managers and leaders to steer their organisations through different and uncertain times, like the present, but this change will act as a deterrent for business leaders looking to invest in higher-level training, particularly those within small and medium enterprises.“