Shortage of skilled workers reaches 21-year high – Chamber survey

Recruitment difficulties for Greater Birmingham manufacturers are at a record high – with an overwhelming 89 per cent of firms facing hiring problems, especially for skilled workers. Figures from the economic survey by Greater Birmingham Chambers of Commerce (GBCC) for the last quarter of 2015, supported by recruitment and people development agency Katie Bard, show that staff recruitment concerns among manufacturers are at their highest level according to official figures, which date back to autumn, 1997.

Worries over business rates and competition have added to the squeeze on firms amid evidence that completed  sales and future orders have declined over the last three months.

But the service sector paints a more bullish picture, with almost two-thirds of firms (59 per cent) confident that profits will improve over the next 12 months and 71 per cent  anticipating a sales surge.

The equivalent figures for manufacturing are 37 per cent (down from 71 per cent three months ago) and 45 per cent (down from 64 per cent).

Less than a third (31 per cent) of manufacturers say UK sales have increased in the last three months compared with 50 per cent in September.  The figures are roughly the same for advance orders, 31 per cent for December compared with 52 per cent in September.

The trend is replicated in manufacturing export markets, with 30 per cent of firms saying exports have increased in the last three months compared with 50 per cent in September. The respective figures for advance orders are 25 per cent against September’s 50 per cent.

GBCC policy advisor Stephanie Wall said: “Concerns amongst manufacturers included low oil prices and the exchange rate. 

“Another concern was the uncertainty around the interest rate.  After a constant interest rate for almost seven years, there is wariness from businesses over the market reaction when the rate does finally rise. 

“With the Fed having now raised the US interest rate, the Bank of England may now increase the UK rate in the New Year.  We however urge the Bank of England to give plenty of forewarning to the business community if a rate increase is planned.”

Paul Faulkner, chief executive of the GBCC, said: “It is an exceptionally worrying trend that nearly nine in ten manufacturers in the West Midlands are facing major problems with recruitment.

“The West Midlands is traditionally a very resilient region but if firms cannot attract the right calibre of candidates to help grow their businesses, then it makes it far more difficult for companies to plan ahead with a reasonable degree of certainty.

“The Government should be aware that continuing skill shortages can only increase the headaches for manufacturers, many of whom may well be still recovering from the impact of the recession.

“An enormous amount of exceptional work is happening in Greater Birmingham to increase skills levels and we need to keep this up. The Chamber’s Skills Hub, along with others, is continually working to link businesses to further education colleges to ensure people are going into the workplace with the right qualifications.

“Employers are playing their part in helping the government to achieve their ambition of creating three million apprenticeships by the summer of 2020. Big companies contributing to  the 0.5 per cent on company payrolls announced by the Chancellor will want to ensure the policy works.

“While the apprenticeship levy will encourage medium and large businesses to utilise their investment well, there is still a need for greater engagement with smaller organisations to encourage their involvement in apprenticeship reform.

 “The skills gap is a long-term problem and an on-going issue that will not be resolved with short term fixes.”

John Mortimer, co-founder and chief executive of the Angela Mortimer group, of which Katie Bard is a member firm, said: “The main issues around the skills issues are lack of intelligent labour market strategies, lack of investment, lack of empowerment, and lack of creativity. But all this is against a background that Birmingham still has a lot to play for, and is still generally positive.

“To be reporting concerns about recruitment shortages, and market weakness at the same time, is counter-intuitive, but it does illustrate a distinct sense of bumpiness in this moment of the recovery.”

The GBCC QES breakfast event, in partnership with Katie Bard and Squire Patton Boggs, will examine the survey results for Q3 and focus on the skills shortage.