The UK has been facing significant skilled manual and technical labour shortages, with unemployment currently at 4%, affecting 2.6 million people.
British Chambers of Commerce (BCC) showed 71% of businesses in the services sector are finding it difficult to hire the right workers - the highest figure on record, with bigger UK businesses saying that unemployment has reached ‘critical levels’.
There are a variety of factors that contribute to this, with analysts suggesting the most prevalent is the uncertainty caused by Brexit. Official figures back this up, as recently released government statistics show how there has been a leap in the number of European Union citizens leaving Britain since the referendum result was announced in June. In 2017 alone, British employers spent £6.3 billion pounds to combat a shortage of required skills, this included an extra £2.2 billion on higher salaries, £1.2 billion in additional recruitment fees and £1.5 billion on temporary staff. It is interesting to state, however, that the UK has significant skills mismatch in comparison to other EU countries, with 40% of workers working in industries or jobs which are different from the area in which they trained. This results in a large percentage of workers lacking cognitive reasoning and complex problem-solving skills, and this is all further amplified by the fact that companies around Britain have been cutting back on their training budget.
These problems can make it so UK companies will not be able to compete in the long-term with their EU competitors, as they won’t necessarily have to deal with these staffing problems. There are ways that businesses can mitigate some of the damage and reduce risks, two of them include the following:
Exploring other markets through diversification - When businesses diversify into other markets, risks are reduced. By not relying single handedly on one specific market, the effects of Brexit (and any new regulations that may come with it) aren’t likely to be as hard hitting, which in turn will provide the firm with a competitive advantage against other UK businesses and result in several new possibilities for profit maximisation and new pricing strategies. Firms can invest in international markets with emerging economies, such as the BRIC countries, in order to familiarise themselves before competitors while reducing risks.
Expanding the firm’s portfolio by Innovating - Firms that innovate and find news ways to expand their product/service catalogue are also directly reducing risks, but more importantly are enriching their product portfolio, which can provide them with new types of customer demographics and as a result, increased sales and more profit.
Furthermore, while both of the methods mentioned are likely to bring a variety of positives if done correctly, firms should think about the opportunity costs associated and do the proper market research before making any corporate decisions, as there can be several obstacles such as overtrading and loss of focus on core markets.
In conclusion, it can be said that while UK businesses are having a harder time finding qualified staff, much of it is in relation to the uncertainty caused by Brexit and its possible new regulations, there are several things that companies can do to mitigate the negatives effects caused by this and get ahead of the competition.
Contact Innova Search today on 0330 311 0080 to discuss your recruitment needs.