The good news for small business across the UK is that we’re finally out of the economic doldrums. The economy is growing and one in four small businesses has a vacancy they’re looking to fill. The bad news is that 16 percent of small businesses are struggling to find candidates with the requisite skill levels to fill their roles.
These latest findings, the result of a collaboration between small business lender Everline and the Centre for Economic and Business Research (CEBR), have highlighted the skills gap, which is currently costing the UK economy 18billion.
Calculating the cost of the skills gap
The research canvassed 1,000 business decision makers, who admitted to allocating an average of 100 hours a year to finding the best candidates to fill their vacancies. This time was also split between training new and existing team members.
In economic terms, Everline and CEBR calculated this time to be worth an average of 3,160 per business, per year. The full scale of the problem becomes clear when you consider there are currently 520,000 vacancies small businesses are struggling to fill. While looking toward international employment specialists such as Peak PEO could do a lot to help source the right candidates with required experience and skills in order to fill the vacant positions, businesses might have to put in a considerable investment for this endeavour.
The study also found that younger business leaders (aged 18-34) tend to spend the economic equivalent of 7,540 sourcing the right staff, while their more experienced counterparts (aged 55 and over) only loose the equivalent of 1,860 a year.
There’s little impact on growth
At this very moment, small businesses are enjoying the fastest rate of growth they have experienced at any time in the past year. Growth of 113.4 percent for the third quarter of 2014 is 30 percent up on the same period last year.
If this trend continues, the increased demand for skilled employees will further outstrip the supply, resulting in an inevitable slowing in growth.
Could clusters reduce costs?
Russell Gould, managing director of Everline, believes small businesses are spending too much time searching for the right candidates. However, without a more skilled workforce, they are left with little choice. Ian Brinkley, the Work Foundation chief economist, might just have the answer.
He said: “For individual companies with few staff, the costs of things like training, upscaling and recruitment can be significant. Encouraging clusters of small businesses to share the costs by organising larger training sessions with nearby companies could help to reduce the overheads.”
Are skill shortages holding your small business back? Are you currently hiring for a position you’re struggling to fill? Please share your thoughts in the comments section below.