Skills deficit damaging productivity say North West businesses

The firm’s latest Business Outlook Tracker* found that almost nine in ten business leaders (89%) believe that a lack of vital skills is affecting productivity levels. Legal Skills (24%) were identified as most lacking, followed closely by complex practical capabilities including technical, digital and entrepreneurial skills (all tied at 18%). The survey of mid-sized regional businesses revealed that 95% were planning to invest more or the same in skills development over the next six months. Many have already established their own development programmes, with 94% of those noting they were lacking digital skills having in-house coaching to boost this. However, 23% of the respondents who were in need of legal skills, do not currently have internal training in place. The high-tech nature of many businesses' productivity concerns is reflected by the fact that 92% will be investing more or the same in technology over the next six months. The growth of Artificial Intelligence has likely been a key aspect of this, with only 9% believing that AI won’t have a positive impact on their productivity over the next year. The survey finds that productivity issues are currently affecting almost every aspect of mid-sized businesses including their ability to grow, export and train and upskill employees. Alongside skills shortages, other important factors impacting the productivity levels of North West businesses include lack of staff engagement or low morale (25%), regulatory or legal barriers (24%) and a lack of funding for further investment (24%). Further investment in skills and training was identified as the policy area that business leaders in the North West would most like to see the government focus on longer term and as one of the most important ways to boost regional economic productivity. With an election called for 4 July, the majority of North West businesses (89%) claimed to have confidence that the next UK government (of any party) will focus on prioritising long-term solutions to address the nation’s productivity issues. Mick Frankish, Practice Leader for Grant Thornton UK LLP in the North West, said: “It’s clear that there’s a strong demand for further investment in skills development in the North West, with business leaders recording a need for better digital, legal, entrepreneurial, and technical skills to help boost productivity. This lack of necessary skills development, combined with a lack of funding for investment in core areas, is likely creating a snowball effect, stretching current people resources and ultimately contributing to heavy workloads and inefficiency – further exacerbating the productivity challenges facing the market. “Ahead of the election, the major parties have outlined that they are focusing on enhancing the skills and training opportunities available to the country’s workforce. It’s crucial then that the parties listen to what mid-sized businesses, the engine of the UK economy, are saying they need and put forward solutions to address the constraints currently hindering the growth and productivity of a core segment of our economy.”