Growing skills shortage threatens Britain’s recovery

Industrials companies remain subdued about turnover growth


ECI Partners’ 2014 Growth Survey shows UK growth companies, the drivers of the economic recovery, are increasingly affected by a growing skills shortage as economic growth picks up and hiring rebounds.

The only annual survey in the UK focused solely on growing companies found that over eight in 10 companies (82%) said they were experiencing a skills shortage, and the problem is not restricted to London and the South East but across the whole country and every sector, with the North West and Midlands the worst affected areas and industrial companies the worst affected sector.

The same survey reveals that companies are increasingly confident about the Coalition Government’s economic policies with a majority of respondents positive about the effect these policies have had on their business.

With less than eight months to go before the next general election, this is a dramatic increase on last year and, for the first time since the survey began in 2010, this is not restricted to London and the South East but is broad based approval across the whole of the UK and all sectors.

Charlie Johnstone, partner at ECI Partners, said: UK growth companies continue to play a vital role in driving Britain’s economic recovery, boosting exports, creating jobs and providing the much needed rebalancing of the economy towards a private sector, so it is heartening to see how their confidence and fortunes have rebounded from the depths of recession.

“Our survey shows that companies are ramping up hiring and investment, and looking to expand overseas. We see this across our own portfolio companies- currently growing sales at a CAGR of 18%, headcount at 19% and export to over 100 countries and with international sales growing at 33% p.a. compared to UK sales of 17%”

“Wage inflation is holding steady, backing the ONS recent estimates of wage growth. This is helping companies to remain competitive, but we fear the growing skills shortage keenly felt across the country could limit the growth potential of these companies and therefore the UK economy.

“Whilst the government may breathe a sigh of relief at the positive approval from these business leaders for steering the economy to calmer waters, it would be foolish for the current or any future government to believe the job is done. The UK is in desperate need of a better skilled workforce, world class infrastructure and a “normal” functioning banking sector. These items should be top of the agenda in the upcoming party conferences, the 2015 general election and beyond.”

Summary

  • Skills shortages a problem for vast majority (82%) of growth companies and shortages are being felt across the whole country, in every sector and across a wide range of roles.
  • Majority (51%) see the Coalition Government’s economic policies as ‘positive’ and for the first time since the survey began, every region has registered a net positive approval rating.
  • It appears we are in a sweet spot for Corporates with sales, profits and hiring to accelerate but wage growth in check.
  • Growth companies are planning to pour money into R&D and capital expenditure with 83% of respondents looking to invest more over the next 12 months.