Lack of skills costs Scotland £350m during past year

A skills shortage cost Scottish organisations more than �350 million last year. Picture: contributed.
A skills shortage cost Scottish organisations more than �350 million last year. Picture: contributed.
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A skills gap in Scotland has cost organisations more than £350 million in the past year, warns a report published today.

The Open University’s Business Barometer revealed this shortfall in skilled workforce cost employers dearly in extra fees and indirect costs.

Some 86 per cent of senior business leaders in Scotland reported difficulties in finding staff with the required skills over the past 12 months, according to the study.

Across Scotland, organisations have paid an additional £70m in recruitment fees, £87m for temporary staff, and an extra £114m for training to upskill workers hired at a lower level than intended.

They have also paid an extra £81m to increase salaries on job offer, as the candidates with in-demand skill sets learn to take advantage of their position.

Marie Hendry, deputy director for external engagement and partnerships at The Open University in Scotland, said: “This survey shows that Scotland’s employers are spending upwards of £350 million dealing with skills shortages in their organisations, but most of that is on mitigating problems rather than solving them – extra recruitment costs, increased salaries and temporary staff. That just pushes the problem down the road.

“Work-based learning and training, such as graduate apprenticeships, mean that employers can upskill and reskill their staff, growing their own talent and creating more stable and sustainable workforces.”

More than three in five senior business leaders (64 per cent) reported the recruitment process is taking longer than they expected, and as a result, just over half of all businesses surveyed said they were forced to spend more on recruitment.

Because of this, training workers hired at less experienced level has accounted for the biggest chunk of Scotland’s overall £352m additional hiring spend, at 32 per cent.

Across the UK this figure dipped to 23 per cent, with inflated salaries and temporary staffing accounting for a more significant portion of the overall expenses.

According to Hendry, this could signify that Scottish organisations are taking a longer-term approach to hiring new staff than other areas of the UK.

She said: “It’s encouraging to see that Scottish organisations are directing more of their spending to training to solve skills issues than the UK average, but there’s room for us to do a lot more to give our people the skills they need to help our businesses succeed.”

The skills deficit caused particular issues when hiring for senior vacancies, as seven in ten organisations said the most recent role they found it difficult to fill was a leadership or management position.

Perhaps of most concern was that 53 per cent of senior leaders in Scotland expect the situation to deteriorate over the next 12 months, and further into the future, after the UK’s official departure from the EU.