£18billion Loss for UK’s economy due to lack of skills

According to research by Everline and Centre for Economic and Business Research, the economy is losing 18 billion pounds every year.

This happens because of the skills gap – 520.000 job vacancies are not filled because the employees lack relevant skills to fill those positions.

The research found that small businesses are spending around one hundred hours a year to find the needed candidates, provide support to existing workers and to train the new employees. This number shows time that could be spent for business development. In money terms, this figure equals to around £3160, rises to £7540 for people aged 18-34 and falls to £1860 for respondents that are older than 55. This shows that younger entrepreneurs see the need to spend time to develop a skilled workforce in order to focus on business development afterwards.

Vacancies unable to be filled despite growth free job roles

The small business employment index was at its highest peak since 2004, and only 24% of small businesses surveyed had open job positions today. But 16 percent of these companies were not able to fill a vacancy within a month because of under-skilled prospects. As low as 17% of the companies told that they believe their staff is fully trained in their job positions. Only 47% are confident to rely on younger members of the company for them to take more responsibility and take on more senior positions.

The need of skills improvement will increase due to increased hiring in 2015

According to the small business employment, small companies will increase their hiring in the near future, which is why skills shortage problem will be addressed. If not, the damage to the economy could become even bigger.

Furthermore, the study shows a big improvement in the trading industries for small companies; the fastest annual growth rates are seen at this period since 2013. The number of SMEs liquidations decreased by 15.3% from the last year, which also shows an improvement in this environment.

This study shows that the need of skilled employees is huge and will only increase due to growing economy. The skills development issue will become even more important in 2015 as the small businesses will provide even more job vacancies. As small companies continue to create jobs and this reduces unemployment faster than expected, skill shortages are seen to become an ever greater challenge.

UK’s workforce, with improved skills and more upgraded processes for finding the right candidates with new vacancies, could lead to huge productivity gains.