Skills shortages loom as 40% of businesses struggle to find workers with the right skills, and almost a third of companies are concerned by shortage of overseas workers, according to the latest research by BDO.
It revealed medium-sized businesses across the UK are planning a hiring spree to drive business expansion as 60% expect to return to pre-pandemic revenues within the next 12 months.
The firm said a third (32%) of mid-sized businesses will need to make new hires this year to support their business expansions, rising to 43% of companies with an annual turnover between £10m and £50m.
However, a shortage of workers and rising employment costs risk hampering this growth with two fifths (40%) of businesses worried about finding employees with the right skills.
In addition, more than a third (35%) report a lack of workers able to work the hours that the business requires, rising to 40% for the retail and wholesale sector.
Despite the Government’s focus on apprenticeships to combat the so-called skills-gap, BDO said almost a third (31%) of businesses cited a shortage of apprentices as an issue affecting their hiring.
It also found almost a quarter (23%) said they will introduce new perks to attract and retain staff this year, while more than a fifth (21%) will be more flexible in their working practises moving forward.
However, these talent shortages coupled with rising inflation and the upcoming increase in National Insurance payments mean the cost of hiring is set to rise rapidly. Some 16% of businesses reported paying employees more to keep up with inflation, with a further 17% doing so to attract and retain staff. Almost a third of firms (30%) also reported that they plan to increase the price of their goods or services in order to drive growth.
Ed Dwan, partner at BDO, said: “While many businesses are optimistic about recovery this year, it is not guaranteed. With significant concerns about staff shortages on the one hand and rising costs of hiring on the other, the National Insurance hike in April could prove a tipping point for medium-sized businesses – the engine of the UK’s economy.
“The struggle almost a third of businesses are facing when trying to find apprentices is also deeply concerning. As organisations try to plan for the future, more should be done to encourage talented workers down this route and create a thriving workforce for the years ahead, whilst also supporting better social mobility.”