SME skills gap widens

Nearly a third (29.9%) of small and medium-sized enterprises (SMEs) are concerned that skills shortages are impeding growth, according to research from the Federation of Small Businesses (FSB).

The FSB's latest Small Business Survey reveals a widening skills gap in the workplace, with the construction and computer services industries hit hardest.

The survey of nearly 2,500 firms also found that confidence among small businesses has reached record highs, with the index rising from 35.7 in Q1 2014 to 39.7 in Q2 2014.

Key findings:

  • 29.9% of SMEs reported skills shortages in Q2 2014, up from 25.4% in Q1 2014
  • a quarter (25.6%) of SMEs plan to increase capital investment in the next 12 months
  • SMEs in the technology and professional services sectors displayed the strongest optimism.

In a bid to boost workplace skills, the FSB is calling for:

  • increased involvement of business in the education system to enhance employability skills
  • reform of apprenticeships to make them more business focused
  • promotion of traineeships as alternatives to formal apprenticeships.

John Allan, national chairman of the FSB, said:

"As the labour market continues to tighten alongside the economic recovery, skills shortages will continue to be an increasing concern for more businesses. While this helps to boost the wage bargaining power of workers with the right skills, it poses a risk to the momentum of economic growth and once again underlines a long standing structural weakness in the UK economy.

"Despite the emergence of a skills shortage, these results show small firms are still feeling very confident, with every intention to invest and grow. This will provide further momentum to the recovery, especially in terms of jobs growth."