Rising optimism amongst both East Midlands and global businesses is potentially under threat due to growing fears over workforce skills, according to the findings of new regional and global studies by business and financial adviser Grant Thornton UK LLP.
New findings from Grant Thornton’s International Business Report (IBR), has revealed that while global business optimism is rising to new quarterly highs, a storm may be brewing in the shape of a skilled worker shortage.
The IBR is a long-running global survey of 2,500 businesses in 36 economies. The most recent study finds that global business optimism has hit an all-time quarterly high of +51% in the second quarter of this year – marking five consecutive quarters of increases.
However, the IBR finds that increases in revenue and profitability expectations are being tempered by growing fears over workforce skills which could impact confidence around the world.
The percentage of businesses which identify a lack of skilled workers as a constraint has increased globally to just over one in three (35%), according to the IBR – its equal highest quarterly level ever. In the UK, 30% of businesses identified a lack of skilled workers as a constraint to growth.
And in a recent Grant Thornton survey of the East Midlands’ most profitable businesses* this apparent worldwide battle for talent is also being felt on a local level, with more than half (56%) believing the region’s talent pool is lacking, with a short supply of individuals with the skills and qualifications they need.
“We asked businesses from across the East Midlands how they are finding business conditions today compared to 12 months ago,” explains Mark Pashley, Director at Grant Thornton’s East Midlands office in Leicester. “Almost a third (32%) told us that recruiting the right people for their business is a big barrier to growth, and this battle for talent appears to be a global phenomenon with our regional survey echoing the findings of the global IBR study.
“Many of the East Midlands’ top 200 businesses rely on the ability to access staff from right across the globe at all levels in their business, and in many cases these individuals have become integral to business operations. Concerns about an ability to retain these individuals or accessing additional skills and/or individuals in a post-Brexit world, may be contributing to lower levels of optimism.
“There is a strong desire amongst them for the education sector to engage more with businesses, in order to understand what they want – at all levels – rather than to educate people according to a pure education model.
“Furthermore, with the UK unemployment rate reaching a 42-year low, businesses should be revisiting their people strategies to ensure they’re fit for purpose. Organisations here in the East Midlands and across the country continue to point to concerns over skilled staff shortages as being a major potential constraint for growth; and in an increasingly tight labour market, businesses may soon find their people looking elsewhere.”
Main findings of Grant Thornton’s IBR:
- Global business optimism hits all time quarterly high of +51% — five consecutive quarters of increases
- US business optimism hits an all-time high of 81%, and China remains at near three year high of 48%
- Europe and UK go their different ways on business confidence: EU reaches two-year high at 50%, whilst UK business optimism stands at 22% – down from 40% one year ago and 79% two years ago
- Plans to increase hiring over next year reaches record level of 36% globally; UK sees quarterly drop from 36% to 25% of businesses expecting to increase hiring over the year
- But percentage of businesses globally who identify a lack of skilled workers as a constraint has increased to just over one in three (35%) – highest quarterly level ever. UK businesses express similar concerns, at 30%.
*The East Midlands Top 200 Report is now in its fifth year, and analyses the financial performance of the 200 businesses in Derbyshire, Leicestershire, Lincolnshire and Nottinghamshire that have delivered the greatest, sustained profit growth between 2013 and 2016. It provides the region’s only in-depth study into the East Midlands’ fastest growing companies by key sector and performance indicators, to deliver a barometer of overall economic performance.
