31 October 2023 – A labour and skills shortage has been plaguing UK businesses for years now. And according to a new study, business leaders are concerned about the challenges continuing in 2024.
The right staff is vital for any business to grow and thrive. But in recent years, a skills gap has impacted on many small businesses in the UK, keeping them from reaching their full potential.
Small businesses make up over 90% of all businesses in the UK, so unless they thrive, the economy is unlikely to recover and grow.
But the situation is far from improving, with 75% of business leaders concerned they won’t be able to attract and retain talent with the right skills in 2024.
Employers And Employees Concerned About Skills Shortage
Robert Half has released its 2024 Salary Guide, in which the recruitment firm analyses hiring trends, market salaries and skills requirements in the UK for the upcoming year.
The report shows that there is a real concern among employers and employees about their company’s ability to retain their staff in 2024. 75% of the surveyed businesses are very or somewhat concerned about their ability to keep their staff in 2024.
The reasons for concern on the employers side are topped by an increase in work pressure/heavy workloads. The fear of their talented staff being headhunted by competitors is also worrying many business leaders.
Salaries are also an important reason why employers aren’t confident they can hold on to their staff in 2024. They are aware that workers will compare their salaries within the industry/sector as well as comparable roles.
There is also a concern about staff’s wellbeing, and what impact high burnout rates will have on staff levels in the next year.
Workers are equally concerned about their firm’s ability to retain staff, with 70% saying they were very or somewhat concerned.
On top of their list of concerns is the lack of competitive pay compared to similar roles. Employees are also worried that colleagues might leave due to their company offering limited opportunities for career progression or training.
A belief that salaries in their firm don’t compare well with other companies in the same sector/industry, is also a cause for concern for workers. Like their employers, employees are also worried about staff being headhunted by competitors and high burnout rates.
There is equally a lot of concern around the impact of the skills shortage on recruiting new talent. With 75% of employers and 69% of employees being very or somewhat concerned about their firm’s ability to attract new talent.
The main reason for concern for both workers and businesses is the inability of the company to offer a competitive pay package. Poor work/life balance is also a concern for workers and business leaders.
Employers are also concerned about unrealistic job expectations by workers and a lack of flexible working options.
Workers are also concerned about the pace of the hiring process as well as the scarcity of opportunities for career progression/training.
Workers And Employers Positive About Growth Despite Challenges
Despite the tough economic situation the UK is in and the difficulties in hiring and retaining talented staff, the outlook for 2024 is positive.
The report found that 69% of employers and 64% of workers are much more or somewhat confident about their company’s growth prospects in 2024.
This positive outlook is down to workers and employers believing that demand in their services or products is increasing and there are more business opportunities available.
A better economic situation and successful restructuring are also fuelling workers’ and employers’ confidence for next year. Businesses also see an increase in financial resources and budgets as a sign to be optimistic.
Workers believe that new technologies and the speed at which they have been adapted by their companies will contribute to growth in 2024.
No doubt, this positive outlook is also responsible for the intention of many businesses to raise salaries in 2024. 41% plan to increase salaries by a flat-rate percentage. 75% will raise them in line with inflation and 16% based on performance of their employees.
However, not all businesses will be able to increase salaries. 22% said they won’t raise salaries any further. 19% said an increase in line with inflation would be too risky for their business.
And another 19% said they have to choose between having a stable business and helping staff coping with the cost-of-living crisis.
The current economic situation is tough for many small businesses. They need the right staff to grow and thrive, but with a labour and skills shortage across the UK, this is a huge challenge.
The report shows that offering a competitive pay package is seen as vital by both employers and employees to recruit and retain staff. However, when we look a bit more closely at the data, we find that workers are also interested in career progression, training, a good work/life balance and the possibility of flexible working.
We know that most people work because they need money to pay their bills and this becomes even more important during a cost-of-living crisis, when budgets are stretched.
However, here at Business4Beginners we believe that this is only a part of what people want from work. People want to feel fulfilled by their work, they want to be challenged and learn, and they want to work for a company that values them.
So while increasing salaries for existing and new staff is great and will help with recruitment and retention, it’s not the only thing small businesses can do. In fact, many won’t be able to afford raising salaries.
In our opinion, providing staff, existing and new, with development opportunities is just as impactful as offering more money. Upskilling your staff is one way to achieve this. We know that small businesses want more support to upskill their staff.
Staff’s health and wellbeing should also be at the heart of your HR strategy. This means offering flexible working wherever possible and ensuring employees have a good work/life balance.
We firmly believe that more money isn’t always the right answer and this report seems to prove this.