A severe skills gap is costing UK businesses more than £2 billion a year as companies struggle to find workers with the right attributes, according to inaugural research by The Open University.
The Open University concluded that companies are having to shell out £2.2 billion on higher salaries, recruitment costs and temporary staffing to fill vacancies amid a dearth of those with the skills they want. Its Open University Business Barometer, which will now be released annually, said 90% of employers had found it difficult to recruit workers with the required skills in the past 12 months and so had been forced to inflate salaries above the market rate to attract talent, costing at least £527 million alone.
Companies are also increasingly having to hire less qualified people and train them on the job. The Open University said in the next year, the number of organisations in England offering apprenticeships was expected to nearly double from 31pc to 59pc, thanks in part to the Government’s recently-introduced apprenticeship levy which is aimed at reducing the skills gap.
What is the apprenticeship levy?
From 6 April 2017, all businesses with a wage bill of more than £3 million will be liable to pay the levy at a rate of 0.5% of payroll (subject to a £15,000 annual allowance). The Government will apply a top up of 10% to the levy funds for spending on apprenticeship training in England i.e. for every £1.00 the business pays, it will get £1.10. The funds will be accessible through the Digital Apprenticeship Service which has been set up by the Government so that businesses can choose which apprenticeships they want to run. However, funds will expire 24 months after they enter the account.
If you would like further information on apprenticeships or the apprenticeship levy, please contact Simon deMaid.