Scots firms report high vacancy levels, skill shortages

Scottish businesses are continuing to report high vacancy levels and difficulties in finding new staff due to skill shortages, according to according to the latest Scottish Business Monitor (SBM) report, produced by the Fraser of Allander Institute and law firm Addleshaw Goddard.

The latest survey found that 42% of Scottish firms are likely, or very likely, to engage in business investment over the next 12 months.

Of those businesses, 75% said they would likely invest in physical assets, 68% stated they would invest in their workforce, and 57% said they would likely invest in technology and information systems.

To fund new investment, almost 80% of those firms said they would use their own funds, with only 10% pursuing a bank loan, and as little as 4% considering using private equity.

The survey of 323 firms in September and October showed nearly half of them cancelled or delayed planned investments in the past 12 months.

The report said that 75% of all firms stated they are more concerned than normal about availability of new staff.

About 45% of businesses in the survey have current vacancies, and 86% of these firms report they have found it difficult or very difficult to fill these vacancies.

The main reason for difficulty in filling vacancies continues to be “a reported lack of required skills or experience.”

Within this, technical (industry specific) skills gaps were the main issue reported (79%) followed by problem solving and critical thinking (42%).

Other factors that stated for difficulty in filling vacancies include a lack of applications (60%),wage expectations (60%) and expectations around flexible working (30%).

About 25% of businesses report difficulties in retaining current staff, and 71% of businesses are more concerned than normal about staff retention.

Laura Falls, Partner in the Corporate team at Addleshaw Goddard in Scotland, said: “The statistics relating to businesses investment decisions are pretty stark, especially when looked at in light of the fact that low levels of investment have previously been highlighted as a factor in the Scottish economy’s relatively low levels of productivity and economic growth.

“Some of that may be in part due to the fact that businesses are still largely focused on funding investment through their own means, rather than what they may see as the risk involved with seeking external backing.

“As someone who regularly works with businesses exploring other forms of investment, including private equity, it is clear that there is still some way to go to align the need for capital injection in Scottish businesses with the opportunities that exist to fund growth plans.”