Nearly half of London’s businesses (45%) say there is a skills shortage amongst current employees, according to the latest CBI/KPMG London Business Survey.
Two-thirds of firms (66%) reported difficulty recruiting highly skilled people, such as IT/technology specialists (20%), creative specialists (14%) and finance and engineering specialists (12%). Science, technology, engineering and maths (STEM) skills are in high demand, whilst basic skills, such as core literacy and numeracy, alongside transferable skills, such as communication and business awareness, were also ranked as key traits firms look for in their employees.
Recognising this, half of firms have established links with schools or colleges. Of those businesses, half provide work experience to students and over a third (37%) provide careers advice and talks. It was striking that over half of businesses (56%) want a reformed visa system to remove the barriers to hiring highly skilled individuals from overseas. Firms highlighted the need to continue to improve visa service standards, remove the net migration target and reform business visitor visas.
The survey of 115 London firms showed increased optimism about the economy (59%), but at the slowest pace in a year. About half of respondents (47%) are optimistic about their business prospects over the next six months, with 66% planning to expand their business over the next year - the highest figure recorded since the start of 2014. Nearly two-thirds of firms (62%) aim to increase headcount over the next six months, 10% up on the last quarter, and only 18% plan to reduce headcount, 5% down on the last quarter.
Lucy Haynes, CBI London Director, said: “Having the right skills to drive the capital’s economy forward is an absolutely core ingredient in the recipe for continued success.
“It’s so important that businesses seize the opportunity to work with schools and colleges and ensure that London’s students, who will build the capital’s future, are equipped with the skills firms want in their employees. STEM skills are particularly valuable, given that London’s thriving creative and technology sector is set to be a big growth contributor over the next five years.
“To keep the capital internationally competitive, as well as attractive to skilled workers policymakers need to look at further streamlining the visa system. We would also like to see the Mayor take urgent action to free up land for house building, and invest more in the city’s transport infrastructure.”
Richard Reid, London Chairman of KPMG said: “As we finally move into a period of more sustained growth, many businesses, including our own, face a larger skills deficit and could struggle to find the talent they need to grow and prosper. Combined with the higher housing and transport costs, the war for talent is getting increasingly complex for employers based in one of the most vibrant but expensive cities in the world.
“London’s businesses are doing more at a grass roots level to work with schools and students to further raise achievement and equip them with the key skills needed for employment. London already has the best qualified school leavers in England, but we can still do more to address a small core with poor basic numeracy and literacy skills required to join the workforce.
“Being a global hub and with two out of three London businesses struggling to get the high skilled workers they need in this country, easing the barriers of our complex visa system to ensure we attract the best global talent needed to compete on a world stage is now vital. Failure to act swiftly on the skills agenda will undoubtedly see London slip in its global reputation as a world class business destination to the highly educated centres of the likes of Shanghai, Singapore and Mumbai.”
The cost of doing business, together with housing costs and transport, remain the biggest threats to London’s competitiveness. Whilst firms saw an improvement in the cycle (57%) and tube (52%) networks, almost half (49%) said the city’s roads are deteriorating, and 55% said air connectivity had not improved.
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Notes to Editors:
About the survey
The survey was carried out between 07 July and 28 July 2014. There were 115 responses.
Professional services was the largest sector, covering 26% of the total sample, followed by hospitality, leisure and retail (14%), and banking, finance and insurance (13%).
46% of responses came from SMEs, defined as having a UK turnover of up to £10m. 18% of responses were from companies with a turnover of £100-500m.
About the sponsor
KPMG is a global network of professional firms providing audit, tax and advisory services. KPMG in the UK has around 12,000 people working in 22 offices and is part of a strong network of member firms. Its vision is to turn knowledge into value for the benefit of clients, people and capital markets.
About the CBI
Across the UK, the CBI speaks on behalf of 190,000 businesses of all sizes and sectors which together employ nearly 7 million people, about one third of the private sector-employed workforce. With offices in the UK as well as representation in Brussels, Washington, Beijing and Delhi, the CBI communicates the British business voice around the world.
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KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.