Grant Thornton: Skill shortages stifle productivity in Scottish mid-sized businesses

The firm’s latest Business Outlook Tracker found that half of the Scottish business leaders surveyed believe that a lack of vital skills is affecting productivity levels. Financial skills were identified as the most in need (28%), followed closely by complex practical capabilities including technical and data skills (tied at 24%).

The survey of Scottish mid-sized regional businesses revealed that 88% were planning to invest more or the same in skills development over the next six months. Many have already established their own development programmes, with 75% of those noting they were lacking digital skills having in-house coaching to boost this. However, 57% of the respondents who were in need of financial skills, do not currently have internal training in place.

The high-tech nature of many businesses’ productivity concerns is reflected by the fact that 90% will be investing more or the same in technology over the next six months. The growth of Artificial Intelligence has likely been a key aspect of this, with only 14% believing that AI won’t have a positive impact on their productivity over the next year.

The survey finds that productivity issues are currently affecting almost every aspect of mid-sized businesses including their ability to export, to recruit and to train and upskill employees.

Alongside skills shortages, other important factors impacting the productivity levels of Scottish businesses include the lack of funding for further investment (36%), increasing levels of stress and burnout amongst staff, difficulty in attracting and retaining talent, and a lack of staff engagement or low morale (all 26%).

Greater investment in skills and training was also identified as the policy area that business leaders in Scotland would most like to see the government focus on longer term. With an election called for 4 July, the majority (84%) of Scottish businesses claimed to have confidence that the next UK government will focus on prioritising long-term solutions to address productivity issues in the nation’s public and private sectors.

Stuart Preston, practice leader for Grant Thornton UK LLP in Scotland, said: “It’s clear that there’s a strong demand for further investment in skills development in Scotland, with business leaders recording a need for better financial, data, and technical skills to help boost productivity.

“This lack of necessary skills development combined with difficulty in attracting and retaining talent is likely creating a snowball effect, stretching current people resources and ultimately contributing to heavy workloads and inefficiency – further exacerbating the productivity challenges facing the market and contributing to the increasing levels of staff burnout being seen in the region.

“Ahead of the election, the major parties have outlined that they are focusing on enhancing the skills and training opportunities available to the country’s workforce.

“It’s crucial then that the parties listen to what mid-sized businesses, the engine of the UK economy, are saying they need and put forward solutions to address the constraints currently hindering the growth and productivity of a core segment of our economy.”