MORE THAN 60 per cent of private businesses in Europe can’t recruit the skills they need, with more than half (54 per cent) saying a skills shortage has a direct impact on financial performance, costing a potential ?324bn annually, according to a new survey from PwC.
In the UK, more than half of private businesses (52 per cent) say the inability to recruit suitably skilled and qualified employees has a direct impact on turnover, equating to approximately £34bn (?39.3bn) in lost revenues annually.
For its European Private Business Survey, PwC surveyed 2,450 companies across 31 European countries, asking private businesses about a range of issues, including skills shortages, the impact of bureaucracy, Brexit and future growth prospects.
Commenting on the headline findings Neil Philpott, Midlands Private Business Leader, said: “Private businesses need to invest in equipping current and future employees with skills that keep pace with technological change. Collaborating with governments, schools and universities will be crucial to help identify the skills private businesses will need tomorrow.
“Responsive, flexible and nimble education systems will help provide school leavers and graduates with knowledge and expertise that is relevant to the future world of work. Employers also need to take responsibility for enabling lifelong learning and re-skilling existing staff.
“If private businesses want to attract and retain talent in a post-Brexit world they’ll also need to think about the appeal of their working environments. Modernising their approach and concentrating on their culture and values as well as just revenues will be key.”
The report says the survey is a wake-up call for national governments across Europe. They need to do more to gain the confidence of their private business constituencies, starting with ensuring they deliver the minimum of additional bureaucracy and regulatory compliance.
UK companies are the most upbeat about the potential outcome of Brexit, with 23 per cent expecting the outcome to be positive, well ahead of the next most-positive nations of Turkey and Romania (15 per cent) and Portugal (10 per cent).
Almost seven in ten (68 per cent) private businesses remain broadly neutral about the impact of Brexit on their business. Just over a quarter said Brexit would be bad for their business prospects. In the UK almost half of the private business interviewed (46 per cent) said Brexit would have a neutral impact.
Paul Terrington, PwC head of regions and UK private business leader, says private businesses believe their national governments are choking growth with red tape: “There is a widely-held perception that national governments are more prone to introducing regulation and red tape than the EU and that they aren’t doing enough to promote the interests of small private businesses.
“Every political decision has potential economic consequences and the smaller the organisation the greater the potential for regulation to add to the cost of doing business. The private business sector needs to become more vocal in articulating its interests and making governments aware of the the constraints domestic legislation can place on growth.”
Less than a quarter (22 per cent) of UK private businesses see cyber threats as the greatest risk to their business. This is in stark contrast to the findings of the 2018 Global CEO Survey, where cyber threats remain a top business concern for 87 per cent of UK CEOs.
Despite the surprisingly low UK figure, it is still higher than the European average for private businesses, with less than a fifth (19 per cent) ranking cyber threats as the biggest threat to their growth.
The European Private Business Survey found private businesses are more optimistic than they have been for some time. They are particularly confident they can grow their companies in their domestic markets by focusing on their customers and embracing digital technologies. Around 69 per cent of UK companies are confident of future growth, ahead of the 31-country average of 65 per cent.
Paul Terrington said: “Competition, skills shortages, domestic regulation and bureaucracy are the top-three threats to growth, suggesting that private businesses across Europe have more in common than we might otherwise have thought.
“Our Global CEO Survey confirmed that large companies are confident of growth and this European Private Business Survey found smaller firms equally bullish. This is a defining moment for European private businesses – and we must grasp every opportunity for growth.”