Inflation in the UK hits a new high.
For the first time since 1981, inflation in the UK hit 11.1% in 2022–bringing with it worsening job shortages, as more people leave the workforce and wages increase at their highest rate in over a year.
In terms of SMEs, budgets are being impacted by the rising cost of living: as global crises affected commerce, more than half of SMEs saw operating costs above inflation, and 95% cited higher operating costs as a result of the rising cost of living.
Wage negotiations and interview no-shows are the main recruitment issues for SMEs.In addition to this, recruitment challenges continue to be costly. Nearly a quarter of employers have experienced early departures of new staff.
Talent problems and salary inflation are being fueled by staff attrition: More than a quarter of SMEs indicate they have been unable to fill open positions as a result of the so-called “Great Resignation,” which has put a shadow over the sector. According to statistics, 29% of millennials are the age group most likely to have quit their jobs in SMEs.
Neil Davies, CEO of Close Brothers’ Commercial Division says:
“Businesses have, for some time now, borne the brunt of both rising costs and inflation along with supply chain problems that have made it difficult to plan – both finances and stock – while trying to meet customer demands. But it’s encouraging to see that firms are still keen to invest despite all the challenges they are facing.”
The Skills Shortage in the UK
The skills gap is straining businesses’ remaining employees and resulting in a loss of productivity, with 78% of them reporting decreased output, profitability, or growth.
Finding the right qualified employees is one of the issues contributing to the stress UK SMEs are feeling, according to last month’s SME tracker. Half (50%) of UK SMEs say that skills shortages are harming their client services.
The skills shortage continues to hamper SME growth in the UK. This lack of access to talent, coupled with the economic downturn and turbulence, is causing SMEs to deprioritize hiring, which will have a long-term negative impact on SME growth as well as exacerbate already existing strains. Nearly one-fifth (17%) of businesses are not actively looking to grow in the next year.
The annual OU study, which this year was produced in partnership with the British Chambers of Commerce, is based on a survey of more than 1,300 organisations of all sizes from the governmental, corporate, and nonprofit sectors throughout the four countries.
What’s the solution?
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