For some time now, manufacturers have expressed fears that a lack of skilled workers could negatively impact growth within the sector and lead to a reduction in expansion.
Now, it appears that a similar issue is facing the service sector which according to the Confederation of British Industry (CBI) has seen a notable slowdown in the pace of growth over the summer.
Skills shortages have especially impacted upon business and professional services firms such as accountants, lawyers and marketing specialists, which last month grew at their slowest pace since last November. Within the professional services category, 45 per cent of firms voiced the opinion that skills shortages will continue to limit expansion for the next 12 months.
As a result of these fears, the service sector as a whole has channelled a huge amount of energy into hiring programmes during the past quarter, with a positive balance of 33 per cent of the 215 firms surveyed claiming to have taken on staff during the period. This means that employment within the sector grew at its fastest pace since November 2007.
As the service sector accounts for around 78 per cent of the UK economy, these hiring drives are playing an integral role in ensuring recovery remains strong. However, CBI deputy director general Katja Hall points out that fears over skills shortages could negatively impact upon the overall economy as the year progresses.
She says; “The slowing in the pace of growth and profits in the service sector reflects our view that momentum in the economy will ease in the second half of the year.
“Employing more staff and planning to increase investment are positive steps in the quest for sustainable growth: however, skills shortages mean it is increasingly hard for firms to find and hire the right people.
“It’s important that businesses and government address this issue together, to put the economy of the future on the right footing.”
Fortunately, the CBI survey also found that optimism remains high within the sector, especially within consumer focused businesses not yet affected by a lack of skilled workers. 48 per cent of businesses in this area surveyed were more confident about the coming quarter than they were 3 months ago, with only 4 per cent voicing concerns over their financial future.
This optimism translated to a willingness to invest further in both employment and commercial property growth, as 16 per cent of hotels, bars and travel firms announced an intention to expand their land or buildings portfolios. As well as being the highest level since 2010, this revelation will aid growth within the commercial property market in regional areas, hopefully attracting further overseas investment to the UK.
Although skills shortages are a real concern, it appears that most firms within the services sector are choosing to take a proactive approach to the problem. Hopefully, this will limit the damage a further slowdown in growth will have upon the economy.
Do you think the government should be addressing skills shortages in the services and manufacturing sectors as a matter of urgency?
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