England's 'Mittelstand' feeling the skills squeeze, report warns

3 Jul 2012

The UK Commission’s Employer Skills Survey interviewed over 74,000 businesses in England. It found that although skills shortages are not widespread, some key businesses - particularly mid-sized firms - are finding it increasingly difficult to get the skilled staff they need.

Like Germany’s famed “mittelstand”, these mid-sized establishments are seen as engines of growth, frequently combining a focus on exports with a local workforce and high-quality products or services.

The survey shows that:

• The proportion of businesses recruiting has increased from 12% in 2009 to 15% in 2011, but is still not at the pre-recession level of 18%
• Only mid-sized businesses report an increase in the intensity of skills shortage vacancies – that is, vacancies which exist because of a lack of suitably skilled candidates. 95 per cent of employers with a skills shortage vacancy feel it has a detrimental effect on their business
• Manufacturers and establishments in the community, social and personal services sector are most likely to report increased intensity of skills shortage vacancies (from 18 per cent of all vacancies being skill shortage vacancies in 2009 to 24 per cent in 2011 and 17 to 23 per cent respectively)
• In the manufacturing heartlands of the West Midlands and North-West, one in five vacancies (19 per cent) exist because of a shortage of appropriately skilled candidates
• Businesses that recruit young people straight from education tend to find them well prepared for work, with 17-18 year old college leavers reported to be better prepared than 17-18 year old school leavers
• Despite the majority of employers providing some type of development opportunity for their staff, total investment in training fell by 1.9 per cent in real terms, from £39.2bn in 2009 to £40.5bn in 2011.

Neil McLean, Consultant to DLA Piper, Chair of the Leeds City Region Local Economic Partnership and Commissioner at the UK Commission for Employment and Skills said:

“Since 2009, the jobs market appears to have shown modest signs of improvement, suggesting that many businesses are slowly regaining confidence in the economy. However, there are worrying signs that the country is experiencing a skills ‘squeezed middle’, with core nucleus of hungry, medium-sized firms finding it difficult to employ staff with the skills they need.

“As a group, these mid-sized firms are weathering the recession pretty well – indeed, they have continued to recruit over the past four years. They are undoubtedly our best hope for growth. Yet these businesses are often overlooked by policymakers in favour of entrepreneurial start-ups or huge multi-nationals.

“We need to stop thinking about a one-size-fits-all approach to industrial strategy, and become much smarter at making sure limited public resources are used to best effect. What’s needed is an approach which targets these employers, giving them both the freedom and the support they need to create jobs to sustain growth. Things like the UK Commission’s innovative employer ownership of skills programme, which gives employers direct control over public funding for training are a step in the right direction, but we need to go further, working with the best employers to ensure that we develop a more skilled, robust and flexible workforce.”

Neil Carberry, the CBI’s Director for Employment and Skills, added:

“The CBI has called for a new focus on the needs of medium-sized businesses, which have the potential to grow quickly and drive the economic recovery. Skills are a key part of this, and we welcome the recognition this survey will bring for the need to address the skills issues of our ‘future champion’ companies.”

ends

For more information please see -

The UK Employer Skills Survey 2011 : England results
The UK Employer Skills Survey 2011 : UK results