Home Business News London firms spend £48m plugging skills gap

London firms spend £48m plugging skills gap

by LLB Reporter
8th Jul 19 3:53 pm

71% of employers in London have struggled to find skilled workers this year, with Brexit uncertainty making talent scarcer.

In an annual report on the skills landscape of the UK, The OpenUniversity Business Barometer 2019 reveals that organisations spent £1.4bn on temporary staff, recruitment fees and increased salaries in the past 12 months. With many employers experiencing difficulties in finding employees with the right qualifications and experience, organisations reported a 179% rise in spending on recruitment fees.

Nearly three in five (57%) hired temporary staff to plug gaps, while half (50%) spent more than intended on recruitment fees. Others (36%) took a different approach, increasing salaries in order to make roles more attractive, and nearly two in five (39%) were forced to hire at a lower level than intended.

Approach to addressing the skills shortage Expenditure


Expenditure 2018 Percentage change
Extra spending on recruitment fees £564 million £202 million 179%
Recruiting at a lower level and boosting skills with training £384 million £358 million 7%
Increasing salaries on offer £236 million £704 million – 66%
Spending on temporary staff while role remained vacant £260 million £248 million 5%
Total £1.4


£955 million



The skills shortage comes as the UK employment rate stands at the highest level since 1971, while unemployment is at its lowest since 19741. The dearth of skills in the labour market means that recruitment is taking one month and 21 days longer than anticipated, forcing many to seek external help.

Nearly seven in 10 (68%) employers in the Capital report that their organisation is currently facing a skills shortage. And while recruiter spending is on the rise in an attempt to attract necessary skills, there is also a greater focus on re-training existing staff, with 64 per cent of organisations increasing their training and development budgets in the past year by an average of 11%.

In the past, many employers have relied on buying talent rather than building it, but with three in five (61%) organisations expecting it to become harder to find the right skills in the next 12 months many are now looking to their existing workforce. Three in five (61%) think that they will have to focus on developing talent from within their organisation if they want to guarantee access to the skills they need in order to be productive and efficient.

Only 14% of employers think that Brexit will open up new growth opportunities for their organisation, suggesting the current uncertainty surrounding the UK’s departure from the EU may be a key driver of this sudden change in gear. Nearly half (48%) of senior business leaders agree that the skills shortage will worsen after the UK officially leaves the European Union, which may explain part of the shift to focus on home-grown talent.

While three-quarters (75%) of employers agree that developing the skills of the existing workforce is a more sustainable approach, it is crucial that any training offered helps support business objectives in order to gain as much as value as possible. The Open University offers flexible, technology-enabled degrees and apprenticeships, which allow employees to fit learning around work and personal commitments, and which over three in five (64%) employers believe is less disruptive than other forms of training.

David Willett, Corporate Director at The Open University said, “It’s encouraging that employers are looking to invest in the talent of their existing workforce, with businesses increasingly turning to strategies that will serve their skills requirements for the years to come. While many are starting to focus more on building up skills from within, rather than buying them in, it is essential that training ultimately delivers results, while fitting around employees’ existing commitments.

“Current uncertainties may see businesses understandably focusing on the short term, but initiatives like work-based training are essential for those looking to remain agile and competitive throughout in a rapidly changing business environment. Training, such as apprenticeships, provides a long-term solution to UK business looking to adapt to challenges on the horizon such as Brexit, digitisation and new technologies.”

Further findings, including specific skills shortages by region and sector and employers’ expectations for the year ahead, as well as details of The Open University’s offering, are available in The Open University Business Barometer 2019.

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