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London firms forced to recruit abroad

Friday, 16 November 2007

Businesses in London struggling to meet their skills needs are increasingly looking overseas for both graduates and lower-skilled staff, the CBI and KPMG claim.

Results from the London Business Survey show that two out of three firms in the capital (65 per cent) expect to be troubled by skills shortages over the next six months, and the majority (58 per cent) are already recruiting from overseas to fill gaps.

Almost a third (29 per cent) of those turning overseas said they were increasing their recruitment from outside the UK and, contrary to the perception that overseas workers often perform low-skilled jobs, 83 per cent are bringing in those with higher, degree-level skills.

Lack of suitable skills

The survey revealed that whilst 57 per cent of respondents thought that London's talent pool was one of its leading assets in business success, 24 per cent warned that a lack of suitable skills was a top threat to London's overall competitiveness.

John Cridland, CBI Deputy Director-General, said that London is still a star economic performer, but that its skills problems could become its undoing. Shortages are being felt across many disciplines and at all levels, from the fundamentals of the shop floor right up to top leadership.

Cridland added that a shortage of UK applicants means London businesses often have no choice but to recruit foreign workers for lower-skilled positions in areas such as catering and transport.

"When it comes to graduates there is far more choice, but many employers are choosing foreign graduates over British applicants because they are of a higher quality and are more employable,” he said.

The CBI stressed that British graduates are competing in the job market with a top slice of talent from overseas universities. To remain attractive to employers, UK graduates need better careers advice and stronger employability skills in areas like team working and communication.

Economically wasteful

Ian Barlow, London Senior Partner at KPMG, was concerned to see the continuing skills shortages and for so much of this to need to be filled from abroad.

While he welcomed talent from everywhere, and said it is important that businesses in London have access to skilled labour from abroad, he emphasised that there is much that needs to be done to up-skill Londoners to enable them to compete for these jobs.

“It's economically wasteful and morally wrong for there to be so many unemployed people in the capital when there are so many jobs to fill,” Barlow said.

Key employability skills like team working, communication and a positive attitude were cited by 40 per cent of bosses as a major skills constraint. 39 per cent said that a lack of technical skills is a bottleneck, while 33 per cent pointed to a shortage of managerial skills, up from 22 per cent in March 2006.

Demand for graduates is set to increase, with 68 per cent of employers expecting their higher level skills needs to grow. By contrast, while 21 per cent said they will need more people with skills at GCSE level, 30 per cent said they will need less.

Barlow added that young people must leave education with the skills that businesses need, not just paper qualifications. He explained that although in the current environment the educational authorities see the students as their customers, the true customers are businesses because vocational qualifications are useless to students unless they lead to jobs.

"This survey clearly demonstrates how much employers value basic and employability skills in preference to just qualifications. This points the way to how the education and skills agenda needs to be redirected under the leadership of the business led London Employment and Skills Board,” he concluded.

Quality of career guidance

Business leaders in the survey said that to improve the capital’s home-grown talent, the London Skills and Employment Board, which is business-led and advises the Mayor on his education strategy, must strengthen the quality of careers guidance to young people.

Over a third (37 per cent) of businesses in the capital recruiting from abroad say that they are "reliant" on workers from Eastern or Central Europe. Some 47 per cent said they are reliant on staff from the rest of the EU, and 46 per cent described themselves as reliant on staff from outside the EU.

The London Business Survey is conducted twice a year to monitor the views of business on London as a place to do business. 116 businesses took part, representing almost half a million employees in the capital. The full survey will be published in December.

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