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Business & Economy

North East reduces skills gap but has a long way to go

A new report has found that the North East has reduced its skills gap over the last year, but still has one of the worst shortages in the UK.

The Open University’s business barometer found that almost two-thirds (65 per cent) of businesses in the region struggled to find suitable candidates for job roles in the last 12 months, a big improvement over 2018, when 85 per cent said they struggled.

The report surveys 950 business leaders from up and down the country annually, focusing on the UK’s skills landscape to get an insight into the state of employment over the last year.

Despite the improvement in 2019, the North East still has a long way to go, as the rate of 65 per cent is still worse than the national average of 63 per cent.

The barometer also found the skills gap is costing the UK, with a collective £4.4 billion spent on recruiting staff in the last year, though this is down 30 per cent from last year’s £6.3 billion bill.

North East recruitment costs came in at a total of around £172 million, which equates to a cost of £19,580 per business, and 61 per cent of firms said they overspent on hiring, the highest in the UK.

David Willet, corporate director at The Open University, said: “In the past year, organisations have spent more than £4.4 billion on recruitment fees, increased salaries, temporary staff and training to bring the skills of those hired at a lower level up to scratch.

“Employers have started to change their approach to solving skills shortages, on average spending 30 per cent less on short-term fixes such as increased salaries over the past year.

“At the same time, more than half have increased their training and development budgets and more than a third are now employing apprentices, which shows a fresh commitment to increasing skills within the existing workforce.

“In order for this positive change to continue, the training and education in which employers invest must deliver results.

“It is not enough to provide the skills required; employees must be able to apply their knowledge to solve problems, at all levels of their organisation.”