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Scottish businesses spend almost £100 million on temporary staff - but redundancies continue to rise

Graphic reading 'Business Barometer Report 2020'

Scottish organisations have spent almost £100 million on temporary staffing to bridge the nation’s skills gap over the last year, despite one in four (26%) making redundancies to cut costs in the wake of COVID-19. 

In a further attempt to create quick fixes to the fallout of the pandemic, over half of Scottish employers (55%) report that their organisation’s survival is dependent on their ability to cut costs, according to The Open University Business Barometer. But with 60% of organisations reporting difficulty finding candidates with the relevant skills, Scottish business leaders have turned to more expensive solutions.

  • Business leaders across Scotland have spent £98.2 billion on temporary staff in the last year

  • Talent shortages continue to drive such a significant outlay, with 60% of organisations struggling to find the skills required to fill vacant roles

  • The Open University is urging employers to invest in existing employees and re-deploy talent to fill skills gaps brought about by the pandemic

The £100 million bill on temporary staff – a sixty per cent increase on last year’s spend – leaves organisations vulnerable to further talent deficits further down the line according to The Open University, which is urging organisations to prioritise investment in training and development as a more cost-effective, longer-term solution to the post-pandemic skills puzzle.

Across the board, expenditure on plugging Scotland’s skills gaps has swelled by 35 per cent over the last year.

Spend on inflated salaries, recruitment fees and the training of those hired at a lower level than anticipated all increased in the past twelve months.

And looking ahead, while more than one in three (36%) Scottish organisations plan to bring back furloughed staff after the government scheme ends, a further 21 per cent will rely on hiring temporary workers to fill in the gap left with another one in eight (13%) investing in automation to cut costs further.  

When it comes to hiring, Scottish employers are expecting to require more managers over the next 12 months to navigate further challenges, with demand for managerial skills exceeding the UK average.

But this is taking its toll on recruitment times, with Scottish employers taking more than 26 months to fill vacancies.  

The Open University in Scotland is encouraging employers to adopt a longer-term approach when it comes to developing skills, and engage in a continuous culture of learning and development that allows organisations to react quickly to future disruption. 

Susan Stewart, Director of The Open University in Scotland, said: 

“Scotland has seen a drastic change in the business landscape over the past six months in the wake of the COVID-19 pandemic. Whilst many have had to make redundancies, and rely more on temporary staff, this hiring and firing approach runs the risk of running up the staggering expenses that employers have reported this year.

“Organisations that adapt a “grow your own” approach to talent acquisition and invest in training up their existing workforce will be able to adapt to further challenges more quickly, and without the costs incurred as those who continue to buy in talent on an ad hoc basis. With the UK already facing a recession, and struggling with the economic uncertainty that this brings, continuous learning is key to adapting and embracing the challenges that lie ahead.”

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