Scottish employers missing out on hidden talent pool

• Data from The Open University and British Chambers of Commerce shows the vast majority of organisations in Scotland (71%) continue to report skills shortages 
• Almost two in five (39%) of all Scottish organisations don’t have specific skills initiatives in place for specific talent pools, including underrepresented groups
• Business expert and Chancellor of The Open University, Martha Lane Fox, warns organisations are missing out on an untapped talent by ignoring underrepresented groups in their workforce

According to this year’s Business Barometer report published by The Open University and the British Chambers of Commerce, more than two thirds (71%) of Scottish organisations are currently experiencing skills shortages, which remains one of the top challenges facing employers.

The annual report, which provides a temperature check on the UK skills landscape, highlights that despite the ongoing skills shortage in Scotland, almost two in five (39%) of Scottish organisations don’t have any specific initiatives, skills programmes or workplace adjustments in place for specific talent pools including underrepresented groups such as people with disabilities or workers from diverse ethnicities.

The report suggests that employers are missing out on an opportunity to ‘grow your own’ talent. 

The report suggests that employers are missing out on the hidden talent pool and an opportunity to ‘grow your own’ talent during a time where two in five (42%) Scottish organisations say they have been prevented from filling roles due to lack of applicants.

The ongoing skills shortage continues to have negative knock-on effect on existing staff morale and wellbeing, with three in four (75%) of organisations in Scotland reporting increased workload on existing staff.

Organisations also reported an impact on reduced activity or output (44%) and reduced long-term growth plans (36%), meaning the additional pressure of skills shortages are impacting the future of organisations which could lead to further challenges for the economy as well as meeting NetZero and equality, diversity and inclusion goals.

The threat of an ageing Scottish workforce retiring without employers having the skills to replace experienced employees is another concern, with a third (33%) reporting an increase in the number of employees over the age of 50 in the last three years.

Despite the ageing workforce concern, 86% of organisations don’t have a specific initiative in place for workers over 50, while 75% of organisations don’t have any written annual plans to prepare for people exiting the business.

While there is a collective effort to address the skills shortage as most Scottish organisations (77%) intend to use some form of training for their staff over the next twelve months, the report reveals that organisations, especially small and medium sized enterprises (SMEs), lack the necessary expertise and resources to strategically address the skills gaps and challenges effectively.

As a result, many firms are trapped in a cycle of continual recruitment and retention challenges.

Baroness Martha Lane Fox CBE, Chancellor at The Open University and President of the British Chambers of Commerce commented:

“It’s clear from this year’s Business Barometer report that the skills shortage has not improved, despite the existing efforts from organisations across the UK. We haven’t solved it yet.

“But what is even more concerning is that organisations aren’t investing in specific talent pools, including underrepresented groups. If organisations continue to ignore these workers, they risk missing out on untapped talent and deepening the skills gap even further.   

“There could be a big opportunity for employers here if hidden talent is given a boost.”

David Allen, Acting Depute Director, External Engagement & Partnerships, at The Open University in Scotland, said:

"Skills shortages are biting hard; damaging businesses and holding back economic growth. Never has it been more important for businesses, governments and training providers to work together to find solutions. 

“The Open University is a world leader in providing innovative and flexible distance learning opportunities. We have a vast variety of initiatives in place to support people, regardless of age, geography and background, to access higher education and succeed in their studies. 

“For example, 26% of OU students in Scotland declare a disability and we are able to offer support with finance, screen setup, exam arrangements, virtual internships and more. We also work closely with employers to ensure both that our students are equipped with the relevant skills and that workplaces are ready to attract our talent."

To view the Business Barometer Report 2023 visit: www.open.ac.uk/business/barometer-2023.

29 June 2023