Two-thirds of Scotland's SMEs report skills shortages

• 9 out of 10 Scotland's small and medium-sized enterprises (SMEs) recognise the positive impact of staff upskilling can have on business success, with 67% reporting skills shortages are impacting business growth and profitability.  
• People management (25%), finance (24%), digital technologies (22%) and project management (20%) were identified as the top areas SMEs are facing skill shortages.  
• 85% of Scotland's SMEs are considering offering sustainability-focused training to employees to support business development. 
• Despite two-thirds of Scotland's SMEs being unaware of the Scottish Government’s fully-funded employee training support, 75% would be likely to consider accessing funds in the next 12 months.  

67% of Scotland’s small and medium-sized enterprise (SMEs) owners and managers have reported that skills shortages are impacting their business growth and profitability, according to new research by Censuswide, on behalf of The Open University (OU) in Scotland. For businesses with 10-49 employees, this rocketed to 83%.  

The survey, completed by 200 owners and senior managers of Scotland's SMEs, identified people management (25%), finance (24%), digital technologies (22%) and project management (20%) as the top areas in which respondents were experiencing skills shortages.  

Current financial and economic pressures mean training budgets are often squeezed at the expense of skills development. This does not need to be the case. "

Environmental concerns and their impact on business growth are also front and centre for Scotland's SMEs, with 85% of organisations planning to invest in ‘green’ staff training.  Priority training areas included developing innovative and sustainable ways of doing things (37%), making their business more sustainable (36%) and renewable energy (32%).    

The survey also highlighted a lack of awareness among SMEs of the access they have to Scottish Government-funded employee training support. Less than a third of businesses had heard of the Scottish Funding Council Upskilling Fund (31%) and the Part-Time Fee Grant (29%).  

32% of businesses surveyed also knew about the Flexible Workforce Development Fund (FWDF), which offers SMEs access to £5,000 of free and flexible online training with the OU in Scotland, supported by the Scottish Funding Council. However, more positively, 75% of respondents would be likely to consider accessing funds in the next 12 months. 

David Allen, Senior Partnerships Manager, The Open University in Scotland, said:
“Despite two-thirds of businesses overwhelmingly reporting skill shortages, current financial and economic pressures mean training budgets are often squeezed at the expense of skills development. This does not need to be the case. Through the Flexible Workforce Development Fund, SMEs can access fully funded high quality, flexible online training that addresses many of the core skills shortages facing them.”  

 “Two-thirds of SMEs surveyed were unfamiliar with the available Scottish Government funded support. This is a core reason why The Open University in Scotland is determined to raise awareness of initiatives such as FWDF.  A positive outcome of our research is 75% of business owners surveyed are now likely to consider accessing Scottish Government-funded training in the next 12 months. It’s an opportunity for the taking.” 

The survey findings also align with the experience of the Scottish charity Health in Mind, which recently undertook a training programme in partnership with the OU, utilising FWDF support. 

Flora Henderson, Alliance Manager, Health in Mind commented:
“The cost-of-living crisis, as well as the ongoing impact of the COVID-19 pandemic, has resulted in a tremendous increase in demand for our services. At the same time, staff are affected by workload and a continued impact on staff absence levels.” 

“It was a priority to continue to offer genuinely valuable development opportunities, intended to help staff feel supported to grow and develop in their role.  The FWDF has allowed scarce resources to have more impact and encouraged wider participation than would otherwise be possible.” 

For more information on the OU’s flexible online training and the Flexible Workforce Development Fund visit: https://www.open.ac.uk/business/fwdf .  

30 May 2023