One of the biggest challenges facing SMEs is always finding the right staff to add to the workforce. It’s a perennial issue and something that businesses in every sector deal with. The right employee can add enormous value to a business, whilst the wrong choice can have serious impacts on smaller businesses.

With new figures  revealing a paucity of workers, with Brexit further impacting the numbers, what does this all mean for SMEs?

Employment is High

Employment numbers in the UK currently stand at their highest for nearly half a century – which is when records began, so this high is indeed a historic one. This is great in general terms for the economy and the workforce, but it also leaves SMEs with a much smaller candidate pool to source talent from.

34 percent of SME bosses revealed that they simply cannot find the right people to fill the vacancies they have. When surveyed, the main reasons bosses gave for this struggle were these: perceived lack of job security, absence of name recognition and a lack of perks to offer in contrast to bigger companies. Many bosses also pointed to the Brexit factor.

Brexit

The Office of National Statistics has borne this out. Their figures show that the European workforce in Britain has declined by 28,000 in a year. For SME employers, this means a scarcity of European talent, many of whom have the skills they need.

It’s a complex process, but there are concrete factors playing into the leaving of European nationals. The UK economy is recovering in fits and bursts, but not on a solid upward trajectory. At the same time, economic recovery in various EU nations is making the prospect of home seem much sweeter to many European workers in Britain. Playing into this is the mental aspect of Brexit. Many European nationals have found the political climate very different to when they first arrived in the UK and, as such, feel more comfortable returning to their home countries or other EU nations.

A Tightening Labour Market

With more people in work than there has been for 46 years and a loss of European candidates, SMEs are facing a labour market that simply doesn’t have the workers to give.

Access to skilled, talented employees is vital for SMEs to grow and thrive, so where are they going to get the manpower they need? One solution is government reform. Changes to the Tier 2 visa would enable more SMEs to find the talent they need internationally. Aside from this solution, SMEs are going to have to get creative and proactive in finding the right candidates, emphasising their future potential and current benefits. 

The Office for National Statistics has released its latest report on the UK labour market last month, painting a healthy picture of employment and work in the UK.

The figures cover every aspect of the labour market and delve into the outlook going forward. Here, we’ll take a closer look at the numbers, what they mean for the UK economy as a whole and for SMEs in particular.

Earnings up, Unemployment Down

The latest tranche of figures from the ONS revealed that there are now 32.34 million people in work in the UK. This is a sizeable increase of 396,000 in the last year, illustrating that businesses are shaking off the restrictions of the austerity period and not fretting too much about any economic impacts related to the UK exiting the European Union. 

At the same time, unemployment dropped to 1.42 million, the lowest it has been since the ONS began collecting figures in 1971. Compared to the same time last year, this represents a reduction of 116,000. This paints a healthy picture of the job market and overall productivity for UK firms.

There was also good news for workers as average weekly earnings rose by 2.9 percent over the previous year. This can only mean good news for the UK economy as people see more monetary inflow and, in turn, will be more willing to spend. Contrasting with previous years, when disposable income was an almost dead concept for many consumers, this represents good news for UK businesses of all kinds.

Workforce Jobs

The ONS report also takes measure of workforce jobs, which focuses on the different roles that workers fill. Whereas employment is an estimate of people in work – where one person may have more than one job – workforce examines the types of roles people are filling.

A number of sectors saw considerable growth in their workforce, with teaching being the main outlier, showing a quite drastic reduction in its numbers. The manufacturing, construction, administrative and human health fields saw very healthy growth.

For small and medium businesses operating in this sector, the numbers are very encouraging. The increased numbers in workforce jobs means that these vital areas of the UK economy are seeing expansion and, therefore, increased business. In the past few years, employers – especially those in smaller and medium-sized concerns – have been reticent to take on new employees due to volatile economic factors. Now, it seems, employers of all sizes in these sectors are feeling a renewed sense of optimism. 

If your SME is feeling buoyant and has expansion plans, why not speak to GIC Capital about our business loans and business overdraft options to help you move forwards?