Staff shortages threaten future SME growth
SME businesses remain optimistic about their post-pandemic recovery but staff shortages and concerns around rising inflation threaten future growth.
The findings from accountancy and advisory firm BDO reveals that business leaders are concerned about staff shortages derailing their recovery with more than half, 58%, currently have open roles that they cannot fill and more than a third, 34%, can’t find people with the appropriate skills.
In the survey of 500 SME businesses, 56% cite that recruitment and retention issues are the biggest barriers to growth.
A fifth, 17%, of businesses reported that they have had to limit their services as a result of staff shortages and a third, 31% have offered a pay rise or bonus to attract and retain talent at their companies.
Looking ahead, the survey found that SMEs expect remote and flexible working to help ease staff shortages by widening the talent pool with a third of those surveyed believing this will help ‘level up’ towns and cities outside of London.
Rising inflation was also another challenge growth in the next six months with nearly all SMEs in the survey, 99%, said that they were concerned about the impact.
Kaley Crossthwaite, partner at BDO, said: ‘Their strong belief that now is the right time to invest in their businesses should provide a welcome boost for the economy. These findings also highlight the role played by private investment, with firms accessing not just the cash but the expertise that will support their ambitious growth plans.
‘While the resilience of medium-sized businesses means their outlook is now more upbeat, the immediate pressures of staff shortages, creeping inflation, and long-term infection trends should provide a heavy dose of realism to any forecasts.’
SME businesses stated that rising inflation could delay their growth plans with 24% stating that they may have to increase prices to offset this, while 15% of respondents said that it may lead to them having to reduce headcount.
The Office for National Statistics (ONS) said the consumer prices index (CPI) measure rose by 2.5% in the 12 months leading up to June 2021 which is the highest rate recorded since 2.7% in 2018, this surpasses the Bank of England’s stated target of 2%.
The ONS state that part of the increase was caused by the bounce back in prices after they were depressed during the lockdown.
In a speech on 15 July 2021, Michael Saunders, member of the monetary policy committee at the Bank of England stated: ‘The Committee will remain focussed on fulfilling our remit, which is to return inflation to the 2% target on a sustained basis in a way that supports output and jobs. Ultimately, the framework of an independent central bank with a clear remit and effective policy tools is why the UK will not face a persistent inflation problem.’