EMPLOYERS of all sizes should be implementing flexible skills plans and inclusive initiatives to build confidence, bridge the skills gap and encourage a more resilient workforce, says a new healthcheck report on the UK economy.

Almost two in three UK companies report worrying levels of skills shortages yet a significant proportion are to implement a written skills plan.

The annual Business Barometer report compiled by The Open University in Milton Keynes and the British Chambers of Commerce reveals that although there is a modest improvement with slightly fewer organisations reporting skills shortages – down from 73% to 62% – skills shortages remain a prevalent issue across the UK in every business sector.

However, employers retain a lack of confidence in applying either new Artificial Intelligence or green technologies – skills that employers agree are crucial to growth and sustainability for UK businesses and the wider economy.  Skills shortages and this lack of confidence continue to have a knock-on effect on staff morale and wellbeing, with 68% of employers saying shortages have increased the workload of their employees.

This is a clear indicator that employers need a strategic, inclusive skills plan to develop talent to fill key skills gaps, said the report’s authors.

Baroness Martha Lane Fox, Chancellor of The Open University and BCC president, said: “Despite tiny green shoots of improvement, the skills gap remains stubbornly high. This year’s Business Barometer exposes the impact of this enduring challenge on organisations of all types, including overwork, diminished productivity and compromised wellbeing.

“What is concerning is the critically low confidence in AI and green technology and the lack of strategic plans or initiatives to engage vital underrepresented groups – both of which are essential to addressing the pivotal challenges of our future.”

Training and development are critical areas of focus for many organisations. The report has revealed that 39% of businesses intend to use mentoring or coaching within the next 12 months to develop skills and encourage a supportive learning environment to enhance employee attraction, engagement and retention.

86% of organisations currently using apprenticeship programmes expect to increase or commit to the same number of learners over the next 12 months. This highlights the value placed on apprenticeships as a means of cultivating new talent and facilitating career changers to address specific skills needs, the Business Barometer said.

But the report reveals that 63% of businesses still do not have specific recruitment, training and retention initiatives in place for underrepresented groups, including young people, older workers, those with disabilities and neurodiverse individuals. As a result, organisations may be missing out by not investing in widening their talent pools to mitigate skills shortages.

“By fostering innovative strategies and inclusive initiatives, we can bridge the skills gap and build a more resilient workforce,” said Baroness Lane Fox.

Viren Patel, director of employers and partnerships at The Open University, added: “Skills shortages are impacting businesses and staff across the country and employers need to plan effectively and implement flexible initiatives to develop existing talent.”