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UK - Employers hampered by regulation and lack of skills

15 December 2011

Firms with more than 50 employees have ambitions to grow, but are held back by a lack of skilled workers and burdensome regulation, according to a new report published by the British Chambers of Commerce (BCC). 

The latest Workforce Survey shows that 52% of firms want to take on more employees before 2015, with only 8% looking to reduce staff numbers. 

With unemployment expected to peak at 2.77 million in 2012, business is expected to play its part in creating growth and jobs. The research shows, however, that the ambitions held by larger firms to expand and grow their workforce are frustrated by a lack of skilled labour in the UK, and burdensome regulation.

Larger companies rely on migrant workers 

  • Many firms are unable to find the skilled workers they need in the UK. Less than a third of businesses (28%) believe that the UK workforce is more skilled than other European Union (EU) countries. 
  • Firms must be able to access the right skills as and when they need them, or risk not being able to fill vacancies, which will in turn hamper their business growth. 
  • The majority (57%) of firms in the UK with more than fifty staff employ some migrant workers. For almost half (47%) of these businesses, the majority of their migrant workforce is from outside the EU. Therefore, the government's ambition to reduce net migration is of particular concern. 
  • Business needs a stable visa system which allows firms to recruit from outside the UK if they cannot source the skills they need from the domestic labour market.

Employment legislation hampers growth 

  • The majority of firms (82%) said they found regulations around sickness absence burdensome. 
  • Asked just before the removal of the Default Retirement Age in April, nearly three quarters of firms (73%) said this change would be detrimental to their business. 
  • More than half of companies (54%) said they found dismissal rules either extremely or fairly burdensome. Firms looking to grow their staffing levels by more than 50 percent are more likely to see dismissal rules as extremely burdensome, than those looking to stay the same or downsize. 
  • Dismissal rules are a consideration for businesses when they hire staff. Relaxing rules around dismissal would encourage companies to create jobs. 
  • Almost half of larger firms (48%) have been threatened with a tribunal claim in the past three years. This rises to 69% for businesses with more than 250 employees. 
  • Nearly one in four employment tribunal claims were not pursued (23%), wasting the employer's time and money which could have been better directed at supporting business growth.

On the Working Time Directive: 

  • 50% of the UK's larger firms use the Working Time Directive opt out, which allows staff to consent to working more than 48 hours a week. 
  • The removal of the Working Time Directive opt out is under constant threat from Europe. The BCC believes that retaining it is key to allowing large firms the flexibility they rely on when running their business and looking to expand. 

John Longworth, Director General of the British Chambers of Commerce (BCC), commented "larger sized firms in the UK could be the multinationals of tomorrow. The government must think business first and give larger companies the confidence they need to create jobs, particularly when unemployment is at a high. Many firms are unable to find the skilled workers they need in the UK, and lack confidence in the ability of the education system to deliver the right people for the job. For some, hiring workers from overseas allows them to access the skills they need." 

"Business needs a migration policy for growth that allows UK firms to hire workers with the skills they need. This doesn't have to be at odds with promises to reduce net migration, but a stable visa system with consistent rules would reassure and attract the best talent looking to find work. Businesses can't always find the skills they need in the UK, and so the government must make it easier to recruit them from overseas." 

"Regulations, particularly around sickness absence and dismissal rules, are a huge burden on larger firms, at a time when we should be encouraging businesses to expand. These findings bust the myth that large firms can cope with constant changes to employment law and the associated costs, particularly around the tribunal system. Tribunal reforms must be implemented in full and without delay, and the consultation on introducing a new dismissal route for micro firms must be expanded to include all firm sizes." 

"Larger companies have told us they are ready and willing to grow. The government must act quickly to ensure that businesses can concentrate on generating the growth vital to a successful recovery." 

http://www.britishchambers.org.uk/zones/policy/press-releases_1/larger-firms-are-hampered-by-regulation-and-lack-of-skills-says-bcc.html

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