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20th June 2024

Almost half of Welsh businesses report skills shortage and lack confidence in AI and green tech

  • Almost half (47%) of Welsh businesses reporting a struggle with skills shortage,far less than 62% of those in the rest of the UK
  • Many Welsh businesses lack the confidence to adopt either AI (56%) or green technologies (48%)
  • Martha Lane Fox, Chancellor of The Open University, and President of British Chambers of Commerce warns organisations need to implement flexible skills plans and inclusive initiatives to build confidence, continue to bridge the skills gap and build a more resilient workforce

New data from this year’s Business Barometer report published by The Open University in partnership with the British Chambers of Commerce, has found that almost half of Welsh employers (47%) are still reporting worrying skills shortages.

The annual report, which surveyed 125 Welsh businesses and monitors the current UK skills landscape, highlights that although the landscape  in Wales has improved in the last 12 months, skills shortages remain a prevalent issue across all sectors. Despite this, less than one in 20 (6%) Welsh organisations have implemented a written skills plan for their workforce this year, hindering the ability to strategically address these issues and prepare for future demands.

In particular, organisations have reported a lack of confidence  in applying either new AI  (56%) or green technologies (48%), skills that employers agree are crucial to growth and sustainability for Welsh businesses and the wider economy.  Skills shortages and a lack of confidence, continue to have a knock-on effect on staff morale and wellbeing, as 60% of Welsh employers say shortages have increased the workload of their employees – a clear indicator that employers need a strategic, inclusive skills plan to develop talent to fill key skills gaps.

Training and development are critical areas of focus for many organisations. The report has revealed that almost two-fifths (37%) of businesses intend to introduce training and development for staff over the next 12 months, with short courses with certification being the most popular choice for Welsh businesses to help develop skills, as well as fostering a supportive learning environment to enhance employee attraction, engagement and retention.

Encouragingly, 75% of Welsh organisations that currently use apprenticeship programmes are expecting to increase or commit to the same number of learners over the next 12 months, highlighting the value placed on apprenticeships as a means of cultivating new talent and addressing specific skill needs.

Paul Butterworth, CEO at Chambers Wales South East, South West and Mid and Vice Chair of the Regional Learning and Skills Partnership for south-west Wales, said:

“The data surrounding skills shortages in this year’s Business Barometer report by the Open University and British Chambers of Commerce reflects the sentiments that businesses in Wales have shared with us quarter on quarter regarding the recruitment and retention of skilled employees.

“Labour costs, recruitment challenges and a hesitancy to invest in training due to other economic pressures are just some of the factors fuelling the current skills shortages. Attracting and retaining people here in Wales with the right skills is crucial for businesses and a key objective of the Regional Learning and Skills Partnerships across the country.

“A skills development strategy that is focused on local skills needs, aligning sector and geographical ambitions, is needed to support young people and jobseekers, and reskill those already in work. This could help those affected by operational decisions such as Tata Steel employees or the movement of workforces out of Wales which significantly impacts local economies.”

Baroness Martha Lane Fox CBE, Chancellor at The Open University and President of the British Chambers of Commerce, commented:   

“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’s 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.

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

Dr Scott McKenzie, Assistant Director of Learning and Curriculum at The Open University in Wales said:

“Once again, employers and businesses in Wales have told us that skills and training are key to helping them meet future challenges and giving our economy a boost. At the OU in Wales, much of our focus in recent years has been on supporting businesses navigate the post-covid world through innovative approaches like short courses, microcredentials and degree apprenticeships. Work-based learning can help people reach their potential while they earn, as well as help organisations address the skills gap that the Business Barometer highlights.”

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