British businesses spend over £2bn a year on higher salaries, recruitment costs and temporary staffing bills in a bid to offset a chronic shortage of skill, a new study has revealed.
According to research published by the Open University, 90% of the 400 firms surveyed reported difficulties in hiring staff with the required skills over the last 12 months. Britain's unemployment rate has been at a 42-year low since March, while those in work were highly reluctant to leave their positions due to the ongoing uncertainty surrounding the UK economy.
The lack of clarity over the country's post-Brexit future as well as the lingering doubts over the future of European Union citizens in Britain have also deterred EU nationals from taking up jobs in Britain.
As a result, the report added, 75% of firms surveyed said their recruitment process was taking on average a month and 24 days longer than expected. The cost of hiring temporary staff combined with extra costs from recruitment fees totalled "at least" £1.7bn, while the cost of offering salaries above the market rate to tempt people into a job came up to £527m.
Some 56% of respondents said they had to increase their salary on offer "well above" the market rate, with small and medium-sized firms raising the offer by £4,150 per hire on average, while the average increase for larger firms stood at £5,575 per hire.
However, the prospect of an above-average salary seemed not enough to tempt people into taking a job, with 53% of firms reporting they were unable to find candidates with the right set of skills and ended up hiring someone less qualified as a result.
"The UK challenge of finding talent with the right skills means that businesses need to look at recruitment, development and retention differently," said Steve Hill, external engagement director at the Open University.
Last week, Deloitte warned Britain could face a serious shortage of skilled workers after Brexit, with almost half of EU citizens working in the UK said to be ready to leave the country over the next two years.
According to the consultancy firm, 36% of non-British workers are reportedly considering leaving Britain after it exits the EU by March 2019. The figure amounts to 1.2 million of the 3.4 million of non-British workers in the UK.
The percentage, however, was much higher among highly-skilled EU workers, with 47% of them said to be mulling the prospect of leaving the UK within the next five years. Meanwhile, 26% of non-British workers said they could leave within the three years.
The report, Deloitte said, is a major warning to the government, which has previously come under pressure to ensure employers do not face a skills shortage following Britain's exit from the EU.