A  new report from the CIPD and the Federation of Small Businesses (FSB) has revealed that skills shortages in Wales are acting as a break on investment and growth, highlighting the need for a revamped skills system and improved business support.

The joint report, A Skills-Led Economy for Wales, examines the experiences of 30 small and medium enterprises (SMEs)  from different sectors across Wales to assess the impact of skills shortages and identify the barriers to addressing them. It finds that experiences of recruiting, training, up-skilling and accessing funding vary dramatically across regions and sectors. Most SMEs say they are time-poor and lack the formal HR function required to enable effective and consistent skills development and analysis. The FSB’s research shows that almost 80% of small firms struggled to recruit in the past 12 months. 

The report also highlights that a fragmented system of business support for skills is having a particularly negative impact on SMEs, which make up 99% of the Welsh economy and provide 63% of private-sector employment. Many reported a lack of business support for those firms that fall between the start-up and multi-million-pound funding phases.

“There’s a real opportunity to develop a skills system that meets the needs of small firms and has a regional approach suited to the needs of businesses in a particular area or industry.”

Lesley Richards, Head of the CIPD in Wales

The CIPD and FSB say that the establishment of the Commission for Tertiary Education and Research (CTER) earlier this year presents Wales with a real opportunity. The two bodies recommend that the CTER has the potential to become a point of engagement between businesses, education and support organisations, as well as becoming a central hub for the analysis of skills gaps to predict future requirements.

The report concludes with a series of recommendations for the Welsh Government to show its commitment to skills and the economy with support geared towards SMEs. The CIPD and FSB are calling for adequate long-term resourcing for providers like Business Wales and Careers Wales to fulfil their role of supporting businesses, learners and future workers. The report also makes the case for a more regional focus to developing talent and skills in key geographic areas such as aerospace and automotive in North East Wales or Fintech in the South East of the country.   

“Long-term resourcing for providers, along with closer links between the business community and teaching institutions, can benefit learner outcomes and small businesses in harnessing the right skills to grow, bolstering our economy and communities.”

Ben Cottam, Head of FSB in Wales

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