Skills shortages threaten recovery in Scotland warning

Business optimism continued to rise for the seventh consecutive quarter, up from the +18.1% in Q1 2014 to +24.9%. Both actual orders and anticipated orders improved during the second quarter with orders from all areas rising and expected to rise in Q3. The rise in total orders was better than forecast. Turnover and profitability are expected to rise for a net balance of firms over the coming 12 month period. Both net balances are better than the average for the last seven years. More than a third of firms increased pay during Q2 and the average increase eased to 3.1%. 58% (compared to 52% in the previous quarter) reported seeking to recruit staff, and almost half of these firms reported increased recruitment difficulties. SCC chief executive Liz Cameron said: "These results show that business is focused on what we do best; doing business and achieving results. Majority of sectors are experiencing continued growth with key indicators maintained from the last quarter, showing that business is on the right track." She added "Manufacturing reported better than expected results, exceeding the expectations from last quarter. Confidence in manufacturing and construction is near record high, signalling a move towards solid growth prospects, indicated by increased orders." However, she warned: "Skills shortages existent in the workforce are making it difficult for business to source and employ the skilled staff required to maintain this growth. Our continued failure to address these issues will block the ability of business to continue on this path. "The positive results from business should act as motivation for swift action. Colleges, universities, Government, with business at the core and in the driving seat, need to develop and implement a realistic plan to plug these gaps urgently."