More than half (53 percent) of UK managers are concerned they can find skilled staff to meet their business needs, according to research by the Confederation of British Industry (CBI) and exams body Edexcel.
The CBI/Edexcel Education and Skills Survey 2008, which covers 735 firms employing a total of 1.7 million people, found employers were concerned about employees IT skills as well as basic literacy and numeracy.
Fifty six of employers are worried about employees' ability to use computers and 69 percent are investing in training to raise IT skills of existing staff.
By 2014 it is expected that the UK will need to fill 730,000 extra jobs requiring candidates with science, technology, engineering and mathematics skills, making a net total of 2.4 million of these jobs in six years.
Yet, 59 percent are having trouble recruiting. CBI blamed the drop in student levels, and said there has been a 15 percent slip in engineering and technology graduates over the past decade.
Employers are increasingly looking abroad to find technology skills. A third, 36 percent are recruiting from India, and 24 percent are looking to China. Another 35 percent will look at hiring in Europe in the next three years. Larger firms are twice as likely as smaller ones to recruit from the expanded EU, such as Poland.
CBI deputy director-general John Cridland says: "A worrying number of employers have little confidence that they will be able to plug their skills gaps. Too many firms also say poor basic skills are hampering customer service and acting as a drag on their business's performance."
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