IoD Scotland survey SMEs have low confidence in finding solution to skills gap

IoD Scotland’s 2023 ‘State of the Nation Directors Survey’ reveals the reality for Scottish businesses, including 43% of SMEs reporting low confidence in finding a solution to ongoing skills gap concerns.

New figures published today (26 April) by the Institute of Directors (IoD) Scotland reveal the state of play for Scottish businesses in 2023.

The annual IoD ‘State of the Nation Directors Survey’ asked cross-sector leaders from businesses big and small for their current position on a range of issues facing Scottish businesses today.

The 2023 survey revealed continued concern about skills shortages in organisations, with 44% of businesses reporting they do not currently have the right number of skilled people in their workforce.

The report also highlights that 43% of SME’s are not confident in being able to recruit the right people for the vacancies they need to fill over the next 12 months – an 8% fall in confidence from the 2022 survey results.

This coincides with low levels of awareness of the Scottish Government’s Fair Work Principles Framework – a key workforce policy launched in 2016 aimed at driving security, opportunity and respect in the workforce. 53% of respondents stated they haven’t adopted the framework, and 48% reported they were unaware of the policy.

Catherine McWilliam, Nations Director – Scotland at IoD Scotland commented: “These new statistics provide real insight into Scottish boardrooms in 2023. While concerns remain high around the skills gap across organisations, we are committed to working with the government to ensure new ways to develop the necessary skills are reached.

“While the Fair Work Principles remain central to IoD’s vision for the Scottish workforce, today’s figures highlight the work still to be done in making leaders aware of the framework and its benefits. We will engage with our members and the government to ensure there is open dialogue on how to embed the principles into the workplace, with a view to supporting recruitment efforts.”

Despite these challenges and wider economic pressures, the survey found Scottish directors showed a resilient ambition for growth. 45% of respondents said their organisation is pursuing ‘steady’ growth, and 28% stated they’re aiming for ‘fast’ growth, demonstrating the keen interest in continued access to skilled workers, and its importance to the wider economy.

The figures also noted a growth in the number of Scottish SMEs with 26-49 employees, with a 5% increase compared with the 2021 survey.

IoD Scotland will now use these findings to focus its efforts on seeking a collaborative relationship with the incoming Scottish Government, particularly to ensure Directors are supported by access to a broad skilled workforce and the Fair Work Principles are made more accessible for businesses.

Other key highlights include:

• On ESG, responses confirmed business and organisations are on board – 87% have either fully or partly embedded “ESG” considerations into their business strategy, operations, and products.

• Directors know the government’s plans on Net Zero – 97% of Directors are fully aware of Scottish Government’s Net Zero targets, but 50% are keen for more support.

• The survey highlighted strong support behind the ‘fairness’ of Scotland’s personal and business taxes – 45% backing the fairness of personal tax, and a majority (55%) supporting current business rates.


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The IoD supports directors and business leaders across the UK and beyond to learn, network and build successful, responsible businesses.
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