SME owners hold the UK education system responsible for skills gaps, according to new data from small business lender iwoca.

Key Findings:

• Three in four (75%) SME owners say the UK education system does not do enough to prepare young people for employment, as only 4% would check for qualifications first when hiring.
  

• Majority of SMEs say the sector is suffering from skills gaps – of those, over a fifth say SME skills gaps have lasted longer than 2 years.
  

• More than two in five (42%) say SME owners themselves are having to work longer hours to plug gaps.
  

• Over three quarters of SMEs think apprenticeships – qualifying while getting on-the-job experience – will be key to solving their skills gaps, along with upskilling support from Government.

The survey of SME owners, by one of Europe’s largest small business lenders, reveals three in four (75%) think the current education system does not adequately prepare young people to take on employment. In terms of hiring, SME owners are first looking for experience in the sector (33%) and the role (28%), before checking for qualifications (4%).

Lack Of Talent Affecting Growth

A majority (54%) of SME owners say the sector does not currently have the right skills it needs to succeed. Of those, nearly half (48%) say that the skills shortages have been ongoing for at least 12 months.

These talent shortages are bearing an impact for small businesses – more than two in five (42%) say SME owners themselves are having to work longer hours to plug gaps. Delays to growth plans (31%) and hiring temporary workers (25%) were cited as the next biggest impacts of skills gaps felt by the SME community.

Investing In Skills Key

The answer to the lack of skills among employees of small businesses could lie in apprenticeships, say SME owners. Over three quarters (76%) say apprenticeships – where people aged 16 and above have paid jobs, gaining on-the-job training while earning qualifications – are key to solving the sector’s chronic skills issues.

Over seven in 10 (72%) believe the Government should introduce more support for SMEs to help employees upskill. By contrast, a loosening of immigration rules to remedy the lack of qualified talent saw support from just over two-fifths of SME owners.

Seema Desai, Chief Operating Officer at iwoca, said: “Skills shortages have hit SMEs hard in recent years, and they have yet to recover. Small business owners are rightly looking for alternatives to plug these gaps, and believe strongly in apprenticeships, educational reform and tailored Government support schemes to try and fix these issues."

"We must ensure that the young talent coming through today have the skills needed not only to help businesses grow, but perhaps become SME owners of the future.”