Two fifths of medium-sized Midlands businesses say supply chain issues are the biggest threat to their success in the coming months, with 37 per cent citing the ongoing fallout from Russia’s invasion of Ukraine.
This is according to the latest edition of accountancy and business advisory firm BDO’s bi-annual ‘Rethinking the Economy’ survey, which contacted 500 leaders of medium-sized businesses to ask about their business prospects for the next six months.
Despite the challenges faced, one third of businesses in the region are currently looking to grow their workforce, however, more than 40 per cent of businesses said they are struggling to find prospective employees with the necessary skills.
With record numbers of job vacancies at the moment, one in three are increasing their starting salary offers to stay competitive in a crowded jobs market.
Despite a growing cost of living crisis, only 16 per cent of surveyed businesses said they were in a financial position to raise salaries in line with inflation (around 9 per cent). Two thirds, however, said they are planning to raise salaries by 4-8 per cent. With inflation expected to rise by 11 per cent in the autumn, however, this is still a significant real terms reduction.
Besides salary, more than half (53 per cent) say they will offer one-off bonuses, and half will offer employment benefits such as shopping vouchers, childcare support, free travel or meals at work.
In response to these challenges, BDO say that a third of Midlands companies will look to take on new debt and a further third will seek to attract new investment to combat rising inflation and the cost of living crisis.
Kyla Bellingall, head of BDO in the Midlands, said: “Local businesses continue to face extreme challenges from supply chains to rising energy costs. As interest rates continue to rise, this is placing a real squeeze on company finances.
“As a result, companies are looking to secure fresh funding – whether that’s debt or investment – in response to the current rates of inflation and the cost of living crisis.
“Even with these dynamics, businesses are still expanding their talent pool and looking at ways to support their teams, with one in five businesses introducing apprenticeship schemes in a bid to attract talent.
“What’s more, two thirds of Midlands businesses told us they are very confident in the effectiveness of their pay and reward strategy regarding the retention and attraction of staff and three quarters have reviewed this area of their business recently.”