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Staff shortages and supply chain issues pile pressure on Central South businesses

By Karolina Skinner
14 October 2021

Staff shortages and supply chain issues are piling increasing pressure on Central South businesses, as the Government continues to grapple with the fallout from Brexit and the pandemic. 

According to BDO’s latest Rethinking the Economy survey of 500 mid-sized businesses, more than half of regional companies (53%) admitted that staff shortages, due to a lack of overseas workers, was currently having the biggest impact on their business. Nearly a third stated that stock shortages were significantly affecting their ability to operate at normal levels, with 35% citing new regulations following Brexit. 

The survey showed that a shortage of overseas workers, exacerbated by Brexit, was the biggest issues when recruiting staff, with 30% of mid-sized businesses stating that a lack of available talent in the region was also fuelling the problem. 

As a result, all those surveyed said they intended to reduce their product lines or services to help manage staff shortages, with nearly half (47%) already having done so. Many businesses anticipate that this reduction in services will be a temporary measure, with 40% of companies planning to change key parts of the way in which they work, in order to attract potential candidates.

Tax Partner at BDO in Southampton, Steve Hoon said: "While the media spotlight has understandably been shining on the lack of HGV drivers, and the knock-on effect this is having on the supply chain, there are many sectors within the region that are facing their own uphill battle to recruit and retain staff at the moment.

"Covid-19 and Brexit are two of the biggest contributors, but Central South businesses are also experiencing issues at the lower end of the market, where they’re struggling to fill apprenticeship level positions. The lack of available talent and skills in the region is a real cause for concern and businesses are having to think creatively in order to circumnavigate this growing issue – whether that’s through enhanced incentives, offering permanent remote or hybrid working, or introducing new recruitment strategies."

The Rethinking the Economy survey showed that despite the issue of staff shortages, which is causing the biggest impact on regional businesses at the moment, Central South companies were still optimistic about the rate of recovery, with 40% stating that it will take less than 12 months for the business to return to pre-pandemic revenues. As such, in the next three months, the key business priorities are managing domestic supply chains (43%), growing revenues (37%), and making loan repayments (37%). 

Hoon added: "It’s reassuring to see that regional businesses are keeping a firm eye on recovery, despite the considerable challenges being posed throughout the supply chain. The adoption of a more confident and forward-looking approach is clearly boosting the investment intentions of businesses, with the vast majority of regional leaders actively seeking additional capital over the next 12 to 18 months – half of which will be used to fund mergers and acquisitions. That appetite and ambition will be crucial for businesses as we navigate what will almost certainly be a difficult few months ahead."

About BDO

BDO LLP is an accountancy and business advisory firm that provides integrated advice and solutions to help businesses navigate a changing world. It operates in 18 offices across the UK, employing 6,000 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.

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The BDO global network provides business advisory services in 167 countries, with 91,000 people working out of 1,658 offices worldwide. It has revenues of $10.3bn.