Higher costs of training and employing staff are threatening to undermine business growth, according to a regional survey of economic trends.
Joint research from the Confederation of British Industry (CBI) and the Regional Development Agencies (RDAs) has found that 41% of companies identify staff costs as their most significant upward cost pressure.
Amongst firms in London and the East of England it was the major cost for over half, as training and retraining remains the most significant area for increased investment among companies nationwide.
Some 19% of firms said they plan such investments over the next year, up from 14% in September last year.
Despite this cost pressure, jobs and output have continued to increase over the last year; although, the report found that the balance of firms that say employment is increasing slipped slightly from 7% six months ago down to 5% in the latest survey.
Still, businesses are more upbeat about the coming 12 months than were last year.
“Companies rightly value a highly skilled workforce and plans for greater investment in training are welcome,” said Terry Hodgkinson, chairman of Yorkshire Forward and spokesman for the RDAs.
“The negative impact of higher costs is not a new phenomenon, so it is a relief to see demand picking up and it is heartening that expectations are for increased output. But profit margins are still being squeezed in every region, despite price increases in most.”
Second to training costs was energy prices, which have remained high throughout the past 12 months. Businesses also rated excessive red tape as a continuous inhibitor to their growth.
