The latest FSB Small Business Index shows a growing skills shortage in the workplace.

Now identified as a significant barrier to growth for small firms, almost one third – 29.9 per cent – of those surveyed report skills shortages as hampering growth, with construction and computer services particularly hard hit.

To address this increasingly significant issue facing the UK labour market, the FSB wants to see a number of steps taken: The business and education community must work more closely together to ensure young people are ‘work ready’ and understand the demands of the world of work. Employability skills must be embedded from an early age; the labour market has changed dramatically in recent years and businesses are adapting to that change but the education system needs to catch up.

Reforms must be completed to create a business-led, high quality apprenticeship system that provides a real choice between vocational and academic routes. This should be for the long term, and aspire to match standards of our leading competitors such as Germany.

Traineeships must be used as a credible alternative to a formal apprenticeship. Initiatives such as the TechBac, 14-19 college programmes and the rejuvenation of University Technical Colleges serve to demonstrate that a vocational education is no longer considered the second tier of the UK education system.

Federation of Small Businesses development manager for the Wessex region, Neil Eames, said: “As the labour market continues to tighten alongside the economic recovery, skills shortages will continue to be an increasing concern for more businesses. While this helps to boost the wage bargaining power of workers with the right skills, it poses a risk to the momentum of economic growth and once again underlines a long standing structural weakness in the UK economy.”