Zarah ChoudharyEmployment remains the top concern for Scottish business leaders, but confidence in skill levels is improving, figures published by the Institute of Directors (IoD) Scotland revealed.
The annual IoD State of the Nation Directors survey asked cross-sector leaders for their views on a range of issues and opportunities across the business landscape.
71% of respondents felt they have the right number of skilled employees for current jobs and future staffing requirements – an increase of 10% from 2024 and 17% from 2023.
Despite this improvement, engagement with skills development initiatives is still low.
Over half (56%) of businesses reported not employing apprentices or supporting workplace training schemes.
Similarly, business engagement with universities and colleges has fallen, with 46% of businesses not engaging with any type of further education establishment, compared to 35% last year.
Catherine McWilliam, nations director – Scotland at IoD, said: “The skills gap has been at the top of business leaders’ agendas for several years.
“While it is encouraging to see increased confidence in recruitment and retention, we cannot afford to overlook the long-term talent pipeline.
“It’s encouraging to see a proportion of our members actively engaging with colleges, universities, apprenticeship schemes and workplace training.”
She added: “I’d urge all business leaders to consider this route as a way to help secure Scotland’s future workforce.
“Ongoing debate about the apprenticeship levy may deter some firms from engaging, but we are working closely with cross-sector organisations and education bodies to discuss reform – which we would welcome.
“88% of members are engaging with CPD training, showing a real drive from business leaders to improve their personal and professional offering.
“At IoD we know this to be true, as we saw 78 directors achieve their Certificate in Company Direction this year, a 59% increase from last year.”
The survey also highlighted a significant rise in the use of artificial intelligence (AI) across Scottish businesses, with 84% of respondents already utilising it within their organisations.
Used across a range of functions including administrative tasks, research, marketing, and data analytics, the increased use of AI raised questions about the future impact on hiring and workforce dynamics.
McWilliam continued: “With automation streamlining business processes, we may see more components of these roles being handled by AI solutions in the not too distant future.
“Whether it prompts businesses to reassess hiring strategies and reskilling initiatives is yet unknown, but it’s certainly a discussion we’re having with members regularly.”
Beyond employment, business leaders are increasingly worried about cybersecurity.
Emerging as the third most pressing business issue over the next five years among those surveyed, companies said they are working to protect themselves from increasing digital threats.
Similarly, taxation remained a concern, moving up to fifth place on the list of top concerns for Scottish businesses.
The survey found that 63% of respondents believe Scotland’s business tax rates are too high, while 75% feel the same about income tax rates.
Nearly half of respondents expressed serious unease over Scotland’s tax divergence from the rest of the UK (49%).
Among them, 40% believed tax differences will impact hiring decisions, and 34% feared it could deter investment.
McWilliam added: “Tax policies play a crucial role in shaping Scotland’s business landscape.
“Our survey results show that a number of business leaders remain wary of increasing tax burdens, particularly when we look at Scotland’s ability to attract and retain top talent.
“I’d like to thank all of our members who took the time to complete our State of the Nation survey.
“The responses have been enlightening and will help to shape our future discussions with decision makers at Government level, ensuring leaders’ voices are heard where it matters.”
