Successful vaccination programmes have improved regional uncertainty but it continues to fall well short of the longer-term average, up only 2pp to -53. Overall, restrictions deteriorated further, driven mainly by supply constraints, while demand constraints also worsened.
Concerns over the availability of skilled workers were in the front of business leaders' minds; the number of businesses citing skills as a constraint jumped to a series high of 51%. The problem is most acute in Germany, where growth exacerbates demand for talent; 59% of German businesses expressed concern, a lift of 15pp.
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Various industries, including travel and tourism, have been hardest hit by the pandemic and the impact on its labour base. Larissa says: "A lot of people have moved to other industries during COVID-19. Some have gone to healthcare, others to administration jobs, and many have not returned to hotels and leisure. So the potential growth of that sector is checked by the challenge of getting the people."
"In 2021 so many companies are talking about the war for talent. But this isn’t only about acquiring new talent, it's also about retention. The turnover of people has become huge. There is a lot of talent on the market, but you need to be an attractive employer to hire those people."
Many businesses also cited access to finance as a constraint on growth, which was up from 34% to 39%. This was largely driven by German business, 47% of which said they were concerned by the supply of funds, a jump of 15pp and a record high.
One issue that could impact the mid-market as they turn attention to growth is the non-financial audit directive, due to come into play at the end of the year.
Larissa says: "A non-financial audit will be required for any upscale company – about 55,000 in Europe – on non-financial reporting topics such as sustainability. We see many court cases happening now, particularly with companies that have not embraced sustainability."
While this puts a burden on businesses, compliance is an opportunity that plays to business efforts to secure the vital skills needed. Larissa adds: "The pool of talent is not interested in working for a company that is not making sustainability part of their business plan and priorities. People want companies to take action, and while this starts with corporates, there will be a big demand on mid-market companies to prioritise this as well."