Over 1,000 firms took part in the latest quarterly business panel survey carried out by Highlands and Islands Enterprise in February.
Around three-quarters of businesses who took part said they were confident they could recruit the skills and experience they require, although they were realistic about challenges, including finding sufficient numbers of qualified and skilled candidates, wage competition, and the need to attract people with a strong work ethic.
The survey also found that four in five businesses in the Highlands and Islands are either very or fairly optimistic about their future prospects.
Larger firms with 25 or more employees were the most optimistic, while businesses in the food and drink sector tended to be more pessimistic.
Our relationship with the EU was again seen by most businesses as important. Around one in five (18%) respondents employed non-UK EU nationals, a figure that soared to 31% for tourism businesses and 53% for firms with 25 or more employees.
Two respondents in five (39%) considered free movement of people across the EU as important to their business, up from 35% in earlier surveys, while 84% said it was important to the Scottish economy overall.
Around half (51%) saw access to the single market as important to their business, up from 44% in October/November 2016. Three quarters (75%) saw single market access as important to the Scottish economy.
Almost all (95%) respondents said they faced challenges in the next 12 months, particularly due to rising costs (general and labour), and market uncertainty. Regulatory and legislative requirements were also viewed as key challenges, along with political uncertainty, lack of time and resources and recruiting and retaining skilled staff.
Amongst employers, the greatest workforce concerns were around preparing for the future, with succession planning, an ageing workforce and the ability to attract apprentices the top three cited.
The vast majority (94%) of respondents said they were taking action to meet the challenges. These actions include seeking new markets and customers, investing in training and development, using digital technologies, collaboration, investment in premises or equipment, and offering new products or services.
Carroll Buxton, director of regional development at HIE, said:
“Businesses and social enterprises across the Highlands and Islands continue to have concerns around Brexit implications, and are realistic about the challenges ahead. It is particularly encouraging therefore, that optimism remains high, and that a clear majority are taking positive steps to meet those challenges.
“A great many of the companies we work with across the region are extending their market reach, particularly overseas. Many are also expanding their use of digital technologies, capitalising on improved broadband connections. And the development of new ideas for products and services is also commonplace.
“These are all steps that Highlands and Islands Enterprise is keen to support and for which we have a range of targeted intervention packages.”
HIE’s Business Panel surveys track feedback on business performance, economic optimism and growth aspirations. The latest survey also explored the type and impact of challenges currently faced by businesses in the region, unpicking where these may differ for sole traders and employers.
It then took a more detailed look at workforce issues and recruitment challenges, including skills sought and labour markets used for the recruitment of both permanent and temporary staff.
Findings from the study were weighted to ensure a representative response from the Highlands and Islands business base in terms of location, organisational size and sector.
The report is available at www.hie.co.uk/businesspanelsurvey