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Most businesses in Highlands and Islands supporting staff during cost crisis


By Alan Hendry

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Martin Johnson, director of strategy and regional economy at Highlands and Islands Enterprise.
Martin Johnson, director of strategy and regional economy at Highlands and Islands Enterprise.

The vast majority of businesses in the Highlands and Islands have been taking action to support their employees in response to the cost-of-living crisis, a study has found.

More than a thousand businesses across the region responded to the latest Rural Business Survey commissioned by Highlands and Islands Enterprise (HIE), South of Scotland Enterprise, and the Scottish Government. It was carried out in October and November 2022 amid increased inflation and rising costs.

The study also coincided with the UK government’s mini-budget announcement and subsequent autumn statement, which signalled higher taxes and likely spending cuts.

This was against the backdrop of Russia's war in Ukraine, industrial action across the UK and the residual impact of the pandemic.

As well as tracking business confidence, performance, optimism and viability, the survey sought to understand the nature and extent of rising costs and the ability of businesses to plan in the current economic climate.

It also explored financial concerns and looked at the wellbeing of business leaders and staff.

A report of the findings for the Highlands and Islands showed that 82 per cent of the region’s employers had been taking action to support their employees in response to the cost crisis.

More than half were engaging with colleagues to understand their needs, increasing wages and encouraging flexible working.

However, most (79 per cent) of business owners and senior managers also reported an impact on their own wellbeing.

Business confidence continued to decline, with 41 per cent expressing confidence in the economic outlook for Scotland – down from 49 per cent in the previous wave and 60 per cent prior to that.

However, confidence levels were still higher in the region than those expressed by businesses elsewhere in rural Scotland.

Highlands and Islands businesses were also more confident in their own prospects, with most (85 per cent) either very or fairly confident in their viability over the next six months.

Virtually all businesses (99 per cent) had experienced cost increases in the past year. These were most notably in relation to raw materials, electricity and gas and the transportation of goods.

Most businesses were absorbing costs, increasing prices or making energy-efficiency improvements.

Those that had performed well were more likely to have increased prices or invested in the business, while those that had struggled were more likely to have scaled back.

Two in three businesses said they were unable to plan more than six months ahead, and 75 per cent had postponed plans because of the cost increases.

Martin Johnson, HIE’s director of strategy and regional economy, said: “This survey was carried out at one of the hardest times we’ve seen for businesses. It was on the back of many challenges, not least Brexit and the pandemic.

“The feedback shows many of the real impacts all of this has been having, not just on our region’s businesses but on the people involved in those businesses, and how they have been adapting.

"It’s very encouraging, for example, to see so many adopting fair work principles to support their employees and applying innovation to fine-tune their operations and navigate the most trying of circumstances.

“As always, we’re grateful to all those who took part in the survey and provided such valuable insight. We will be sharing the findings with our partners and stakeholders and using them to inform our approach to providing business support.

“In the meantime, we’d welcome approaches from businesses looking for innovation support – whether that’s to develop a new product or simply to change their way of doing things, to help them maintain or improve their competitiveness.

“We’re also keen to hear from those who want to become fair work employers. For this we offer support packages for social enterprises in any sector, and to small and medium-sized enterprises working in creative industries, food and drink or tourism.”


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