The CBI’s new Scotland Director has called for urgent action to redress the shortage of skills north of the border.

Michelle Ferguson’s call, made on the eve of tomorrow's CBI Scotland annual lunch in Edinburgh, which will be addressed by First Minister John Swinney, comes as more and more sectors are speaking publicly about the severe consequences of the shortage.

Two months ago, Scottish Engineering warned that the shortage of skills in the sector represented a “potential economic disaster which “jeopardises” the Scottish government’s entire economic programme.

Karen Meechan, CEO of ScotlandIS, the membership and cluster management organisation for Scotland’s digital technologies industry, said last month that a growing skills gap was "one of the biggest factors restricting growth in the sector and, as international competition continues to increase, Scotland faces the prospect of being left behind in the pursuit of growth”.

The Open University Business Barometer has found that the skills shortfall is costing Scottish organisations an extra £352 million a year in recruitment fees, inflated salaries, temporary staff, and training for workers hired at a lower level than intended. The Scottish Labour Party has meanwhile claimed that a “dysfunctional” skills system is contributing to Scotland’s housing emergency as the number of construction workers declines. 

Speaking to The Herald in her first interview since she was appointed in January, Ms Ferguson, of Glasgow, said: “Every day our members face something new but one of the biggest things really is the skills shortage.

“Scotland’s economy is built on great education, and over 50 per cent of people in Scotland of working age have Higher or above educational standards, which is absolutely great, but our economy is moving at a really fast pace, and change is needed.

“At the moment we have about 25,000 apprenticeships coming through every year but we believe there’s a need for 40,000. In the net zero economy alone we expect there will be a skills gap of about 100,000 for the next ten years, so we need to look at that and see how we can deliver change.

“We’ll be speaking with the Scottish and UK governments about possibilities - skills are a devolved area in Scotland - and how we can improve that.

“There’s a desperate need for welders across Scotland, for instance. So it’s how we marry in what's happening in skills through colleges and universities and apprenticeships in the skills gap for now and for the future.

“But we’re talking about long-term sustainable jobs. It’s about how we can show how we can marry those up and look at how, from a net zero perspective, the new skills that are coming on board, that colleges and universities and business can work together to improve those outcomes.

“Most of the jobs that people have now won’t exist in 20 years’ time so we need to make sure that we have new jobs and new opportunities and new training, and continually up-skill the workforce that we have now”.

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AI is just one of the factors that could change the world of work as we know it, Ms Ferguson added.

“New developments are arising across all business sectors. AI is taking over different areas. One of our members is in its second iteration of a large piece of manufacturing equipment and this ensures that the material they produce is free of defects.

“AI is delivering on that, whereas it would have taken four people to check it on every piece. They’ve now got AI and two people doing that, while the other two have been retrained in skills needed elsewhere in the factory”.

Scotland has achieved much in many advanced fields, she added. A key example is the fact that the most senior person at Apple in charge of AI is a Scot, John Giannandrea, Senior Vice-President, Machine Learning and AI Strategy, who was formerly Google’s chief of search and artificial intelligence.

“We lead the way when it comes to new technologies or engineering.Our universities are absolutely outstanding: the people who come through the higher education sector are wanted globally but we need to make sure that they stay here. It’s about whatever we can do to persuade people to stay in Scotland, take up the opportunities here and help improve our economy”.

Widespread concern has been expressed in recent months over the impending rise in employers’ National Insurance contributions and the inheritance tax on all family businesses, with the CBI having observed that the NI hike “will add to the burden on business”.

“Our members are very much aware that the [Westminister] government is having to make very tough decisions”, Ms Ferguson said. “The government has taken over a country which has challenges.

“Things are changing at pace, so we recognise that it has to make tough decisions. What businesses are saying is that a lot of the changes are coming all at once, and [the government] needs to look at how we invest, how we can improve the economy, and how it can strive to help the country improve the outcome, so that we can have better employment opportunities and better businesses, and that the UK is seen as a great place for investment.

“There are challenges. There are companies that are working on margins of three or four per cent. That's been completely eroded now. They’re waking up and having to pause investment in new machinery or capital expenditure and looking at how they can maintain their business and grow without that investment.

“But we need to be really clear that that is enough. We cannot be facing any more [tax hikes] Whether it's the UK government or the devolved government, business needs the opportunity to invest in growth. Taxation can't be seen as a way to get out of the economic issues that the country faces. There needs to be stability because we need to be looking at how great businesses across the UK are".

There are, however, causes for optimism.

“After visiting our members in the last two months, I’ve been truly impressed by their resilience, innovation and ambition and growth trajectory”, Ms Ferguson added. “We normally think of exports as such things as whisky, gin, beer and farming, but there is so much more.

“We’re seen as global leaders in net zero, our skilled workforce are wanted across the world. We need to be talking Scotland up, the UK up, because it is a good place to do business.

“Our wind farms are extraordinary. We're creating new energy sectors. There are opportunities for new inward and outward investment coming into the UK, and we need to make sure that the government is looking at that, first and foremost, so that we can build the economy. Businesses will help it generate the income it needs for growth and stability".

The Organisation for Economic Co-operation and Development (OECD) has however warned that President Trump's trade wars are slowing global growth and fuelling inflation. The OECD lowered its forecast for UK growth by 0.3 percentage points this year to 1.4%, and by 0.1 percentage points for 2026 to 1.2%.

"What businesses are asking the UK and the Scottish governments to do is to try to make sure [a trade war] doesn't happen", Ms Ferguson said. "Would that be difficult for our businesses? Absolutely.

"Any trade sanctions are a challenge for every business. Rather than heeding the siren calls of protectionism, major global players should be leaning into the significant economic benefits that free, fair and open trade can bring.

"Our businesses cannot be focused on sanctions that haven't happened; the most important thing is they look at what they can control. What they can control is their own business and ensure they can take advantage of any growth opportunities".

Ms Ferguson’s extensive business background includes the role of UK Managing Director of Social Enterprises at Royal British Legion Industries, where she founded Scotland’s Bravest Manufacturing Company.

Earlier in her career she revitalised St Andrew’s First Aid, transforming it into Scotland’s leading provider of First Aid Training. Years before that, she was an advertising executive at the Herald and Times group of newspapers.

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“Scotland’s economy is growing slightly this year”, she said. “It’s not where we would want it to be. We want it to be much higher and we are continually speaking to government.

“I’ve already had discussions with [Scottish] ministers about how we grow the economy. That’s about investing in infrastructure, looking at contracts and awards they can make, looking at long-term energy solutions, fully ten years in advance.

“Oil and gas has been absolutely great, and continues to be great, for the UK economy, and we need to be looking at net zero, which has grown by 20 per cent since 2022, following suit. The infrastructure, including planning and awarding of major projects and contracts needs to be improved, but we have great businesses here which can help ministers deliver on these.”

Ms Ferguson, who in the last three weeks has attended round-tables with ministers from both the UK and Scottish governments, is clear that both administrations see the benefits of partnership working. “In terms of relationships, things have changed in the last year”, she says. “Relationships between the UK government and the Scottish government seem to be far more positive than they were previously, and that can only be good for our economy and for businesses across the UK”.