Mid-market businesses in the North West could provide vital employment opportunities for young people, according to new research from accountancy and advisory firm BDO LLP, but heightened business costs and skills barriers risk derailing those plans.

According to BDO’s bi-monthly Mid-Market Tracker, a survey of 500 businesses with revenues between £10m and £500m, the majority (88%) of businesses in the region are hiring for entry level roles within the next six months. Within that number, almost a third (32%) are hiring for permanent entry-level positions that do not require a degree with over two-fifths (44%) planning to recruit entry-level graduates.

Despite comprising less than 1% of private sector businesses, the UK mid-market accounts for more than one in three private sector jobs, employing 11.1m people according to separate research from BDO.

The number of people ‘Not in Education, Employment or Training’ (NEETs) in the UK now tops 1 million. With the mid-market growing revenues by 3.1% over the last year and outperforming the FTSE, it is well placed to provide job opportunities.

However, nearly a third of North West businesses (32%) say higher employment costs and labour or skills shortages are one of the top challenges facing their business over the next six months.

Although employment costs are reported as the main barrier to hiring, the majority (85%) of North West businesses identified a specific gap in soft skills such as problem-solving, reliability, communication and relationship-building, compared with more than a third (35%) citing a lack of technical or industry-specific skills.

Regional businesses are calling on government support including better incentives for hiring young people (38%) and more training and education to support the transition from school to employment (41%).

Angela Cross, regional managing partner at BDO in the North West, said: “The mid-market already plays an outsized role in UK employment, employing more than 1 million people in the North West alone, creating vital opportunities that young people need. But rising employment costs and persistent skills shortages are putting their ambition under pressure.

“New prime minister Andy Burnham has already vowed to give metro mayors powers to help the ‘lost generation’ of NEETs. For our new political leadership, addressing these challenges, as well as incentivising regional businesses to invest in hiring and training youth talent, should be a critical priority to avoid future skills shortages. This action will create long-term opportunities to help young people succeed, improve the UK’s social mobility and ensure the mid-market is fully equipped as the UK’s engine for growth.”