Scottish Labour has set out how it will reform the skills system to “unlock opportunities and grow the economy” as businesses warn of workforce crisis.

The party said its analysis of the latest Business Insights survey showed nearly one in four (24%) Scottish businesses are experiencing recruitment challenges. More than one in five (22.6%) also warned they are facing a “workforce shortage”.

A “lack of qualified applicants” has consistently been given by businesses as the primary reason for difficulty recruiting, said Labour.

However, in 2023/24 Modern Apprenticeship starts hit their lowest point outside the pandemic since 2014/15, with starts 10% below where they were 2019/20.

Scottish Labour warned that under the SNP, skills shortages are harming businesses and holding back Scotland’s economy.

The party has made a series of pledges ahead of the 2026 Holyrood election as part of its Skills for Scotland plan.

Those include greater input and co-operation with industry, new Skills for School programmes to join up schools and employers and an expansion of the work experience scheme.

Labour said it would create a digital skills passport, develop short courses to offer new skills or retraining and embed retraining into public procurement contracts.

Daniel Johnson, Scottish Labour’s economy spokesperson, recently met with Neil Carberrry, the CEO of the Recruitment & Employment Confederation to discuss skills issues.

Mr Johnson said the current system is “outdated”, adding: “Businesses across Scotland are struggling to recruit the staff they need to thrive, but the SNP isn’t listening.

“Damaging skills shortages are wreaking havoc with businesses and holding back Scotland’s huge economic potential.

“Under the SNP, Scotland is lumbered with an outdated skills system that no longer delivers for businesses or workers – but Scottish Labour has a plan to fix this.

“A Scottish Labour government will modernise our skills system so it is fit for the future and equips workers with the right skills.

“From improving our schools to supporting retraining, we will make sure Scots can choose the best career for them at any stage in life.”

Minister Graeme Dey responded: “The Scottish Government is already undertaking a major programme of reform of the skills system to ensure that it meets Scotland’s needs and we are providing £185m this year to deliver 25,000 new modern apprentices, 5,000 Foundation Apprentices and 1,200 Graduate Apprentices.

“A major driver of skills gaps which are holding Scotland back is Brexit and UK immigration policy, and the Scottish Government has put forward proposals for a Scottish Graduate Visa to ensure we can benefit from the skills of people who want to live and work here.”