British economy has become increasingly dependent on overseas workers both at the low skills stage as well as at the top leadership levels because more and more Britons in working age group are said to either lack the right skills for the jobs the economy is generating or prefer to be on social security rather than ‘work’ for a salary a hefty part of which is skimmed off by the government by way of taxes.

Most of the low skilled jobs at present are going to people from Eastern European countries. But for high level jobs of middle and top management the British industry is said to be looking still beyond the EU, especially in Asia.

Results from the latest London Business Survey show that two out of three firms in the capital (65 per cent) expect to be troubled by skills shortages over the next six months, and the majority (58 per cent) are already recruiting from overseas to fill gaps.

Almost a third (29 per cent) of those turning overseas said they were increasing their recruitment from outside the UK and, contrary to the perception that overseas workers often perform low-skilled jobs, 83 per cent are bringing in those with higher, degree-level skills.

The survey revealed that whilst 57 per cent of respondents thought that London’s talent pool was one of its leading assets in business success, 24 per cent warned that a lack of suitable skills was a top threat to London’s overall competitiveness.

London is still said to be a star economic performer, but its skills problems could become its undoing. Shortages are being felt across many disciplines and at all levels - from the fundamentals of the shop floor right up to top leadership.

London businesses claim that a shortage of UK applicants means they often have no choice but to recruit foreign workers for lower-skilled positions in areas such as catering and transport.

And when it comes to graduates, there is said to be far more choice, but many employers are choosing foreign graduates over British applicants because they are of a higher quality and are more employable.

British graduates are said to be competing in the job market with a top slice of talent from overseas universities. Experts said to remain attractive to employers UK graduates need better career advice and stronger employability skills in areas like team working and communication. The British industry appears extremely concerned to see the continuing skills shortages and for so much of this to need to be filled from abroad.

While the industry welcomes talent from everywhere, and feels that it is important that businesses in London have access to skilled labour from abroad, there is so much that needs to be done to up-skill Britain’s own to enable them to compete for these jobs.

It’s considered economically wasteful and morally wrong for there to be so many unemployed people in the capital when there are so many jobs to fill.

Key employability skills like team working, communication and a positive attitude were cited by 40 per cent of bosses as a major skills constraint. As many as 39 per cent said that a lack of technical skills is a bottleneck, while 33 per cent pointed to a shortage of managerial skills - up from 22 per cent in March 2006.

Demand for graduates is set to increase, with 68 per cent of employers expecting their higher level skills needs to grow. By contrast, while 21 per cent said they will need more people with skills at GCSE level, 30 per cent said they will need less.

Experts said young people must leave education with the skills that businesses need, not just paper qualifications. In the current environment the educational authorities see the students as their customers. But the true customers are businesses because vocational qualifications are useless to students unless they lead to jobs.

The survey demonstrated how much employers value basic and employability skills in preference to just qualifications. This points the way to how the education and skills agenda needs to be redirected under the leadership of the business-led London Employment and Skills Board,

(LESB),

Business leaders in the survey said that to improve the capital’s home-grown talent, the LESB advises the Mayor on his education strategy, must strengthen the quality of careers guidance to young people.

Over a third (37 per cent) of businesses in the capital recruiting from abroad say that they are “reliant” on workers from Eastern or Central Europe. While 47 per cent said they are reliant on staff from the rest of the EU, 46 per cent described themselves as reliant on staff from outside the EU.

Foreign workers have become too valuable for the British economy as according to the Confederation of British Industries (CBI) the prime minister’s aim of “British jobs for British workers” won’t work unless the government faced up to the scale of effort needed to help millions of British people currently on sickness benefits back into work, and tackled the skills gap for those not in employment.

The government has published what is called a green paper on welfare reform and in response the CBI has come up with its own submission to Work and Pensions Department.

The CBI said it was unacceptable that, in a successful economy, more than 4.5 million people – many of whom could work if the right support and training was made available – remain on benefit, costing taxpayers £12.5 billion a year.

Tackling this would benefit business – which needs more skilled staff – and government departments.

John Cridland, CBI deputy director-general, said: “The success of the prime minister’s exhortations to ‘employ Britons’ is dependent on action to make them more employable. If the quality isn’t high enough then no business can or should be expected to choose second best.”

Government investment in programmes to help people into work have had some success – and business is prepared to build on this through the Jobs Pledge, the CBI said. But these schemes will only succeed if these individuals are given personalised support so they can gain the skills needed to be ready for work.

The CBI said the government needs to show political leadership and drive through plans to use the private and voluntary sectors in welfare-to-work initiatives if it is to achieve its ambition to get 80 per cent of people of working age into employment, a target set in 2005. The excellent track record of private and voluntary sector organisations in getting people back into work – and keeping them in employment – will only be replicated more widely if the right government support is given.

The CBI stressed that helping some of the hardest-to-reach individuals into work is crucial to improving social cohesion and Britain’s economic competitiveness. The submission said joining up support on issues such as poor health, limited access to child care and mental and physical disabilities, as well as the common problem of low basic skills, is essential to helping individuals overcome multiple disadvantages.