Speaking the right language in a global economy

UK companies are missing out on £21 billion of business every year due to poor foreign language skills, according to research by Cardiff University.

While English may currently be the preferred language for business transactions, according to a recent Reuters poll, that does not mean companies are not missing out on opportunities if their staff are unable to speak another language.

In fact, the research by CardiffUniversity shows that while English might be used for initial market entry, the picture is far more complex and geographically variable. For example French is commonly used in trade negotiations in Africa and Spanish in Latin America.

Here we take a look at why languages are becoming increasingly important to businesses and what can be done to tackle the current skills shortage.

Why language skills?

International trade is becoming increasingly important in helping the UK economy grow and develop.

The ongoing financial issues facing the nation may have seen demand for products fall domestically, but there is a huge potential to export, not just to neighbouring countries in Europe, but to growing economies across the globe, particularly the BRIC nations- Brazil, Russia, India, China – where growing middle class populations mean spending power is rising.

The Ernst & Young ITEM Club has predicted that exports to the BRIC nations will rise by 11.7% a year over the next 10 years.

The Government has repeatedly stated that boosting exports is an important part of getting Britain back to growth. Chancellor George Osborne has set a target of doubling exports to £1 trillion by the end of the decade and is aiming to get 100,000 more UK firms doing business internationally.

“Britain’s economy is showing signs of improvement and exports must be at the heart of our recovery, in particular to the large emerging markets,” Business Secretary Vince Cable said recently.

However, there are signs that this is going to be an uphill battle, with Office for National Statistics figures showing that just one in five small businesses in the UK export, compared with one in four in the rest of Europe.

There are a number of factors which are holding British businesses back from exporting, with the London Chamber of Commerce and Industry highlighting problems accessing finance and transport. However, a lack of language skills undeniably plays a role.

The problem

Data from the British Chambers of Commerce (BCC) highlights how crucial language skills are to exporting success, with 62% of non-exporters that are likely to consider trading internationally in the future seeing proficiency in foreign languages – or lack of them – as a barrier to doing so.

However, the current level of language skills among UK workers is low. Data from the first European Survey on Language Competences in 2012 showed that just 39% of UK adults can have a conversation in another language, compared to a European average of 54%. Hungary and Italy are the only EU nations with poorer language skills.

Even where people do have language skills, there is a question mark over whether they are sufficient. BCC figures show that while 71% of business owners claim to speak some French, just 5% are able to converse fluently enough to conduct business deals.

There are also issues with the languages people are learning. While knowledge of European languages is still weak (of business owners questioned by the BCC 57% spoke no German, 65% no Spanish, and 76% no Italian), knowledge of the languages spoken in emerging markets is significantly worse.

A massive 95% of business owners have no knowledge of Chinese or Russian, despite them being among the fastest growing economies.

And it seems this problem is only set to get worse in the future. Figures from Telefonica Digital show 70% of UK graduates cannot speak any languages other than English well or fluently. Only 3% of the graduate foreign language speakers can speak Portuguese, the first language of Brazil, despite that country being one of the fastest growing BRIC market.

Data from UCAS shows that the number of 18 year olds applying to study European languages has fallen by nearly 17% since 2010, suggesting workers joining businesses in the coming years will also have poor language skills.

“It is critical that firms understand the challenges and opportunities attached to the export market. Helping companies forge new connections, through trade promotions and incentives, will help companies to think internationally. Furthermore, a renewed focus on language skills at school and in the workplace will ensure that we continue to export the finest goods and services that Britain has to offer,” John Longworth, director general of the BCC.

What needs to be done?

It is clear that something needs to be done to tackle the language problems the UK is facing and work has already begun to improve language teaching in schools. From 2014, children will learn foreign languages from the age of seven in the hope that they will get a better grounding in the subject and be more likely to continue studying a language to GCSE and A-Level.

But while such measures will help the next generation of workers, businesses also need to think about up-skilling their current employees, or they will miss out on growth opportunities in the immediate future.

Here at learndirect we offer short online courses in over 100 languages, including Chinese Mandarin, Arabic, French and Spanish. The most popular courses are available at four levels, ranging from beginner to advanced business.

All the courses are flexible, meaning staff can fit them around their day-to-day tasks and only focus on where there are gaps in their knowledge. All the courses are available to buy online and training can start right away.

For more information about our language courses please visit our website>