A new report by the CBI reveals a third of employers have had to provide training in basic writing and numeracy skills because staff did not learn these skills at school.

The report, commissioned by the Department for Education and Skills, says that in total around a fifth of employers find non-graduate recruits have literacy or numeracy problems.

Functional numeracy has been defined as the ability to do simple mental arithmetic, interpret data, competence with percentages and calculating proportions. Functional literacy is defined as communicating information orally, understanding written instructions, correct grammar and spelling together with legible handwriting.

Delivering these skills must be an integral part of our education system but, business says, it is not happening under the current GCSE curriculum.

Apart from the cost of having to pay for remedial training, UK businesses have to carry the burden in terms of low productivity, especially compared to their international competitors whose new recruits can boast higher functional skills.

Last year 54 per cent of GCSE students achieved a grade C or above in maths and 60 per cent in English. Only 45 per cent achieved both. But the opportunities for unskilled workers will shrivel from 3.4 million today to 600,000 by 2020, according to Lord Leitch’s interim report on skills in the UK.

CBI director general Richard Lambert said: “We must raise our game on basic skills in this country. The UK simply can’t match the low labour costs of China and India. We have to compete on the basis of quality, and that means improving our skills base, starting with the very basics.

“Employers’ views on numeracy and literacy are crystal clear: people need to be able to read and write fluently and to carry out basic mental arithmetic. Far too many school-leavers struggle with these essential life skills.”

Employers in the manufacturing and construction sector reported greater problems with innumeracy than in service industries. Both sectors reported a similar spread of literacy problems.

One training manager at a car company said: “Some people with GCSEs in maths and English can’t get through our basic skills tests, which is worrying....people who fail have difficulties with basic reading and writing, fractions, multiplication and division.”

A construction firm’s personnel manager told the CBI: “The standard of literacy shown by people filling in the double-sided application form for a trainee position is often very poor. Many applicants can’t construct a sentence and their grammar, handwriting and spelling are awful.” He added: “It’s a delight when an application form is good.”

But the problem is not confined to school leavers, figures from the CBI’s Employment Trends Survey 2006, to be published in full next month, show 23 per cent of employers were not satisfied with graduates’ basic literacy and use of English, and 16 per cent had concerns about graduates’ numeracy skills.

Meanwhile, the latest CIPD/KPMG quarterly Labour Market Outlook, a survey of over 1,400 UK employers, indicates the hunt is also on for softer skills.

The survey says that while a quarter of employers list literacy as one of the key attributes they are looking for when recruiting from the current crop of school leavers, and over a fifth list numeracy; the attributes that top the list are communication skills, work ethic – the basic desire to do a good job – and personality.