Quarterly Recruitment Outlook: No sign of hiring difficulties easing

• 80% of UK businesses surveyed (92% of whom are SMEs) attempting to recruit have faced challenges, with hospitality and manufacturing firms still the most likely to report difficulties

• Almost six in ten (59%) UK businesses are actively trying to recruit staff

• The British Chambers of Commerce calls on the government to work with business on solutions including skills training, investment and urgent reform of the Shortage Occupations List

The latest Quarterly Recruitment Outlook (QRO), a survey of more than 5,000 UK firms of all sectors and sizes by the British Chambers of Commerce (BCC) reveals businesses are still facing record high difficulties in hiring new staff.

The first quarter results for 2023 show that recruitment difficulties have fallen just two percentage points from the record high level of 82% in Q4 2022.

Attempted recruitment in Q1 was virtually unchanged from the previous quarter, with 59% of those surveyed looking to find staff (61% in Q4 2022). In Wales, 45% of businesses attempted to recruit in Q1 2023 and 71% experienced difficulties in finding suitable staff.

While recruitment difficulties are being experienced across the economy, firms in the hospitality and manufacturing sectors were the most likely to report recruitment difficulties (83% in each sector). This is closely followed by the construction and engineering sector (81%) and then professional services; and public, education, health sectors on 79%.

The recruitment pressure points vary across sectors. For firms who struggled to recruit in the construction and engineering sector, 71% faced difficulties in finding skilled manual/technical workers. However, for hospitality businesses that struggled to recruit, 64% faced difficulties in finding semi/unskilled workers.

Across all sectors in Wales, 60% of businesses faced difficulties in finding skilled manual/technical workers, closely followed by professional and managerial staff and semi or unskilled workers.

Investment in training remains stubbornly low in an environment of increasing cost pressures. Just over a quarter of firms (27% in UK and 26% in Wales) reported an increase in their training investment plans over the last three months.

Overall, 67% of businesses say labour costs are a source of inflationary pressure, with a similar number (66%) worried about energy costs. Concerns around labour costs are highest in manufacturing (76%) followed by construction and engineering, logistics, and hospitality (each at 70%).

In Wales, the pressure to raise prices because of labour costs has increased from 63% in Q4 2022 to 79% in Q1 2023, a significant jump that indicates that it is an employee’s market at present.

Paul Butterworth, Interim CEO of Chambers Wales South East, South West and Mid: “This latest survey shows recruitment remains an ongoing challenge for businesses in Wales and the UK.

“While fewer businesses in Wales attempted to recruit within the last quarter, a significant percentage of those that did continued to experience difficulties in finding suitable staff.

“Investment in training remains low due to overall cost pressures, including labour costs. 64% of businesses in Wales told us that they were under pressure to raise prices of their goods and services due to existing labour costs.

“We need to see the commitments made in the Spring Statement regarding employment and enterprise propelled into action so that employers can respond to skills and labour gaps in their businesses and look ahead to growth.”

Jane Gratton, Head of People Policy at the British Chambers of Commerce, said: “People shortages are a massive issue and employers can see little sign of improvement. The high number of unfilled job vacancies is damaging businesses and the economy. Firms are struggling to fulfil order books and turning down new work.

“While investment in training is part of the solution, it is being held back by rising overall cost pressures and a lack of time and resource at firms to mentor and support new recruits.

“There is no quick fix and employers and the government need to work together to find solutions.  While firms can do more to make workplaces more flexible and jobs easier to access, the government must redouble its efforts to encourage and help people into work.

“Support for parents and carers, older workers and those with health issues will be crucial.  At the same time, where there is evidence of urgent and critical skills shortages that are crippling business sectors, the government must adopt a sensible and pragmatic approach to immigration and ensure that the Shortage Occupations List reflects the reality on the ground.

“The Chamber Network is rooted in its communities, representing businesses of all sizes across the UK, and these are the big issues they are telling us need addressing if we are to get the economy growing again.”