Tag Archives: Quarterly Economic Survey

Business, Business Finance, Economy & Jobs News, FInance, Wales

Labour costs loom ahead of new financial year

Businesses feel under pressure to raise their prices due to labour costs, according to Chambers Wales South East, South West and Mid’s first Quarterly Economic Survey of the year.

 

85% of businesses in Wales stated that labour costs, including salaries, pay settlements and contractors, were a key business pressure in the first quarter of the year, with the concern rising from 81% in Q4 of 2024.

 

Increases to the National Minimum Wage (NMW) and Employer National Insurance Contributions (NICs) from 1 April and 6 April respectively are also factoring into businesses’ plans to raise prices of their goods or services by up to 15% to cover costs. 44% of Welsh businesses surveyed shared that they plan to raise prices because of both NMW and NICs, while 10% suggest that they will increase prices because of the National Insurance increase only.

 

More than three quarters of businesses in Wales (76%) revealed that the size of their workforce remained constant in the last three months, with the number attempting to recruit in Q1 falling to 40%, compared to 45% in the previous quarter. More than half of Welsh businesses (58%) expect the size of their workforce to remain constant in the next quarter, while 23% plan to increase their workforce.

 

The Quarterly Economic Survey for Q1 also showcased the successes and confidence of businesses as they began the new calendar year, with 39% experiencing an increase in export sales and bookings, 28% increasing investment plans for plant, machinery, technology and equipment, and 45% predicting that turnover will improve.

 

Gus Williams, interim CEO at Chambers Wales South East, South West and Mid, said: “In our recent Quarterly Economic Surveys, including this survey for Q1, recurring concerns for businesses centre around labour costs and taxation. As changes are set to come into effect in April, businesses in Wales are having to review their goods and services prices, ongoing costs and recruitment plans.

 

“While there have been glimmers of optimism in exporting and some aspects of investment this quarter, firms will require reassurance and action from government to avoid stagnating and unlock growth. The Office of Budget Responsibility’s revised growth forecasts suggest that economic growth is less certain this year but will be a longer-term achievement.”

Business, Business Finance, Business Investment, Business News

Impact of Budget announcements felt by Welsh business in Q4

Employment measures announced in the Autumn Budget may have affected attitudes to recruitment by businesses in Wales in Q4 of 2024, according to Chambers Wales South East, South West and Mid’s latest Quarterly Economic Survey.

17% of businesses in Wales increased the size of their workforce over the last three months and 17% also expected their workforce to increase in the next quarter. While over half of the businesses surveyed (59%) expect the size of their workforce to remain constant in the next three months, there was a rise in the number of respondents who foresee that their workforce will decrease, from 15% in Q3 to 24% in Q4.

Fewer businesses in Wales attempted to recruit during the final quarter of the year than in Q3. Of those who did recruit in Q4, 65% experienced difficulties especially when recruiting for professional, managerial, skilled manual and technical roles.

The latest edition of the Quarterly Economic Survey also included questions specific to measures announced in the Budget such as the proposed increase to the National Minimum Wage and National Living Wage from April and whether the changes would impact businesses’ staffing plans, particularly in relation to hiring young people such as graduates, school and college leavers.

Around half of the respondents revealed that the increases to £10 and £12.21 an hour for the minimum wage and living wage respectively would not affect their business. Other businesses in Wales suggested that they would have to either halt recruitment plans, approach recruitment with caution or increase the prices of their services.

Businesses also expressed their hesitation to hire young people, with many reducing the numbers they plan to recruit in 2025.

Gus Williams, interim CEO at Chambers Wales South East, South West and Mid, said: “Taxation has become the external factor causing the most concern for businesses in Wales and the measures announced in the Budget such as the increase to employers’ national insurance contributions, combined with rising labour costs and changes to employee rights, have not surprisingly driven those concerns.

“Our Quarterly Economic Surveys show that recruitment remains a persistent challenge for businesses in Wales, and this continued in Q4 with a rise in the number of firms expecting their workforce to decrease and fewer investing in training. One of the impacts of the tax and National Minimum Wage increases looks to be a reduction in expected entry level recruitment this year.

“As businesses review their budget planning in preparation for upcoming changes, more support is needed to tackle barriers to growth such as access to skills development and learning pathways to help companies attract and retain talent with the right skills for their sectors.”

Business, Business Advice, Economy & Jobs News, Wales

Recruitment, trade and taxation sticking points for businesses in Q3

Businesses in Wales have revealed the opportunities and challenges they faced in Q3 of 2024 in Chambers Wales South East, South West and Mid’s latest Quarterly Economic Survey.

Businesses in Wales who trade goods and services domestically performed well. Over two thirds (68%) of businesses taking part in the survey traded in the UK only. 38% of these businesses stated that there had been an increase in UK sales and 33% reported an increase in orders and advanced bookings, with both of these figures up from Q2.

It was a mixed picture, however, for Welsh businesses who trade internationally. Almost a quarter (23%) of businesses in Wales shared that their export sales had increased in the last three months, up from 15% in the previous quarter, but only 7% saw export orders and advanced bookings increase in Q3.

David Peña, the Chamber’s International Trade Manager, said: “Many of the survey respondents cited new markets as an opportunity for their business so we need to ensure that those who wish to export can access the guidance, support and contacts they need to fully achieve their trade ambitions.

“Welsh businesses have so much to offer on the international stage. Different markets bring different challenges, and penetrating these markets requires innovation and information. We heard several inspirational success stories from exporters across Wales at our recent exporting excellence event held in collaboration with our partners Atradius and Welsh Government, showing how the right support and ideas can make exporting a reality.”

The Quarterly Economic Survey for Q3 also revealed that recruitment continues to be a sticking point for many businesses in Wales.

54% of the businesses surveyed attempted to recruit staff in the last quarter, primarily for full-time positions. 79% experienced difficulties recruiting, particularly for professional and managerial positions, citing a lack of appropriate, experienced candidates and skills requirements not being met.

While recruitment and retention remain an issue, an improved economic picture has led to a shift in which external factors are more of a concern to businesses in Wales than they were three months ago. 55% of businesses in Wales stated that taxation was more of a concern this quarter, more so than interest rates, business rates and inflation.

Paul Clark, President at Chambers Wales South East, South West and Mid, said: “With an ongoing skills shortage in the private sector and concerns regarding taxation, businesses in Wales will be watching the Autumn Budget later this month with great interest. Throughout the election campaign and their time in office to date, the government has repeatedly stressed its commitment to boosting economic stability and growth, and the Budget will be chance to set these measures to develop the economy and remove barriers to a higher growth future.”

Data & Analytics

Recruitment, skills and labour pressures felt by Welsh businesses in Q1

Businesses in Wales are continuing to face challenges regarding recruitment, the ongoing skills shortage and labour costs, according to Chambers Wales South East, South West and Mid’s latest Quarterly Economic Survey.

In the survey for Q1 of 2024, 46% of businesses in Wales reported that they had attempted to recruit staff, predominantly for full-time and permanent roles. 69% of those who attempted to recruit experienced difficulties in finding suitable staff, a 5% increase compared to the previous quarter, with businesses citing finding candidates with the correct skill sets and qualifications as barriers to recruitment and meeting salary expectations as a challenge for retention.

Salaries and other labour costs were also stated as a key business pressure, with 75% of businesses in Wales feeling under pressure to raise their prices because of these costs. This is also reflected in the national picture with the British Chambers of Commerce reporting that 68% of UK businesses cited labour and staffing costs as their main cost pressure.

However, despite these challenges, there is optimism. 46% of Welsh businesses believe that turnover and profitability will improve over the next 12 months.

Paul Butterworth, CEO of Chambers Wales South East, South West and Mid, said: “The results are a timely reminder of the ongoing challenges businesses in Wales face, particularly around ongoing issues such as recruitment, skills development and employee retention.

“While the economy is caught in a low-to-no growth cycle and managing the effects of interest rates and inflation, businesses have been hesitant to invest in training and skills. With consistent and lower inflation, we hope that the Bank of England will lower interest rates to stimulate investment into skills and the seeds of economic growth.

“In the new first minister’s leadership manifesto, he included pledges to provide flexible and timely reskilling opportunities, a much-needed reinvestment in apprenticeships and developing regional sectoral skill centres for excellence. It is our ask that he starts to deliver on his pledges to rekindle Wales’ productivity levels, a skilled Welsh workforce and business support for economic growth.”

The latest edition of the Quarterly Economic Survey also included questions specific to changes happening in Wales such as the election of the new first minister and the new workplace recycling law.

94% of businesses in Wales had heard about the workplace recycling law which came into effect from 6 April, with 71% aware of the changes and how it affected their business.

Over a quarter (26%) of Welsh businesses were aware of the recycling changes but were unaware of how it affected their organisation and only 3% were unaware of the changes or how it affected their business. These businesses suggested that clarity, simple guidelines and research would help them comply with the new law.