Quarterly Recruitment Outlook: No sign of hiring difficulties easing

• 80% of 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%) businesses are actively trying to recruit staff

• BCC calls on Government to work with business on solutions including skills training, investment and urgent reform of the Shortage Occupations List (SOL) 

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).

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 sector 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.

Investment in training remains stubbornly low in an environment of increasing cost pressures. Just over a quarter of firms (27%) reported an increase in their training investment plans over the last three months (24% Q4 2022), while 14% report a drop.

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%).

The view from business

“We are desperately short of semi/unskilled workers. We could increase business by about 20% if we could employ, and that in turn would bolster the taxation into the government. We are turning away work as we are struggling to meet current requirements with the staff we have.”

Small services firm in Sussex

“[We] don’t have the staff available to help young people/apprentices to train up.”

Small insurance company in Somerset

“Finding suitable workforce remains the biggest challenge.”

Large Manufacturer in Northern Ireland

Responding to the findings, Jane Gratton, Head of People Policy at the BCC, 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.”