- Recruitment remains static with 55% of businesses attempting to hire staff in the last three months (compared with 54% in Q1)
- Hiring remains challenging despite some respite, with 73% of respondents reporting difficulties in Q2 (76% in Q1)
- Those in the transport and logistics (80%) and construction (77%) sectors were most likely to be facing recruitment problems
- 23% of businesses increased the size of their workforce in Q2, compared with 20% in Q1
- Only a quarter of businesses (25%) expect to increase the size of their workforce over the next three months
The British Chambers of Commerce (BCC) Insight Unit’s latest Quarterly Recruitment Outlook (QRO) shows hiring remained largely static in Q2 as firms dealt with the employer National Insurance (NI) hike.
55% of responding businesses attempted to recruit in the last three months, broadly similar to the 54% in Q1. Of those trying to hire staff, 73% said they experienced difficulties, a slightly improved picture from the previous quarter (76%).
The research for Q2 was conducted after the NI rise came into force, with the fieldwork conducted between 12th May and 9th June. Over 4,500 businesses across the UK (93% of which are SMEs) responded online.
The hiring landscape varies for different sectors, with recruitment difficulties in transport and logistics companies remaining the highest at 80% (compared with 82% in Q1) followed by construction and engineering business at 77% (83% in Q1).
Most businesses didn’t increase the size of their workforce in Q2, with 60% saying staffing levels remained the same. However, 23% did increase their staff numbers, up slightly from 20% in Q1. Looking forward, businesses are less optimistic – with only a quarter (25%) expecting to boost their workforce over the next three months, compared with 27% in Q1.
Labour costs remain the biggest cost pressure for businesses, cited by 73% of respondents, the same as Q1. The issue is most significant for transport and logistics (88%) and the hospitality sector (83%). Faced with those rising costs, training investment remains relatively static, with 23% of firms saying they increased investment in Q2, compared with 22% in Q1. Most businesses (59%) didn’t spend more on training in the last three months.
Suzanne Caldwell, Managing Director of Cumbria Chamber of Commerce said:
“While it’ s still early days, businesses are beginning to sound the alarm on the impact of NICs and other employment costs. There could a big shock coming further down the line.
“Increased labour costs and persistent skills shortages are making recruitment a significant challenge for SMEs.
“Businesses tell us they’re having to adjust budgets, especially for workforce growth and people development. Whether that’s recruiting fewer staff, not replacing staff who are leaving, or scaling back training budgets – there’s no doubt that higher employer costs are having an impact.
“At the same time, growth and productivity are being stymied by persistent skills shortages, particularly in sectors like transport, logistics and construction.
“We need urgent action by policymakers to tackle the long running skills crisis. That means a more flexible and responsive training system, better support for people facing barriers to work, and a firm commitment to no further tax hikes on business.
“Chambers’ recently published Blueprint for Growth (BCC-Blueprint-for-Growth-Report-FINAL.pdf) provides clear policy proposals, which if implemented, can help resolve the recruitment headache, and put businesses in pole position for turbocharging the economy.”
