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 fieldwork for the study was undertaken online between 13 February and 9 March 2023.
92% of respondents were SMEs (firms with fewer than 250 employees). 73% were in the service sector and 27% in the manufacturing sector.
The first quarter results for 2023 show that recruitment difficulties have fallen just two percentage points from the record high level of 82 per cent in Q4 2022.
Attempted recruitment in Q1 was virtually unchanged from the previous quarter, with 59 per cent of those surveyed looking to find staff (61 per cent 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 per cent in each sector). This is closely followed by the construction and engineering sector (81 per cent) and then professional services; and public, education, health sector on 79 per cent.
The recruitment pressure points vary across sectors. For firms who struggled to recruit in the construction and engineering sector, 71 per cent faced difficulties in finding skilled manual/technical workers. However, for hospitality businesses that struggled to recruit, 64 per cent 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 per cent) reported an increase in their training investment plans over the last three months (24 per cent Q4 2022), while 14 per cent report a drop.
Overall, 67 per cent of businesses say labour costs are a source of inflationary pressure, with a similar number (66 per cent) worried about energy costs. Concerns around labour costs are highest in manufacturing (76 per cent) followed by construction and engineering, logistics, and hospitality (each at 70 per cent).
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.”