Hiring boom fading but three-quarters of UK firms still struggle to find staff

Monday, October 9, 2023

A survey by the British Chambers of Commerce found that 73% of the 5,000 companies it polled had faced hiring difficulties in the July to September quarter – a nine percentage point drop from the record high of 82% in the final three months of 2022.

Recruitment difficulties are being felt across the economy, but the hospitality sector continues to suffer the most, with 79% of firms reporting hiring challenges in Q3 (compared to 86% in Q2). This is closely followed by both construction & manufacturing on 78% (down from 86% and 81% respectively in Q2). 72% of retail businesses said they had experienced recruitment issues.  

Of the hospitality firms reporting problems, 58% faced difficulties in finding semi/unskilled workers, 41% skilled manual/technical staff. In the construction and engineering sector, 78% faced problems getting skilled manual/technical workers, but just 21% for semi/unskilled.  

As businesses continue to face a series of economic headwinds, most are still reporting no increase to investment in workplace training. Just over a quarter of firms reported an increase in staff training (27%, the same as Q2), with 13% reporting a drop (14% in Q2).  

Labour costs are cited by the most firms as a source of cost pressure, with 66% citing this (compared to 63% in Q2 and 67% in Q1). 59% of firms say they’re concerned about energy costs.  

On Tuesday, Robert Walters will inform investors on its trading over the past three months. Analysts at AJ Bell expect its annual profits to slump by nearly half to £29m, despite a 6% rise in sales to just over £1bn.

Pagegroup, which is expected to post a 30% fall in annual profits to £136m, on flat sales of nearly £2bn for this year, will report on third-quarter trading on Wednesday.

Dirk Hahn, who took over from longstanding Hays chief executive Alistair Cox last month, will present his first shareholder update on Thursday, with figures for the first quarter of its financial year. Annual profits are forecast to fall 15% to £166m.

Reed, one of the UK’s biggest privately owned recruitment agencies, has seen a 20% fall in the number of jobs advertised over the last three months compared with last year, while applications have risen by 20%.

The company’s chairperson, James Reed, said previously healthy sectors including construction, property, IT and telecoms have all “dropped off”.

He said: “The market is fairly tough at the moment – there are more people applying than there are jobs out there. We are still to see the full effect of interest rate rises … certain sectors are slowing down.

“There has been a big culling in the tech sector. It feels like the party is over. [But] there are still huge shortages in IT and people with skills in handling AI will be in demand.”

He added: “We are still trading reasonably well but it won’t be as strong as last year. There was a jobs boom coming out of the pandemic, starting in August 2020.”

Reed is in the process of launching “energy academies”, designed to teach green skills such as fitting solar panels and home insulation.

“We are behind schedule on net zero and for someone learning those skills it’s a great opportunity because there will be plenty of work for the next 25 years retrofitting homes. There is a real need to bring more skills into the UK workforce,” he said.