Less than a quarter (23%) of firms are expecting to increase the size of their workforce over the coming months, according to the latest data from the British Chambers of Commerce (BCC).
The BCC’s Quarterly Recruitment Outlook shows most businesses (66%) are planning to keep with their existing staffing numbers, while 11% of firms are planning to cut staff.
The research also shows persistent hiring challenges for businesses, with 73% of firms trying to find new staff reporting difficulties.
The latest data is published alongside a policy briefing from the BCC, focusing on upskilling. It calls on policymakers to make it easier for firms to develop the talents of their existing workforce.
The recruitment survey was carried out by the BCC Insights Unit and the UK-wide Chamber Network, with the fieldwork conducted between 11 May and 8 June. Over 4,700 businesses across the UK (92% SMEs) responded online.
Construction is the sector most likely to be expecting their workforce to grow, with 28% of firms saying they plan to increase their staffing levels over the next three months. Meanwhile, with labour costs increasing, only 13% of retailers expect to hire more staff.
With BCC research showing the cost stack for SMEs has risen by 70% over the last decade, investment in staff training remains low. Most businesses (60%) reported their investment in workforce development remained unchanged over the past three months (58% in Q1). Only 20% said they increased training investment in Q2, while 20% made cuts.
The BCC’s policy briefing argues ministers should focus on three priorities to support firms to upskill their existing teams and support growth. It calls for government to:
- Reduce the financial risk of training, by exploring a skills tax credit or similar fiscal incentive.
- Cut administrative burdens and provide practical support to SMEs on staff training.
- Help firms measure the return on training investment.
The briefing says “skills shortages are not a marginal workforce issue” and argues the “UK needs a culture of lifelong learning that supports people at all ages and stages of their working lives.”
It warns that without more practical support, many businesses will continue to struggle to access the training they need to boost productivity, respond to changing workforce demands and close skills gaps.
The briefing concludes that “a successful skills system must be employer-led, easy to navigate and flexible”.
What business say:
“We would have looked to recruit another apprentice, but it’s become too expensive, particularly when combined with other business pressures that have significantly decreased our profits” Micro professional services firm in London
“Rising employment costs, including National Insurance increases and upcoming employment law changes, are influencing hiring decisions and placing additional pressure on budgets” Micro services firm in Hertfordshire
“There is a severe shortage of skilled personnel available making recruitment and long-term expansion difficult” Large services firm in East of England
Patrick Milnes, Head of People and Work Policy at the British Chambers of Commerce said:
“Skills shortages and recruitment difficulties are holding back too many firms from investing, growing and taking on new opportunities.
“Businesses tell us they want to upskill and develop their existing people, but the current system can be hard to navigate and too often fails to meet their needs.
“Our upskilling policy briefing sets out practical steps ministers can take now to reduce the risk for employers, open up more flexible training routes and help firms invest in the skills of the people they already employ.
“The crisis of young people not in employment, education or training, highlighted by the Milburn Review adds extra urgency to situation.
“If the next Prime Minister is serious about unlocking growth, then helping businesses invest in skills must be at the heart of their economic plan.”
Read the full policy briefing here