Quarterly Recruitment Outlook: Hiring Headaches And Labour Costs Loom Large

15th January 2024

The latest Quarterly Recruitment Outlook (QRO), a survey of nearly 5,000 UK firms of all sectors and sizes, by the British Chambers of Commerce (BCC) Insights Unit, reveals that the labour market remains tight for most firms.

• Over three quarters (76%) of firms attempting to recruit faced difficulties 
• Firms in the hospitality sector remain the most likely to report challenges in hiring staff (82%) 
• 68% of companies say labour costs are a financial pressure 
• 59% of companies attempted to recruit in the quarter

The latest Quarterly Recruitment Outlook (QRO), a survey of nearly 5,000 UK firms of all sectors and sizes, by the British Chambers of Commerce (BCC) Insights Unit, reveals that the labour market remains tight for most firms.  

The fourth quarter results for 2023, show a slight rise in the percentage of companies facing hiring difficulties, from 73% in Q3 to 76% in Q4. This figure is 6 percentage points down from the historical high of 82% in Q4 2022, but it has remained at or above 70% since the economy reopened post-pandemic (Q2 2021). 

Attempted recruitment in Q4 was virtually unchanged from the previous quarter, with 59% of responding firms looking to find staff (61% in Q3).  

The hospitality sector continues to suffer disproportionately from the recruitment difficulties in the economy, with 82% of firms reporting hiring challenges in Q4 (compared with 79% in Q3). This is closely followed by the transport and logistics sector where 81% of businesses attempting to recruit, reported difficulties in finding staff. Meanwhile 79% of construction firms, 77% of manufacturing companies and 66% of retailers, said they had experienced recruitment issues.  

Of the hospitality firms reporting problems, 62% faced difficulties in finding semi/unskilled workers, 41% skilled manual/technical staff.  

As firms continue to navigate a series of economic pressures, many are struggling to increase investment in workplace training. For the second quarter in succession, just over a quarter of firms reported an increase in investment plans for staff training (26% compared to 27% in Q3) with 14% reporting a drop (13% in Q3) 

Labour costs are cited by most firms as a source of cost pressure, with 68% citing this (compared to 66% in Q3). 55% of firms say they’re concerned about energy costs.  

Responding to the findings, Jane Gratton, Deputy Director Public Policy at the BCC said:  

“Our data shows the recruitment crisis continues to loom large for many businesses across the UK. 

“Too many firms are still struggling to hire and retain staff. The situation in the hospitality sector is especially concerning.  At the start of an election year, and with a budget just weeks away, it’s vital that politicians start outlining how we can plug these gaps and support more people into work.  

“The Chancellor announced several welcome measures on apprenticeships in the Autumn Statement, but more action is needed.  For example, increasing flexibility in the apprenticeship levy would help more people get the workplace training they need. 

“And we need to ensure that local training provision meets the needs of employers and learners. Local Skills Improvement Plans (LSIPs), many of them led by local Chambers, are now shifting the dial on this by planning for skills needs, now and in the years ahead. But this transformation won’t happen overnight, and LSIPs need long-term funding and commitment from politicians. 

“We’ll be looking closely at tomorrow’s labour market statistics from the ONS. While the number of vacancies has continued to decline in recent months, the prospects going forward remain challenging. Our latest Quarterly Economic Forecast predicts unemployment is expected to stay higher for longer, hitting 4.8% by the end of 2025 

“Businesses urgently need to see a long-term strategy on skills and training from politicians. One that can properly resolve the ongoing recruitment crisis and ultimately boost economic growth.”