The British Chamber of Commerce (BCC) Insight Unit’s latest Quarterly Recruitment Outlook (QRO) reveals hiring intentions have dropped to their lowest levels since the depths of the pandemic.
The survey of more than 5,100 UK firms of all sectors and sizes, shows that 56% of respondents said they had attempted to recruit in the last three months, down from the previous quarter (59%). The last time the attempted level of recruitment was lower was in Q2 of 2021 when it was at 52%.
There are wide sectoral differences, with transport (73%), hospitality (70%), and construction (67%) firms looking for new staff. By contrast, more than half of retail (52%), professional services (54%), marketing and communication firms (54%) are not hiring. Of the firms who tried to hire in Q3, 76% reported difficulties, compared with 66% in the first three months of the year.
Construction and engineering firms are still bearing the brunt of staffing issues, with 85% reporting recruitment problems in Q3, up from 69% in Q1. Manufacturing is not far behind with 80% having difficulty, while 76% of hospitality firms said they could not find the people they needed. At the other end of the scale, 65% of marketing and communications firms faced problems.
The third quarter of the year also saw a slight drop in funding in workplace training, as 25% of firms reported an increase in investment in staff, down from 28% in Q2. Most businesses (62%) reported no change in their investment plans for training over the past three months, with 13% saying they had decreased it.
Labour costs continue to be the main pressure businesses are facing to raise prices in Q3, with 66% of firms citing them as a worry. This pressure is currently felt most keenly in the transport (76%), construction (74%) and hospitality (74%) sectors.
Responding to the findings, Jane Gratton, Deputy Director Public Policy at the British Chambers of Commerce said: “The percentage of firms holding back on hiring has been rising since the start of 2024. At the same time, firms trying to fill job vacancies are still struggling to find the skills they need.
“There’s considerable uncertainty for business right now. They are concerned about potential tax rises heading their way in the budget. They’re also worried that changes to employment rights might increase costs and complexity.
“The government needs to drive growth and ensure there’s no drop in momentum. The upcoming budget is a golden opportunity to give firms reason to be optimistic. There are two key issues the Chancellor must address to boost employment. First, is to help the long-term sick back into work and, second is to plug the gaps in local training provision.
“We want a reduction in the employer and employee tax on workplace health services so more people can get tailored support more quickly. And we need longer-term funding for Local Skills Improvement Plans, to help more business provide more training for more people.”
