Business appetite to recruit strong but recruitment difficulties can’t be ignored

• 60% of UK businesses attempted to recruit new hires in the previous three months, an increase from 53% in Q1.
• 64% of businesses struggled to find the right people when recruiting in Q2 – a drop from 73% in Q1.
• 30% of employers expect to increase their workforce in the next three months, showing intentions to hire remain strong.

Based on the responses of over 6,500businesses of all sizes and sectors, the report indicates that demand for labour remained strong in the second quarter, despite a subdued economy. The proportion of UK firms attempting to recruit in the second quarter of the year rose from 53% to 60%.

The percentage of firms reporting difficulties hiring the right staff fell from 73% to 64%, although the figure remains high by historic standards and stands at critical levels in a number of sectors such as construction (77%) and hotels and catering (74%).

The results show 79% of hotel and catering respondents had attempted to recruit in quarter, reflecting seasonal demand (up from 60% in Q1), although the vast majority of those (77%) were for part-time roles. The transport and distribution firms (72%) also recorded a strong appetite for labour, while ongoing issues in the retail sector were indicated in more subdued recruitment numbers (50%).

Totaljobs data shows that 147,000 applications were made to hospitality roles in Q2, and a further 1.7 million made to transport and distribution vacancies on the platform. In all, 780,000 jobs were advertised on Totaljobs in Q2 2019, with an average of 17 applications for each role advertised.

Looking ahead, 30% of UK firms say they plan to increase their workforce in the next three months, with the construction industry reporting the highest proportion of firms (38%) looking to grow their staff.

As the report indicates, the jobs market is showing its resilience, despite sluggish economic growth and ongoing uncertainty. However, the current scale of labour shortages can’t be sustained in the long-term. The fall in hiring difficulties this quarter is encouraging, but to achieve a prolonged decrease, the new government must put reform of the skills and training system at the top its agenda. BCC wants to see a coherent and long-term plan to stabilise the skills system, and for those struggling to hire locally, an efficient and cost-effective route to recruiting overseas workers at all skills levels.

Claire Walker, Co-Executive director at the British Chambers of Commerce (BCC), said:

“In the face of sluggish growth and political uncertainty, the jobs market has been a positive for the UK economy. The quarter saw a pick-up in attempts to recruit and an easing of recruitment difficulties, although levels are high by historic standards and remain a cause for concern.

“Demand for seasonal workers, many of whom have traditionally come from the European Union, highlights the importance of the new government quickly setting out a sensible post-Brexit immigration policy, that reflects the needs of different sectors and regions in the UK.

“The solution to plugging the UK’s skills gap in the long-term includes reforming the skills education and training system, and giving it time to bed-in. We look forward to working with the new administration to get the system working better for everyone and ensuring firms can access the skills they need to improve growth and productivity.

“To sustain the strength of the labour market, businesses also need clarity on how they will be able to manage their future workforce requirements in the years to come and broader certainty on economic conditions after October 31^st.”

  Patrick Wehrmann, CEO of Totaljobs, said:   

“The labour market continues to weather economic uncertainty, with the vast majority of businesses showing a continued commitment to maintaining or increasing staff headcount. In fact, just 7% of employers expect their workforce to decrease as we head into Q3.

“Notably, while the figure remains high, the proportion of firms reporting a skills shortage has decreased – falling from 73% to 64% in just three months. However, with almost two-thirds of employers still struggling to find the talent their business needs to thrive, this thawing should not be considered as mission accomplished, but rather an opportunity to build upon.

“As a consequence of not only an increasing national living and minimum wage, but also a continued challenge to recruit, it is telling that Q2 2019 saw the fastest rise in real-wage growth in over three years, outpacing inflation and expert predictions. As employers look to attract their next hire, there is an opportunity for people possessing in-demand skills to make significant progress in their career and begin to realise their earning potential.

“In light of this, employers should be mindful of their employer value proposition, and ensure that while salaries remain competitive, they consider more than just pay as a solution to overcoming skills shortages.”

Skills shortages are an ongoing problem

UK firms are keen to hire but skills shortages is an ongoing  problem they’re facing. In the second quarter of the year, 60% of British firms tried to hire new employees, in the latest sign of strength in the job market.

Jason Fowler, HR Director at Fujitsu UK & Ireland, said:

“It’s worrying to see that such a large proportion of organisations are struggling to find people with the relevant skills for their openings. Digital skills – for example – are key to driving effective change across the country, so, with the skills gap costing our economy £63 billion a year, there is an urgent need to funnel more efforts into investing in the UK workforce. If we don’t, there is a risk we won’t be able to keep up with the pace of change that is taking place.

“To sustain the competitiveness of the UK economy, businesses, government and educational institutions need to come together to implement a long-term plan that will help train and educate the current workforce and the next generation of workers so they are utilising new technologies and are ready for the jobs of tomorrow. Whether this is retraining programmes, apprenticeships, or public-private partnerships, there are many exciting and innovative pathways to ensure that the UK is digitally savvy.

“If we want to continue to see the UK as a ‘digital first’ nation we must ensure we are investing in all talent. From the current workforce to those at the very beginning of the journey, by developing the right skills we will be able to support the future digital economy.”

Attracting and retaining top talent in the current skill shortage

Offering her opinion on how businesses can continue to attract and retain the top talent in the current skill shortage, Vivienne Barclay, Vice President, Quality Operations Excellence at Korn Ferry, said:

“[These] employment results indicate that businesses are increasing the rate at which they’re recruiting, which is encouraging. The gig economy, in particular is fuelling this growth, showing how the UK’s employment landscape continues to shift as companies compete for staff with the right skills.

“Not all businesses are in the financial position to offer monetary rewards to attract and retain top talent. However, for the most part employees’ expectations have begun to shift and so money is no longer necessarily the most effective way of rewarding staff or appealing to new talent.

“Companies need to look at benefits beyond financial incentives in order to attract the best talent. From flexible working schemes for a better work-life balance, to robust career development programmes and creative working environments, employers need to communicate the benefits associated with their brand. This is particularly important as the gig economy widens the talent pool, but companies need to be responding and accepting this change.

“With this change in focus, organisations are able to attract and retain the best talent and so combat the current skills shortage that is affecting many industries”

The British Chambers of Commerce surveyed more than 6,500 business people from across the UK online between 20 May and 10 June 2019. 94% of business surveyed were SMEs (firms with fewer than 250 employees).