The post-pandemic hiring boom is in decline as three-quarters of UK businesses admit to struggles with staff recruitment, according to new research from the British Chambers of Commerce (BCC).
Hiring intentions were also shown to be continuing to fall last month.
The BCC surveyed almost 5,000 companies, and found that 73 per cent had faced hiring difficulties in the July to September quarter – a nine percentage point drop from the record high of 82 per cent in the final three months of last year.
This comes as BDO’s monthly employment index also recorded its weakest reading in nine years, with businesses struggling to retain staff costs amid higher borrowing rates, elevated wage growth and weaker customer demand.
In consequence, business confidence and output were also down.
The latest official unemployment figures showed a 0.5 percentage point increase in the jobless rate to 4.3 per cent, and many companies now appear to be moving toward scaling back their hiring plans after repeated interest rate rises from the Bank of England and growing concerns over the risk of recession.
Derek Mackenzie, CEO at Investigo, a global skills provider, said: “Getting access to highly skilled, qualified candidates remains a major challenge for many businesses following the post-pandemic boom. The delay in bringing in the right people damages productivity and wider economic growth, so it’s critical that companies get the right systems in place to swiftly source a pipeline of talent. Building a strong recruitment process with specialist partners saves both time and money, as well as protecting companies from understaffing and skills shortfalls.”
Reed saw a 20 per cent fall in the number of jobs advertised over the last three months compared with last year, whereas applications have risen by 20 per cent.
The company’s chairperson, James Reed, said previously healthy sectors including IT, construction, property, 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.”
Robert Walters, Pagegroup and Hays, three big London-listed recruitment companies, will this week update investors on their trading over the last quarter – and City analysts believe they are all on track to post a fall in pre-tax profits by the end of their financial years.
The firms have all noted signs of weakness across the UK, US and Chinese hiring markets in recent months, and a swing towards hiring temporary rather than permanent staff
Tomorrow, Robert Walters will inform investors on its trading over the past three months and analysts at AJ Bell have projected its annual profits to slump by nearly half to £29m, despite a 6 per cent rise in sales to just over £1bn.
Pagegroup will report on their third-quarter trading on Wednesday, with expectations to post a 30 per cent fall in annual profits to £136m, due to flat sales of nearly £2bn for this year.
Dirk Hahn, Hays chief executive, will present his first shareholder update the next day with figures for the first quarter of its financial year. Their annual profits are also forecast to fall 15 per cent to £166m.