Three-quarters of UK firms are still struggling to recruit staff, research has found, but the post-pandemic “jobs boom” appears to be in decline, with hiring intentions continuing to fall last month.
A survey by the British Chambers of Commerce found that 73% of the almost 5,000 companies it polled had faced hiring difficulties in the July to September quarter – a nine percentage point drop from the record high of 82% in the final three months of 2022.
The hospitality sector continues to suffer the most from recruitment difficulties, with 79% experiencing problems, the BCC said, followed by construction and manufacturing (both on 78%).
However, there are signs that this tightness in the labour market is starting to ease, with separate research from the advisory group BDO showing that hiring intentions fell again in September.
Its monthly employment index recorded its weakest reading in nine years, as businesses struggle to maintain staffing numbers amid higher borrowing costs, elevated wage growth and weaker customer demand. Business confidence and output were also down, BDO said, as firms grappled with “ongoing inflationary headwinds”.
The latest official unemployment figures showed a 0.5 percentage point increase in the jobless rate to 4.3% and many companies appear to be moving now to scale back their hiring plans after repeated interest rate rises from the Bank of England and growing concerns over the risk of recession.
This week three big London-listed recruitment companies, Robert Walters, Pagegroup and Hays, will 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 three firms have all noted signs of weakness in the UK, US and Chinese hiring markets in recent months, and a swing towards hiring temporary rather than permanent staff.
On Tuesday, Robert Walters will inform investors on its trading over the past three months. Analysts at AJ Bell expect its annual profits to slump by nearly half to £29m, despite a 6% rise in sales to just over £1bn.
Pagegroup, which is expected to post a 30% fall in annual profits to £136m, on flat sales of nearly £2bn for this year, will report on third-quarter trading on Wednesday.
Dirk Hahn, who took over from longstanding Hays chief executive Alistair Cox last month, will present his first shareholder update on Thursday, with figures for the first quarter of its financial year. Annual profits are forecast to fall 15% to £166m.
Reed, one of the UK’s biggest privately owned recruitment agencies, has seen a 20% fall in the number of jobs advertised over the last three months compared with last year, while applications have risen by 20%.
The company’s chairperson, James Reed, said previously healthy sectors including construction, property, IT 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.”
He added: “We are still trading reasonably well but it won’t be as strong as last year. There was a jobs boom coming out of the pandemic, starting in August 2020.”
Reed is in the process of launching “energy academies”, designed to teach green skills such as fitting solar panels and home insulation.
“We are behind schedule on net zero and for someone learning those skills it’s a great opportunity because there will be plenty of work for the next 25 years retrofitting homes. There is a real need to bring more skills into the UK workforce,” he said.