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UK- Increasingly difficult to recruit new staff and labour costs up

29 December 2014

According to the latest JobsOutlook survey by the Recruitment and Employment Confederation (REC), 93% of UK businesses have little or no spare capacity. Over a third of UK businesses (36%) have no capacity to take on more work, and almost three in five (57%) have ‘little capacity’.

With a high proportion of employers indicating that they would struggle to meet additional demand with current staffing numbers, the survey also reveals that 84% of employers are planning to hire permanent staff in the next three months, and only 7% plan to reduce numbers. 

 REC chief executive Kevin Green said:

“With employment levels at an all-time high and the economy strengthening, businesses will find it increasingly difficult to recruit new staff to increase their capacity.

“The priority now is to ensure that employers are able to recruit the talent they need. That means making it easier for businesses to employ workers from overseas and the UK remaining part of the EU. At home, we need to focus on improving our education system so that the next generation are equipped with the kinds of skills employers are calling for.”

This month’s JobsOutlook also found that that:

  • 43% of employers want to hire more agency workers in the next quarter, whilst 37% plan to do so in the medium term.
  • 80% of hirers say they use agency workers to gain short-term access to key strategic skills.
  • 84% of microbusinesses state that they intend to create more permanent jobs over the next quarter compared to 21% this time last year.

The survey also reveals a concern among employers about a potential shortage of workers with ‘education and training skills’, with over a quarter of employers (26%) raising this as an issue.

In a separate report from the Office of National Statistics, UK Labour Productivity as measured by output per hour increased by +0.6% in the third quarter of 2014 compared with the previous quarter and was +0.3% higher than a year earlier. However, productivity still remains about -2% below its level prior to the economic downturn in 2008.

Output per hour increased in all of the main industrial groupings in the third quarter, by +0.5% in the production industries and by +0.6% in the service industries.

Unit labour costs increased across the whole economy by +0.5% in the third quarter, reflecting a sharp increase in labour costs per hour worked.