UK firms are still facing problems hiring staff in the third quarter of 2023, despite a continuing decline in the percentage of companies facing hiring difficulties, according to the latest Quarterly Recruitment Outlook by the British Chambers of Commerce (BCC) Insights Unit.

The research showed nearly three quarters of firms attempting to recruit have faced difficulties (73%), 9% from the historical high of 82% in Q4 2022. The figure has now fallen in each quarter of 2023 but remains above 70%. 

Attempted recruitment in Q3 was virtually unchanged from the previous quarter, with 61% of firms looking to find staff (60% in Q2). 

Labour costs are cited by the most firms as a source of cost pressure, with 66% citing this (compared to 63% in Q2 and 67% in Q1). Meanwhile, 59% of firms say they’re concerned about energy costs. 

Recruitment difficulties are being felt across the economy, but the hospitality sector continues to suffer the most, with 79% of firms reporting hiring challenges in Q3 (compared to 86% in Q2). This was closely followed by both construction & manufacturing on 78% (down from 86% and 81% respectively in Q2). Most, or 72%, of retail businesses said they had experienced recruitment issues. 

Of the hospitality firms reporting problems, 58% faced difficulties in finding semi/unskilled workers, 41% skilled manual/technical staff. In the construction and engineering sector, 78% faced problems getting skilled manual/technical workers, but just 21% for semi/unskilled. 

As businesses continue to face a series of economic headwinds, most are still reporting no increase to investment in workplace training. Just over a quarter of firms reported an increase in staff training (27%, the same as Q2), with 13% reporting a drop (14% in Q2). 

Jane Gratton, Deputy Director Public Policy at the BCC said, “The scale of the recruitment crisis remains huge, despite a welcome fall in the number of firms reporting hiring problems.”

“Employers are offering more flexible working wherever possible but are still struggling to hire and retain the right staff to help get them through these challenging economic times. The picture in the hospitality and manufacturing sectors is particularly worrying,” Gratton added.

“We have just under a million job vacancies in the economy, and skills shortages are damaging businesses’ ability to operate profitably – as well as impacting the wellbeing and morale of remaining staff,” Gratton said.

“Our economic forecasts suggest the coming couple of years are going to be tough for everyone. Solving the recruitment crisis will be key to getting the economy growing again,” Gratton added.

The Outlook is a survey of nearly 5,000 UK firms of all sectors and sizes.