In partnership with Pertemps Network Group, our Employment Trends Survey tracks labour market trends and challenges facing businesses across the economy.
Despite strong demand for goods and services, labour and skills shortages continue to hold back growth. This years’ results show that 75% of businesses have been affected by shortages in the last 12 months, with wide ranging impacts - nearly half (46%) of those who have faced labour shortages say they have been unable to meet output demands, and 26% are reducing planned capital investment in the business.
The results reflect the need for government to work with businesses to address shortages by taking long-term steps to boost productivity in the long-term, such as introducing incentives to unlock business investment in automation and creating a skills system that is responsive to economic needs by turning the Apprenticeship Levy into a flexible Skills Challenge Fund. This should be paired with action to increase labour supply – including proportionate immigration reforms and tackling inactivity, primarily by reforming unaffordable childcare.
Other key findings from the report include:
- Recruitment: fewer than half of businesses (43%) expect to grow their workforce in the next 12 months, down from 57% in 2021
- People & Skills: access to labour (75%) and skills (72%) continues to top business’ labour market concerns, while the cost of living (69%) and labour costs (59%) also feature heavily
- Pay: nearly 3 in 10 firms (29%) are planning to increase pay in line with inflation, compared to 44% in 2021, while less than 1 in 10 firms (7%) are planning to increase pay above inflation, the lowest since 2013
- Cost of living: nearly 9 in 10 firms (87%) are taking action to help employees with the cost-of-living crisis, with almost half (46%) bringing forward or having additional pay reviews
- Workforce priorities: retaining talent is business’ top workforce priority in the c