Worker shortages hit small employers the most - REC

Seven in 10 employers across the UK are still witnessing a shortage of all types of candidates for their roles, a survey by the Recruitment and Employment Confederation (REC) suggests.

More than four-in-five small employers (with less than 50 staff) involved in the survey reported shortages of candidates (81.5%). Despite a year of slower economic growth and lower overall hiring, this shows that the UK jobs market is still struggling to meet employers’ demand. The challenge facing policymakers and employers is to stop these ongoing candidate shortages constraining the economy if economic growth returns this year. A total of 57.1% of medium-size employers (50-249 staff) and 66.7% of large employers (with 250+ staff) reported shortages of candidates, which suggests that they are also challenged – but finding better routes to cope.

Neil Carberry, REC Chief Executive, said:

“Companies reporting persistent hiring difficulties comes as no surprise to us at the REC. Too few firms have appreciated that – despite slow growth – our jobs market has changed fundamentally. Only 9.5% of firms told us they were looking to temps, freelancers and contractors to help. Yet support from agencies on both temporary labour and innovative routes to hiring permanent roles are vital to getting the people a business needs now.

“A good recruitment partner is no luxury – and small firms in particular can benefit from the specialist skills they bring. As well as helping with reaching new pools of candidates, and innovative flexible options, agencies can deliver great support and advice to their clients. What matters, though, is that businesses understand that buying on value rather than lowest price matters – cutting costs in recruitment processes is a highway to failure.

“For too long, the debate within businesses and with governments about productivity, production design and workforce development has been sterile. That has to change if the economy is to reach its full potential and boost prosperity, public services and incomes. Our REC manifesto Dynamic Labour Markets for Growth sets out some key steps that can be taken in the upcoming Budget – we don’t even need to wait for an election.”  

This survey is important because of acute shortages of workers across the UK, with 1.7 million active job postings in December 2023. And with REC’s Overcoming Shortages report finding that a 10% surge in demand for staff across the economy, and the labour market restricted by shortages, could lead to a 1.2% fall in expected GDP and productivity by 2027 – costing the economy anywhere between £30 billion and £39 billion every year. This figure is just short of two whole Elizabeth Lines

The REC/Savanta survey of different size employers across the UK in private and public sectors was conducted by telephone between November and December 2023. The survey asked a total of 167 employers of different sizes, places and in private and public sector ‘How, if at all, has your attitude towards temporary agency workers, freelancers and contractors changed because of ongoing candidate shortages?’

Ends

Notes to editors:

1.     Of the 77.8% of all respondent employers who said they are witnessing labour shortages, the breakdown by region: North 82.6%, Midlands 72.7%, South excluding London 85.7%, South including London 74.1%, London 61.5% and other areas which are the devolved nations 90.9%.

For completeness, 75.5% of small businesses in our survey said current candidate shortages will not impact on their existing hiring of temporary workers, freelancers or contractors and 9.4% of small businesses in our survey said it has made them more likely to hire temporary workers, freelancers or contractors.

2.     Recruiters filled 25 million temp and contract roles in a year, according to the latest REC industry report – REC, December 2023.

3.     Labour Market Tracker: December labour demand was lower than in previous years but labour shortages are still supporting activity - REC.  There were 1.7 million active job postings in December 2023.

4.     Overcoming shortages - How to create a sustainable labour market – REC, July 2022.

5.     Federation of Small Businesses Statistics: At the start of 2023 there were 5.5 million small businesses (with 0 to 49 employees), 99.2% of the total business population. Employment in small businesses (with 0 to 49 employees) was 13.1 million (48% of the total), with a turnover of £1.6 trillion (36%).

Click here to view all REC press releases and for more information and interview enquiries, contact the REC Press Office on 020 7009 2157, 020 7009 2129 or pressoffice@rec.uk.com. Outside of regular office hours, please call 07702 568 829.

The REC is the voice of the recruitment industry, speaking up for great recruiters. We drive standards and empower recruitment businesses to build better futures for great candidates and themselves. We are champions of an industry which is fundamental to the strength of the UK economy.

Find out more about the Recruitment & Employment Confederation at www.rec.uk.com.