Recruitment has always been influenced by the wider economy, but the latest UK workforce data suggests employers are facing a more complicated challenge than simply deciding whether they are hiring or not.
The latest British Chambers of Commerce (BCC) Quarterly Recruitment Outlook found that only 23% of businesses expect to increase the size of their workforce over the coming months, while 66% plan to maintain their current staffing levels and 11% expect to reduce them. At the same time, 73% of businesses that have tried to recruit are experiencing difficulties finding the people they need.
It is this combination that we need to pay attention to as it suggests that the UK labour market is not simply moving from a period of recruitment into a period of redundancies or widespread contraction. Instead, many employers appear to be holding their existing workforce levels while continuing to experience difficulty accessing the skills and people required to grow.
For businesses, that creates a particularly difficult position. Recruitment budgets may be under greater scrutiny, but the need for people has not disappeared.
In some cases, the challenge may be that employers are not looking to significantly increase headcount. They may simply be trying to replace leavers, fill skills gaps or find people with the experience needed to support existing operations, and if that is the case then it is a very different recruitment challenge compared to recruiting due to rapid expansion needs.
The recruitment challenge has not gone away
The phrase “recruitment challenges” can make the issue sound more straightforward than it actually is. A business may say it is struggling to recruit, but the underlying problem can be very different from one organisation to the next. For one employer, the challenge may be a lack of suitable applicants. For another, there may be plenty of applications but very few candidates with the technical skills required. Another business may be attracting people to interview but losing them before an offer is accepted, perhaps because of competition from other employers or because the role no longer matches what candidates are looking for.
The solution depends on understanding which problem you actually have.
That is why recruitment strategy becomes increasingly important in a difficult market. The question is not simply how to generate more applications, but whether the role is being positioned in a way that reflects the reality of the available workforce.
Are all the listed requirements genuinely essential? Is the salary competitive for the local market? Is the location accessible to the people you are trying to attract? Could someone with the right transferable skills be trained into the role? Are you looking in the places where the candidates you need are actually likely to be found?
These questions may sound basic, but they are often overlooked when a vacancy is approached as a straightforward process of writing a job description, advertising the role and waiting for applications.
When the available talent pool is tight, the details matter. The organisations most likely to recruit successfully are not necessarily those with the biggest budgets or the most recognisable brands. They may simply be the ones with the clearest understanding of the problem they are trying to solve.
The answer may not always be to recruit more people
One of the most interesting aspects of the latest BCC findings is that the recruitment data was published alongside a policy briefing focused on upskilling existing employees.
The BCC found that 60% of businesses reported that their investment in workforce development had remained unchanged over the previous three months. Only 20% said they had increased their investment in training, while the same proportion had reduced it. The organisation has argued that businesses need more practical support to develop existing employees and close skills gaps.
The tension is obvious. Businesses are reporting difficulties finding the people they need, yet investment in training and development remains limited for many organisations. For many businesses it is a catch 22 and the reasons are understandable. Training costs money, takes people away from their usual roles and does not always produce an immediate return. Smaller businesses in particular may find it difficult to release employees for training or commit to development programmes when they are already operating with limited capacity.
There is also the concern that an employee may leave after receiving training, however, the alternative can be more expensive.
If a business cannot find the skills it needs externally and is not developing those skills internally, it can find itself stuck between two difficult options. It can continue searching for a candidate who may not exist in the available talent pool, or it can reconsider what the role actually requires and whether some of the capability can be developed.
This does not mean that every vacancy should become a training programme. Sometimes an organisation genuinely needs an experienced person who can walk into a role and deliver immediately. In other cases, the better long-term decision may be to recruit for potential and build the missing capability.
The important point we are trying to make is understanding which situation you are actually dealing with.
Workforce planning is becoming a more practical conversation
The Government’s latest Industrial Strategy Jobs Plans provide another indication of where the wider conversation is heading. The plans have been developed around the workforce needs of priority sectors and are intended to help address the skills challenges facing industries expected to play a significant role in future UK growth. They focus on creating a more joined-up skills system, closer employer engagement and better alignment between training provision and future workforce needs.
That matters because workforce planning has traditionally been something many businesses associate with large organisations, annual strategic planning exercises or long-term succession planning.
In reality, workforce planning can be much more practical than that. It can mean asking:
- Which roles are becoming more difficult to recruit?
- Which skills are genuinely essential on day one?
- Which skills could be developed within six or twelve months?
- Where are our future employees likely to come from?
- Are we relying too heavily on one particular source of labour?
- What happens if demand increases unexpectedly?
- What happens if an experienced member of the team leaves?
The answers will be different for every organisation; a manufacturer may be thinking about automation and the technical skills required to support it, a logistics business may be considering how to manage fluctuating demand, a growing service business may be thinking about how to develop its first layer of management.
The common factor is that recruitment decisions are increasingly connected to wider business decisions.
Local skills are becoming part of the conversation
The release of 39 new Local Skills Improvement Plans in England adds another layer to this discussion. The plans are designed to provide greater insight into the priority sectors and jobs within local areas, with employers, education providers, strategic authorities and other partners working together to make training more closely aligned with local business needs.
This is particularly relevant for employers who recruit from a defined geographical area as the available workforce is not an abstract national pool, with most businesses are recruiting from somewhere specific, e.g. a manufacturing business in Yorkshire is operating within a different labour market from one in the West Midlands and a logistics operation in the South West which will face different transport, commuting and talent challenges from an employer in Greater Manchester.
Local labour markets matter. This means employers may benefit from looking beyond traditional recruitment channels and developing a clearer understanding of the workforce around them. This could involve relationships with training providers, colleges and local organisations, as well as a better understanding of the skills people already have, and the skills they may be able to develop.
It also raises a question about how employers describe their vacancies. If a job advert lists every possible skill, qualification and experience requirement, it may unintentionally exclude people who could perform the role successfully with the right training.
That does not mean lowering standards, it means being more precise about what the business genuinely needs.
Temporary recruitment has a role to play, but it is not a complete workforce strategy
The current environment also highlights where temporary recruitment can support employers. When demand is uncertain, seasonal or difficult to predict, temporary workers can provide the flexibility to respond to peaks in workload, staff shortages and short-term projects without immediately committing to a permanent increase in headcount.
That flexibility can be particularly valuable for businesses that are cautious about growing their overall workforce, but temporary recruitment should not be treated as a quick fix for a difficult labour market. The same questions still apply: what skills are genuinely required, how quickly does someone need to become productive, what support will they receive and is the role genuinely temporary, or could temporary recruitment help the business understand a longer-term workforce requirement?
The quality of the recruitment process matters here too. When the available talent pool is difficult to access, candidates are not interchangeable. How an opportunity is presented, how clearly expectations are communicated and how people are supported once they start can all influence whether they accept the role, remain available for future work and recommend the employer to others.
The most effective workforce models are therefore likely to be those built around the reality of the business rather than a reaction to its latest staffing problem. For some employers, that will mean permanent recruitment; for others, temporary workers; and for many, a combination of both.
Recruitment and workforce planning are becoming harder to separate
The traditional recruitment question has often been:
How do we find more people?
That question still matters, particularly when vacancies are difficult to fill. However, the current labour market suggests that employers also need to consider what their workforce must be capable of doing in the future and how those capabilities will be developed.
The latest Make UK HR Bulletin highlights this increasingly connected relationship within manufacturing, covering recruitment activity, skills availability, workforce planning and the implications of forthcoming employment law reforms. It also examines the proposed right to guaranteed hours and what this could mean for employers as workforce planning obligations evolve.
The result is that recruitment decisions are increasingly connected to wider business decisions. Investment in technology can change the skills required within a team, employment legislation can influence how a workforce is structured and changing demand can affect the balance between permanent employees, temporary workers and other forms of workforce flexibility.
These decisions may still sit with different people across an organisation, but they are influencing one another. That makes a joined-up understanding of workforce needs increasingly important.
What should employers be looking at now?
There is no single answer to the recruitment challenges facing UK businesses. The right approach will depend on the organisation, its sector, its location and the roles it is trying to fill. However, the latest evidence suggests there is value in looking beyond the vacancy itself and asking a few more fundamental questions.
Understand what is actually making a role difficult to fill
Low application numbers, candidates rejecting offers, a shortage of specific skills, an uncompetitive salary or an unrealistic list of requirements all create different recruitment problems. Identifying which of these issues an employer is actually facing is important because the solution will depend on the cause.
Be clear about what is essential
A long list of qualifications and experience may appear thorough, but it can also reduce the available talent pool unnecessarily. Employers should distinguish between what someone needs to be able to do immediately and what could be developed with the right training and support.
Look at the workforce already in place
External recruitment is not the only way to address a skills gap. Existing employees may have transferable skills, development potential or experience that could be built upon, particularly where the BCC’s latest research suggests that investment in workforce development remains limited despite ongoing recruitment difficulties.
Build flexibility around actual demand
Permanent recruitment will be the right answer for many roles, while temporary recruitment will be more appropriate for others. The important consideration is whether the workforce model reflects the reality of the business, including fluctuations in demand, the skills required and the level of certainty around future growth.
Look beyond the immediate vacancy
A vacancy may be the result of growth, a skills gap, an ageing workforce, retention issues or a change in the way the business operates. Understanding that wider context gives employers a better chance of addressing the underlying workforce need rather than simply filling the role currently sitting empty.
The workforce you need may not look the same as the workforce you have today
The latest recruitment data does not suggest that businesses have stopped hiring. Instead, it points to a more complicated picture in which many employers are maintaining existing staffing levels while still struggling to find the people and skills they need. At the same time, investment in workforce development remains limited, while government and industry are placing greater emphasis on future skills and closer alignment between training and the needs of employers.
For businesses, that creates a difficult environment, but it also makes workforce planning more relevant than ever. The answer to a staffing challenge may be external recruitment, internal development, a change to the role itself, a more flexible workforce model or a combination of several approaches.
The businesses best placed to respond are unlikely to be those relying on one solution for every workforce problem. They are more likely to be the organisations that understand what they need, where the gaps are and which approach is most appropriate for the situation in front of them.
The more difficult question is whether employers are still trying to recruit the workforce they have always had, or whether they are starting to build the workforce their business is actually going to need next.
If you think you have a temporary recruitment need, reach out to your local Swift Temps branch below: