WORKFORCE & RECRUITMENT

The workforce balance score went up by four points to 60 but broader recruitment challenges continue to linger.

In total, 30% of businesses in the two sectors combined added to their headcount over the previous three months (compared to 24% in Q3) which led to an overall uplift in the balance score. The percentage of businesses attempting to hire staff also went up from 52% in Q3 to 61% in Q4 – the largest percentage on file since Q1 2021. However, of those businesses, 69% faced recruitment difficulties, although this figure represented a two percent fall in relation to Q3, the percentage remains exceptionally high and points to the ingrained challenges businesses face when attempting to recruit staff. The trend was particularly pronounced amongst manufacturers as 85% faced challenges when trying to bolster their workforce (the largest figure on record since Q4 2018).

Looking ahead to the next three months, the balance score for the two sectors combined increased by a single point to 65 – mainly due to the fact that a higher percentage of firms are expecting to add to their workforce over the coming months (up from 31% in Q3 to 33% in Q4). Nationally, for the three months ending October 2022, employment rose slightly by 0.2% to 75.6%. Unemployment rose by 0.1% to 3.7% and economic inactivity declined by 0.2% to 21.5%. During the same period, the employment rate estimate for the West Midlands was 73.6%, 1.7% lower than May to July 2022 whereas the unemployment rate was estimated to be 4.9% - a 0.3% increase compared to the previous quarter and the highest rate in the UK. For the seventh year running, the GBCC will be running its flagship Growth Through People campaign in 2023 and the topics of staff retention and upskilling the existing workforce will feature in the series of events – full details can be found on our website.

In total, 54% of businesses in both sectors combined expect their turnover to improve over the course of next year – an increase of 2% compared to Q3, whereas 16% projected a drop in the same period (compared to 20% in Q3) which led the balance to go up by 3 points to 69. Likewise, the profitability index saw a welcome uplift of three points to 58 – much of this was based upon a dip in the number of businesses forecasting a fall in their profitability over the next 12 months (down from 31% to 25% in the current quarter). 54% expect their profits to rise in the same period (compared to 52% in Q3), however the overall figure of 58 is the lowest on file (outside of the pandemic period) since Q3 2012 when the UK was faced with the threat of a double dip recession.

The balance score for capex investment increased by two points to a figure of 50 as 61% noted that investment plans for equipment had remained unchanged for the previous three months (compared to 56% in the previous quarter). Likewise, it was pleasing to see a noticeable increase in the training investment balance score. 28% of businesses in both sectors said investment plans for training had been revised upwards over the last three months – the figure in Q3 was 23% and this development was the main reason behind the balance score for training investment going up by 4 points to 58. The results mirror national trends as the ONS revealed in December that business investment across the UK is estimated to have fallen by 2.5% in Q3 and remains 8.1% below the pre-pandemic level.

Raj Kandola Head of Policy and Strategic Relationships

The Mini Budget of September will go down in history but not for the reasons it’s author Kwasi Kwarteng was hoping for – the statement led to turmoil on the financial markets as the former Chancellor announced a series of unfunded tax cuts in a bid to boost growth. Jeremy Hunt moved quickly to scrap the majority of announcements in a bid to restore economic credibility, however, as our survey demonstrated, businesses continue to experience the fallout from that ill-fated Budget – concerns over the impact of rising interest rates are the highest on record since the summer of 2002 are a pertinent example.

Despite the announcement of additional support for businesses paying their energy bills beyond March, many firms will feel underwhelmed by this announcement. Whilst it was good to see an ongoing level of support for all businesses, it’s clear that the Government are clearly betting on the recent fall in wholesale prices being passed on to businesses in the coming weeks. We all hope that they are right and ready to adapt their plans if they are not or if businesses face a further round of pressures next winter. As outlined by the British Chambers of Commerce, we need to see the Government formulate an energy support strategy to help improve long term efficiency – whether that’s increasing Ofgem’s powers to protect businesses from unscrupulous operators or pushing for greater devolution to improve energy storage at the regional level.

Greater Birmingham Chambers of Commerce