- Mid-sized businesses in East Anglia (27%) see workforce issues, such as recruitment and retention costs, skills gaps and a shortage of workers, as a big challenge in the next six months
- More than a third of regional businesses (37%) say it’s too expensive to hire staff.
East Anglia businesses face a squeeze on their workforce in the next six months, as skills and labour shortages rival rising interest rates and business costs in the list of top concerns. More than a quarter of mid-sized businesses in the region (27%) have ranked workforce challenges, such as recruitment and retention costs, skills gaps and a shortage of workers, as one of the biggest issues facing their business – with supply chain challenges coming out on top. According to BDO LLP’s bi-monthly Rethinking the Economy survey of 500 mid-market businesses, more than a third of Midlands businesses (37%) say it’s too expensive to hire staff – pointing the finger at the cost of immigration bureaucracy, National Insurance contributions, and the expectation of higher pay and more benefits during the cost of living crisis. The survey also found that 40% of regional businesses cannot hire people with the right skills, with 37% admitting that immigration restrictions are preventing them from recruiting enough people. Currently, the biggest areas of concern for East Anglia businesses is recruitment of entry (70%) and lower managerial levels (70%). As a result, business leaders are taking significant steps to address workforce challenges over the next six months. Peter Harrup, partner and Head of East Anglia at BDO LLP, commented: “Time and again over the last three years, we have seen regional businesses thinking outside the box when faced with growing pressures. Workforce challenges are no different, with businesses offering specific incentives targeted at attracting more diverse talent, opportunities for existing staff to upskill and retain, as well as recruiting more staff through trainee schemes or apprenticeships. The landscape has changed considerably, and a significant number of businesses have flexed to adapt to it.” The Rethinking the Economy survey also showed that over the next five years, East Anglia businesses intend to invest in upskilling their existing workforce (30%), with the same number making a concerted effort to reverse the slide in the number of over 50s workers. Data from the Office for National Statistics (ONS) shows a mass exodus of over-50s from the labour market between March 2020 and November 2021, following record high employment rates of 50-64-year-olds in 2019. Similarly, nearly a quarter of East Anglia businesses (21%) intend to launch new products or services to support business growth in the face of labour shortages. As workforce challenges add to mounting economic pressures, additionally businesses are turning to technology and automation in order to address operational and productivity shortfalls. The survey found that over the next three years, nearly a third of East Anglia businesses (30%) intend to invest in technology to improve data-driven decision making, with 37% increasing the use of AI or adaptive AI systems. Harrup added: “The pressures and knock-on effect of workforce challenges is a worrying concern and one that could significantly impact on business confidence in the coming months if recruitment initiatives and investment in technology don’t begin to bear fruit. “What is clear from our latest survey is the need for greater support from the Government, to help East Anglia businesses address long-term challenges. Without more targeted intervention from Whitehall, mid-market businesses will continue to struggle in the face of ongoing adversity.” Topping the list of requests for Government support include incentives for consumers to encourage them to purchase from businesses, such as voucher schemes similar to Eat Out to Help Out, together with immigration policy changes to plug skills gaps and labour shortages.