Is anybody hiring?

British businesses haven’t been this pessimistic about recruiting people for 15 years according to BDO the consultancy firm.

Bosses of small and micro companies in particular face delays in growing their businesses if they can’t get the right people in the right roles. But when the cost of each employee is going through the roof intentions and capacity to extend your workforce go out the window. We’ve been talking about this since the increases in wages and National Insurance contributions last April and increasing costs since. Add the new Employment Rights coming into force from April and it’s hardly a surprise the BDO’s employment index is at its weakest since March 2011. There are huge knock-on effects possible when it comes to unemployment levels for young people who want to get into work.

Workers’ rights and wage and NIC increases are putting the brakes on businesses. The current geopolitical situation is likely to be the final straw especially if the war in the Middle East goes on. Oil prices are soaring and while the news outlets seem to be concentrating on the impact on households, small and micro businesses which need fuel, energy, transport, will be hard hit and in turn that hits households and leaves consumers with less to spend. There’s a vicious circle here with could turn into a vortex.

Despite all the gloom BDO’s research shows the service sector has been doing quite well. It accounts for 80% of UK GDP and activity increased in February but that was despite job cuts and price hikes which resulted from the tax and wage increases. The hospitality sector is a significant part of our service sector and researchers for BDO say the government’s £300m business rates reliefs for pubs and live music venues is encouraging activity. 

However, like everyone else BDO is watching the conflict in the Middle East and the threat of further US tariffs as even the boost to the service sector could be short-lived. The truth is we won’t get real growth and increased productivity unless and until we fix the our under siege  labour market.