Businesses unable to absorb higher employment costs while delivering growth - report

A labour market report produced by Pertemps and CBI have revealed that firms are running out of options to fund pay rises without productivity growth with the current climate of rising costs making it difficult.

The report follows extensive consultation with businesses across the UK about their plans for the coming year and the obstacles to growth that they seem as hampering them the most.

Findings include 50 per cent of respondents saying the cumulative cost of doing business is the top threat to their competitiveness and seven in 10 pointing out the recent National Insurance Contributions (NICs) increase was the biggest factor in rising costs.

The balance of businesses planning to invest in training the coming 12 months is negative.

Out of the respondents, 50 per cent believe continued rigidity in the Growth and Skills Levy will stop their organisation from being able to plug skills gaps.

Carmen Watson (pictured), chair of West Midlands-based recruitment specialist Pertemps Network Group, said: “Falling confidence to hire, rising employment costs and persistent productivity challenges continue to hold the market back.

“Pay pressures are harder to meet, high costs are widening skills gaps and recruitment decisions have become more complex for everyone involved.

“Yet there are genuine reasons to be optimistic. Confidence in developing skills beyond formal qualifications has risen slightly over the past year.

“More organisations recognise that supporting candidates to build essential workplace capabilities, whether new hires or existing staff, is central to long-term success.

“Above all, this report reinforces a simple truth: collaboration matters. Businesses, government, trade associations, education providers, and candidates themselves, all have a part to play in addressing the challenges ahead.

“Through working together, we can close skills gaps, strengthen productivity and build a labour market that delivers opportunity and sustainable growth for everyone.”

Click here to read the full report.