Tight labour market emphasises the importance of staff retention

According to the latest BICS survey data1, over a third (35%) of businesses in the UK reported difficulties in recruiting employees in September 2022.

Analysis of government data from Broadstone, an independent pensions, employee benefits, and investments consultancy, reveals the impact the tight labour market is having on UK businesses.

A shortage of workers appears to be to blame, with the highest proportion of employers experiencing difficulties due to a low number of applications for the roles on offer (62%) or because of a lack of qualified applicants (57%).

Businesses reporting recruitment issues also blamed a reduced number of applicants from the EU (18%) and a growing number of vacancies to fill (19%).

Nearly three in 10 (29%) employers also said that they could not offer an attractive enough pay packet to applicants.

These rising staffing costs remains a key worry of many employers. Nearly half (47%) said that their staff expenditure had grown in the last three months and four in 10 (40%) expect further increases before the end of the year.   

David Pye, director at Broadstone, said that the data demonstrated just how important it was that businesses were able to retain staff and are doing all they could to limit longer-term absences in the current economic climate.

He explained: “Employers in the UK are experiencing huge difficulties when it comes to recruiting high-quality employees as the hunt for talent intensifies. 

“It underlines the need for businesses to do all they can to retain their existing talent through attractive compensation packages and differentiated employee benefits propositions.

“While pay may be an immediate factor amid the cost-of-living crisis, ensuring employees feel appreciated at their place of work, are part of a strong culture and have the right level of flexibility are increasingly important influences.

“It should always be the priority not to lose valued staff rather than attract new, but all of the above help do both if implemented correctly. 

“Access to affordable health insurance is another increasingly important tool of retention given there is currently a seven-million-person long queue for NHS treatment. Nearly 400,000 more people have left the labour market because of a long-term illness since COVID and replacing this talent is hugely time and capital intensive for employers.”