Jessica O'ConnorThe British Chambers of Commerce (BCC) has issued a warning regarding persistent pressures in the UK labour market, following the latest employment figures released by the Office for National Statistics (ONS) this morning.
Jane Gratton, deputy director of public policy at the BCC, highlighted that the labour market remains a major source of strain for companies across the country.
She said: “The labour market continues to be a significant pressure bearing down on businesses of all sizes.”
“The rising cost of employment is a major challenge for employers.”
While the pace of wage growth, including bonuses, has moderated slightly, Gratton noted it still “continues to significantly outpace inflation.”
This wage inflation, she said, combined with April’s increase in employer national insurance contributions, has pushed staffing expenses higher.
She cautioned that it could take some time to fully grasp the knock-on effects on jobs, investment decisions, and the capacity of businesses to adjust to these financial burdens.
The ONS data also revealed a quarterly decline in job vacancies, a trend the BCC says reflects broader stagnation in workforce growth.
Gratton said: “Vacancies have fallen on the quarter, underlining our latest research which shows workforces aren’t growing.
She added that recruitment remains a “huge challenge,” with many firms being forced to raise prices due to escalating labour costs.
Gratton urged the Government to step in with further support, arguing that without relief from rising employment costs, businesses would struggle to expand and invest in training.
She said: “The Government must ease the cost pressures on businesses, so they have the freedom to recruit and invest in a skilled workforce.
“The recent announcement on construction training investment by the Chancellor was welcome.
“However more flexibility in the skills system is needed to boost training and development across the economy.”
The BCC also voiced concerns about the forthcoming Employment Rights Bill, warning that the legislation could introduce even greater complexity and cost for businesses.
“While Government is consulting business, the legislation as it stands threatens to add even more costs and complexities for employers,” Gratton warned.
