Weak customer demand, rising employment costs and ongoing recruitment difficulties are creating significant challenges for businesses across South East, South West and Mid Wales, according to the latest quarterly survey from Chambers Wales.
The findings reveal that 64% of respondents are currently operating below capacity, with 57% citing a lack of orders as the main reason.
Market demand was identified as the biggest barrier to growth by 19% of respondents, closely followed by skills and workforce availability at 17%.
Despite these pressures, businesses are continuing to consider recruitment and workforce development. Almost a third (31%) expect to increase their workforce over the next three months, while 28% reported increasing their investment in training over the previous three months.
However, finding suitable employees remains a significant challenge, with 59% of respondents reporting recruitment difficulties during the past quarter.
Employment costs are also placing pressure on business finances, with 76% of survey participants reporting pressure to increase prices because of labour costs.
Dr Fiona Withey, Chief Operating Officer of Chambers Wales, said:
“Skills and labour are a major blocker for many of our members, not just gaining and retaining talent, but also paying for it when they do employ the right people.”
She added that businesses were struggling to balance their ambitions to recruit and train staff with the increasing cost of employment and the need to remain competitive.
“Many of our members have told us that the cost to employ people due to increases in National Insurance, minimum wage, as well as now the changes in employment law, are all making it very difficult to employ permanent full-time staff.”
Dr Withey said the findings demonstrated how employment pressures were becoming a serious barrier to economic growth, adding that Chambers Wales would continue campaigning to ensure members’ concerns were heard by policymakers.
