New Report Reveals Recruitment For Vacancies Is Still Challenging With Inflation And Labour Costs Also A Concern

The latest report by NI Chamber and BDO NI has revealed that over 70% of businesses in Northern Ireland are struggling to fill staff vacancies with suitable candidates. Businesses are also concerned about inflationary pressures which are still ongoing, along with rising labour costs, business rates and energy bills.

The report also finds that the services sector is performing much better than the manufacturing sector. Here is some of the data from the report as copied from an article on the Irish Newsletter website.

Most Businesses In The Survey Are Currently Trading Well

‘Most businesses who responded to the survey are currently trading well or reasonably (77%), but around one in four (23%) are just covering costs or struggling. Just over half (56%) are seeing some slowdown in demand, although for most only a little (49%). Some 7% are seeing a significant slowdown in demand, which is down significantly from 13% at the end of 2023.

‘Inflationary pressures, despite easing, continue to be a key concern, along with rising labour costs. In Q1, more businesses said they expect to raise prices after a period where this showed signs of easing. Almost 3 in 5 (57%) of respondents were operating below capacity in Q1 24 (49% Q4 23).

‘In the first QES since the restoration of the institutions at Stormont, NI Chamber members were asked to identify their priorities for the Executive. The top three responses were a new economic strategy, a long-term infrastructure plan and an independent review of public spending.

‘Most service sector indicators remain above the UK average, with particularly strong indicators around trading performance and cashflow. The sector ranks first across the UK regions in terms of the share of businesses operating at full capacity.Confidence around turnover growth in the next 12 months is strong for the service sector, and while confidence around profitability is less strong, it remains positive and is more positive relative to Northern Ireland’s manufacturers.

‘More businesses are expecting to raise prices in Q1 24. In Q1 24 the balance of manufacturers expecting to raise prices was +38% (+29% Q4 23) and for services (+61% vs.+51% Q4 23). This is down from a peak of +88% for manufacturers in Q1 22 and for services at +76% in Q4 22.

‘Labour costs remain the biggest internal cost pressure for both sectors. In Q1 24 86% of manufacturers (92% Q4 23) and 81% of services (91% Q4 23) reported labour costs as a key pressure. Raw material costs are a pressure for 71% of manufacturers, which is down from 86% a year ago. Energy cost inflation continues to slow but 69% of members are still dealing with increased energy costs over the last quarter (71% Q4 23).

‘In terms of external cost pressures, inflation remains one of the most pressing concerns but continues to show positive signs of easing for both sectors. In Q4 23 51% of manufacturers reported inflation as a greater concern than 3 months ago, down from 57% in Q4 23 and 79% in Q1 23. For services, 52% report inflation as a key concern in Q1 compared to 57% in Q4 23 and 77% a year earlier.Competition has been a growing concern for both sectors with 41% (43% Q3) of manufacturers and 44% (44% Q3) of services highlighting competition as a greater concern than 3 months ago. Business rates are a concern for 54% of manufacturers, up from 23% for the same quarter in 2023.’

A Once In A Generation Opportunity For Local Businesses

Brian Murphy, managing partner, BDO NI, believes that businesses in NI have a great opportunity right now if they are fully backed by the Executive. He says in the article that:

“Local businesses now have a once in a generation opportunity with clarity about our trading relationships – unrestricted access to both the EU and GB markets, and a new Executive that provides stability.

“The partnership between local firms and our Ministers took centre stage recently in the US, gaining international recognition and support. The message was clear and welcomed with great enthusiasm: if you want access to the UK and EU markets, look no further than NI as the most exciting region on these islands to invest, work and live.

“To help achieve this potential we need our new Ministers to act. Nearly two thirds (63%) of local businesses want a new economic strategy for Northern Ireland, recognising our unique positioning and opportunities, with 64% backing calls for the UK Government to introduce a new fiscal framework for how we manage, support and fund public services in Northern Ireland. We need a fresh approach to deliver a system that reflects the realities of today and supports the planning for tomorrow.

“Businesses issues and asks may be well rehearsed, but our opportunities are unlimited. Momentum has been built and we cannot let it stall. Ministers need to make the decisions to support investment and job creation by delivering structures that will facilitate and incubate growth, thereby building a better, more productive, and more prosperous Northern Ireland for all.”