Small and medium-sized enterprises (SMEs) in Britain are struggling to compete for talent, with the cost of recruitment soaring, a new study suggests.
The study of 514 small businesses found 89 per cent are struggling to match salaries offered by bigger organisations in the UK, while multinationals present a threat to 69 per cent of firms, according to recruitment platform Employment Hero.
Contributing to hiring difficulties is an eye-watering 68 per cent rise in the average cost of hiring to £3,089 over the last year.
And SMEs, particularly those employing less than 10 workers, are also bearing the soaring cost of recruitment at a time when their hiring needs outweigh those of larger counterparts, separate data suggests.
89 per cent of SMEs are struggling to match salaries offered by bigger organisations, new research from talent platform, Employment Hero shows
White-collar SMEs are suffering the most, experiencing the highest advertising costs and turnover rates.
Sectors such as insurance and finance, which are also the most exposed to multinationals, face the most expensive job advertisement costs on average at £5,316.
And, amid tough competition for talent in a still-tight labour market, the survey found the sub-500-staff companies are receiving 10 or fewer applicants for advertised roles, which typically take 31 days to fill.
These types of SMEs also experience the longest wait to hire – 46 days – and a higher turnover rate, with 17 per cent of new employees leaving within six months.
Ben Thompson, CEO and co-founder of Employment Hero, said: ‘Recruitment isn’t working for SMEs.
‘They are the backbone of our economy but can’t keep up with a hiring environment of increasing complexity and cost, where huge multinational companies can easily outspend them in the race for top talent.
‘We just can’t stand by and watch our small business community, especially those relying heavily on seasonal workers during crucial times like Christmas, lose ground after facing such a tough time through Brexit and the pandemic.’
The size of the organisations that took part in Employment Hero’s research
Recruitment firms are currently cutting profit forecasts as the pace of hiring has slowed.
Earlier this month, PageGroup cut its annual forecast due to employers scaling back hiring and more jobseekers rejecting offers. Rival Robert Walters earlier provided investors with a similar update.
Data from the Office for National Statistics shows the very smallest businesses increased vacancies in the third quarter of 2023.
The data suggests that smaller businesses have been advertising in greater volume generally relative to bigger counterparts since the pandemic began in 2020.
ONS data suggests that the smallest businesses have been the most eager to recruit since March 2020
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