New employment law creating recruitment challenge

14 Apr 2026

Almost three-quarters of firms say they experienced hiring difficulties in the first quarter of this year, according to the British Chambers of Commerce (BCC).

The BCC's research shows just 29% of businesses reporting no recruitment problems.

The BCC's Quarterly Recruitment Outlook indicates hiring problems are most significant in transport and construction, with 82% and 81% of responding firms experiencing issues. Retailers were the least likely to have experienced problems, with 60% reporting issues.

Labour costs were still the biggest cost pressure for businesses, cited by 73% of responding firms.

Patrick Milnes, Head of Policy for People and Work at the BCC, said: 'Firms of all shapes and sizes are continuing to face a challenging and costly labour market.

'Our latest data shows hiring difficulties persist, as firms across all sectors struggle to find the right people and skills they need. Even before the Iran War, this was having a huge impact on economic growth.

'At the same time, the Employment Rights Act is beginning to take effect, adding further burdens for firms that continue to be underestimated.

'Ministers need to work in partnership with business to tackle the ongoing skills crisis and improve productivity. 

'Next month's King's Speech is an opportunity for the government to back SMEs by outlining plans to cut business costs, support employers and provide a compelling blueprint for economic growth.'