That’s according to the latest quarterly economic survey by Chamber for South East, South West and Mid Wales.
The survey said 17 per cent of businesses in Wales increased the size of their workforce over the last three months and 17 per cent also expected their workforce to increase in the next quarter.
While over half of the businesses surveyed (59 per cent) expect the size of their workforce to remain constant in the next three months, there was a rise in the number of respondents who foresee that their workforce will decrease, from 15 per cent in quarter three to 24 per cent in quarter four.
Fewer businesses in Wales attempted to recruit during the final quarter of the year than in quarter three.
Of those who did recruit in quarter four, 65 per cent experienced difficulties especially when recruiting for professional, managerial, skilled manual and technical roles.
The latest edition of the Quarterly Economic Survey also included questions specific to measures announced in the Budget such as the proposed increase to the National Minimum Wage and National Living Wage from April and whether the changes would impact businesses’ staffing plans, particularly in relation to hiring young people such as graduates, school and college leavers.
Around half of the respondents revealed that the increases to £10 and £12.21 an hour for the minimum wage and living wage respectively would not affect their business.
Other businesses in Wales suggested that they would have to either halt recruitment plans, approach recruitment with caution or increase the prices of their services.
Businesses also expressed their hesitation to hire young people, with many reducing the numbers they plan to recruit in 2025.
Gus Williams, interim CEO at Chambers Wales South East, South West and Mid, said: “Taxation has become the external factor causing the most concern for businesses in Wales and the measures announced in the Budget such as the increase to employers’ national insurance contributions, combined with rising labour costs and changes to employee rights, have not surprisingly driven those concerns.
“Our Quarterly Economic Surveys show that recruitment remains a persistent challenge for businesses in Wales, and this continued in Q4 with a rise in the number of firms expecting their workforce to decrease and fewer investing in training. One of the impacts of the tax and National Minimum Wage increases looks to be a reduction in expected entry level recruitment this year.
“As businesses review their budget planning in preparation for upcoming changes, more support is needed to tackle barriers to growth such as access to skills development and learning pathways to help companies attract and retain talent with the right skills for their sectors.”
