Somerset businesses face ongoing recruitment challenges as new employment law takes effect

9 April 2026

Businesses continue to face significant recruitment difficulties at the start of 2026, according to the latest national data released by the British Chambers of Commerce (BCC), as new employment legislation begins to come into force.

The BCC’s Quarterly Recruitment Outlook shows that nearly three quarters of firms (71%) have experienced difficulties hiring in the first quarter of the year, with fewer than a third reporting no recruitment problems. This reflects ongoing challenges across Somerset’s largely SME‑led economy, where access to skills remains a key barrier to growth.

Sectors that play a critical role in Somerset’s economy are among the hardest hit. Transport and construction continue to experience the greatest hiring pressures, closely followed by manufacturing and hospitality. While retail businesses are the least affected, a majority still report ongoing recruitment difficulties.

The survey, carried out between February 9 and March 9 before the spiralling impact of the Middle East conflict was fully apparent, gathered responses from more than 4,560 businesses across the UK. Some 91% were small and medium‑sized enterprises – a profile closely aligned with Somerset’s business base.

Labour costs remain the biggest pressure on employers, cited by 73% of firms. This is particularly acute for Somerset’s hospitality and tourism sector, with pubs, hotels, restaurants and visitor attractions continuing to face rising wage costs alongside persistent skills shortages. Transport, logistics and manufacturing firms also report sustained cost pressures.

Despite these challenges, some businesses remain cautiously optimistic about the year ahead. Over a quarter of firms expect to increase their workforce over the next 12 months, while most foresee no change in staffing levels. However, ongoing cost pressures mean that investment in staff training and development remains limited, potentially exacerbating longer‑term skills gaps.

David Crew, Managing Director of Somerset Chamber of Commerce, said: “Recruitment remains a major challenge for employers across Somerset, particularly in sectors that are vital to our local economy. Businesses are under pressure from rising labour costs, persistent skills shortages and the introduction of new employment regulations.

“While firms want to grow and invest in their workforce, many SMEs are operating on tight margins and need greater certainty and support. It is essential that government works in partnership with business to address skills shortages, control costs and ensure new regulations are implemented in a way that supports job creation and economic growth.

“With small businesses forming the backbone of Somerset’s economy, the right policies could make a meaningful difference to productivity, investment and employment across the county.”