Over half of SMEs are set to increase the number of full-time staff in their workforce during 2023, according to our latest research.

We surveyed over 600 firms and the results found that, despite nearly two thirds of SMEs claiming their sector suffers from skills shortages, 55% expect to grow employee numbers during the remainder of the year.

Increases to staffing levels coincide with rising confidence in the SME sector, with our previous research finding that 62% of SMEs expect higher turnover in Q1 2023 compared with the same period last year.

While staffing levels are set to improve, our research also identifies challenges faced by SMEs in finding and retaining suitable employees, with a majority citing a skills shortage (64%) as a barrier to recruitment and a need to offer higher salaries to attract candidates (65%).

Meanwhile, six in 10 employers said they have introduced flexible working practices to attract potential recruits, whilst 70% of SMEs said they had increased wages to retain existing employees.

Commenting on the research findings our Managing Director of SME Lending, John Phillipou, said:

“That over half of all SMEs are planning to increase their number of full-time staff in 2023 is a clear demonstration of their resilience and optimism for the future. Supported by turnover growth, SMES are investing in their businesses and are expanding their operations to meet the demands of clients – providing a boost to the economy as it recovers from the challenges of previous years.”

He continued: “If SMEs are to fulfil their growth and recruitment goals it is essential they can access the support necessary to make them possible. As a specialist SME lender, the Paragon team is talking with businesses daily to understand their requirements and deliver funding packages that will allow them to achieve their goals.”