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2022’s economic turmoil, cost of living crisis and record-breaking hits to living standards have affected millions of households up and down the UK. With many turning to charities for support, the sector has been trying to address rapidly growing levels of need, while simultaneously attempting to navigate an increasingly perilous financial landscape.

With inflation and energy costs both consuming sector resources and negatively impacting public giving, charities are facing an almost impossible balancing act. Despite this, charities are doing what they always do – stepping up and doing their best to deliver their charitable objectives and meet the needs of their beneficiaries.

For many, this has meant trying to bring in additional staff and volunteers to help tackle the increasing levels of demand. But attempts to grow, far from being the answer to the problem, are proving to be yet another difficulty that charities are having to overcome.

Results from the second wave of the PBE and Nottingham Trent University National VCSE Data and Insights Observatory quarterly VCSE Sector Barometer reveal the extent of the sector’s recruitment and retention challenges. The survey finds that over eight in ten (82%) charity employers have tried to recruit paid staff in the past year, with over seven in ten (71%) saying that recruitment has been difficult. More than half of charity employers (54%) reported that they currently have vacancies, with over eight in ten (83%) saying those vacancies are proving hard to fill.

Many cited a tight and competitive labour supply as the primary cause of their recruitment woes. Respondents identified insufficient numbers of suitably skilled applicants, a low number of applications in general, increased competition from other employers, and poor terms and conditions as the key barriers to growing their workforce.

For the charity sector, heightened competition amid a cost of living crisis is an especially difficult bind. Previous analysis has shown that people working for charities earn on average 7% less per hour than their counterparts in the rest of the economy. And with evidence that private sector pay growth has been outstripping charity pay growth over the last two years, it is likely that charities are becoming increasingly less competitive in terms of remuneration.

To make things worse, the long-term downward trend in volunteering participation has continued. Volunteering rates have fallen to record lows, as the sharp decline in volunteering witnessed during the pandemic is proving difficult to reverse.   

Consequently, the sector’s existing workforce is shouldering much of the burden, with seven in ten (70%) employers with hard-to-fill vacancies saying that current staff were facing increased workloads as a result. Retention is proving to be a smaller but nonetheless important problem for many employers, with over one quarter (26%) describing their experience of retention over the past 12 months as difficult. Recruitment problems are further exacerbating issues of retention for some charity employers, with almost one quarter (24%) citing stress, burnout, and large workloads as a main cause of their retention issues.

Beneficiaries are also being impacted, with some charities having to pause or scale back their operations in the face of worker shortages, while others say they are struggling to maintain current quality standards and meet existing contractual or project objectives.

Longer-term improvement within the charity sector is also being hindered, as innovation and organisational development are being hampered by workforce gaps. More than half (52%) of employers with hard-to-fill vacancies said they have had to delay the introduction of new services, while almost three in ten (29%) said they have been unable to introduce new working practices.

But as the economic outlook in early 2023 begins to show gradual signs of improvement, so too has the outlook brightened for some within the sector. The proportion of charities reporting high levels of uncertainty has fallen slightly, while a growing minority of organisations are becoming more optimistic about their short-term prospects in a range of areas, from recruitment to finances.

It remains too early to say whether the dampening of pessimism observed in early 2023 will be the start of a sustained and expanded period of optimism within the sector, but with organisations already running so hot, and at risk of burning out - change cannot come too soon.

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