In a rapidly evolving talent market, staying ahead means understanding not just the numbers, but their implications for your organisation. That’s exactly what Lorien’s Director of Solutions & Insight, Darren Topping, delivers in our Talent Pulse Webinar series. In the last session of 2024, Darren analysed the current market, shared predictions for 2025, and examined the broader impact of the UK’s shifting economic and legislative landscape on hiring strategies.
Current Market Trends: Stability amid shifting employment dynamics
Darren highlighted the complexity of employment trends in the UK. While there have been positive shifts since early 2024, some challenges remain. This includes unemployment rates that have unfortunately continued to increase, with the majority of the unemployed and economically inactive population sitting in two varying ends of the age scale –mainly 16–24-year-olds and 50–64-year-olds.
When we think about increasing unemployment rates, it’s assumed that redundancies aren’t too far away. However, redundancy reports fell last quarter, reinforcing the stability of today’s job market despite broader economic challenges.
Darren also highlighted that job security is paramount right now, which has been discovered through Lorien’s own candidate sentiment work. Although between 42% and 87% of candidates wanted to move roles this year (dependent on their role), nowhere near that number of people actually moved due to job security concerns and potential lack of opportunities in the market. The reluctance to change roles highlights the need for organisations to emphasise job security and clear career advancement pathways and skills development to retain top talent in a cautious market.
Organisations must address the widening unemployment gaps by tailoring attraction strategies. This could mean apprenticeship programs or early-career initiatives, while for older candidates, flexible working and reskilling opportunities could play a vital role.
Client Insights: Trends in talent attraction and retention
In the webinar, Darren called attention to recent trends we’ve been seeing in the market and with our clients. For example, each organisation and each sector we have recently examined is now competing with a different set of competitors than usual. Sectors such as energy, utilities and legal organisations are currently more successful in attracting candidates from tech & finance companies – a new trend for 2024. These sectors must therefore adapt by reevaluating their Employee Value Propositions (EVP). For example, focusing on flexibility, benefits, or mission-driven branding can help these firms regain their competitive edge.
We also learned from our clients that the conversation on working patterns has quietened down slightly, with many organisations settling into a pattern of two days per week. Our research indicates that this may rise to three days per week by the end of 2025, with our clients expecting to see people in the office more. As an example, according to our data, cities like Manchester, Birmingham, Bristol, Cambridge and Oxford currently have fewer candidates per open job vacancy than London due to the new hub strategies, with talent pools not as developed therefore leading to fierce competition between candidates. The shift towards two- to three-day in-office patterns underscores the importance of hybrid work optimisation. At the same time, emerging regional hubs like Manchester and Birmingham require organisations to proactively invest in local talent development and consider innovative sourcing strategies to address talent shortages.
According to Darren, the biggest area of curiosity that clients have been asking about recently is the use of AI and automation in recruitment. Darren reported that clients are equally focused on improving the hiring experience using AI as they are on efficiency. We have conducted significant horizon scanning of technologies in this space, and what we have seen is that – currently – there is not one single tool that solves all recruitment challenges using AI. The closest technologies to do this are ATS and CRM type technologies, which means organisations need to be prepared to invest if they wish to leverage this technology.
Legislative Challenges: How new policies affect workforce strategy
In addition to industry insights and market overviews, Darren touched on recent legislation and policies – and how they are impacting hiring decisions and workforce strategies. One highly discussed change is the recent increase in employers National Insurance Contributions in the UK. For clients, this could mean that, in the face of increased payroll expenses, they feel compelled to reduce their workforce or implement hiring freezes to keep control of your costs. Recent feedback from the Association of Independent Professionals has highlighted that the increase will significantly impact umbrella company workers, potentially costing them well over £1000 a year.
Another upcoming key change is that the National Living Wage is set to rise again from April 2025. This increase, alongside the NIC increase, leads to increased payroll costs for organisations, particularly those with a high proportion of low wage workers. These two factors could potentially dampen UK hiring in the next few months. Employers facing higher National Insurance Contributions and a rising National Living Wage could explore cost-saving measures such as automation, flexible work arrangements, or optimising workforce distribution through offshoring and nearshoring.
The new legislation that requires day one rights for all employees could also impact clients. There will be increased compliance requirements, more administrative responsibilities and potentially, again, increased employment costs which may lead to a further decline in vacancies in early 2025. Day-one rights may require organisations to overhaul onboarding processes and review contracts. Investing in HR tech solutions and training can help manage the increased administrative burden while maintaining compliance.
Stay Informed
To stay ahead in today’s competitive market, it’s essential to translate insights into action. Watch Darren’s full webinar below for a deeper dive into these trends and sign up for our newsletter to receive expert analyses, upcoming webinar invitations, and practical strategies tailored to your organisation’s needs.
