Tazio Trends: The Future of Recruitment

In this edition of Tazio Trends, we explore the future of recruitment and talent acquisition through the lens of costs and operations. With the UK’s minimum wage set to increase, businesses must navigate the challenge of offering competitive salaries while managing rising operational costs, including the rising National Insurance contributions from April. While higher wages can help attract and retain talent, there is a broader conversation around rising costs both for businesses and candidates which will ultimately impact decisions.

As businesses face these rising costs, there needs to be a balance between offering competitive compensation and maintaining profitability. This growing financial pressure may prompt companies to rethink their approach to employee benefits, flexible working arrangements, and alternative incentives to attract and retain talent. The focus on skills based hiring and pre assessed talent pools may also become even more crucial, as employers look for more cost effective ways to recruit top talent with long term potential without compromising quality.

The job market is increasingly employer led, shaped by a surge in available talent due to redundancies, economic uncertainty, and the accelerating adoption of AI. This means there is a higher volume of candidates competing for fewer vacancies, putting pressure on employers to adopt more efficient, streamlined recruitment processes.

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What the Latest Vacancy Data Means for Hiring

If you thought 2024 was a tough year for job seekers, 2025 is looking even more competitive. The latest Office for National Statistics (ONS) data shows that job vacancies have seen a sharp decline, dropping from 860,000 in January 2024 to 759,000 in January 2025. That’s over 100,000 fewer opportunities, meaning employers are holding the cards, and candidates are facing greater competition.

Retail, one of the biggest hiring sectors, has felt the squeeze too, with vacancies dropping from 570,000 to 480,000. That’s a lot more applicants battling it out for a single role.

So, What Does This Mean for Businesses?

Well, while a bigger candidate pool might seem like a hiring dream, sorting through hundreds (or even thousands) of applications is another challenge entirely.

This is where more advanced recruitment strategies come into play. By incorporating additional tests such as initial automated assessment, employers can quickly build a more accurate candidate profile early in the process, ensuring only the most relevant applicant's progress. Automated communications with candidates can keep them engaged throughout the process and free up valuable time that can be used to assess talent quicker.

Utilising skills based assessments enables organisations to evaluate candidates' capabilities and potential, not only giving an indication of the candidate's potential for the current role but can also highlight future potential as the needs of the business change over time. Evaluating talent based on skills and adaptability rather than solely on traditional qualifications is a great way to plan for future hiring challenges.

What Exactly is Skills Based Hiring?

Skills based hiring is an approach that focuses on evaluating candidates based on their abilities and competencies rather than traditional credentials or experience. Skills based assessments are designed to identify specific talents a business needs, such as problem solving, technical skills, or communication abilities. This method helps reduce hiring bias by shifting the focus from background and experience to proven capability. Candidates hired for their skills are more likely to thrive in their roles, leading to better job fit, higher retention, and improved performance, ultimately benefiting both the individual and the organisation.

The Role of Skills Based Hiring

According to a report by Hays, four in five (80%) employers would now consider hiring a candidate without all the required skills but with strong potential to progress, with the intention of upskilling them. This approach reflects a growing recognition that potential and adaptability can be as valuable as existing skills.

Additionally, a survey by HR Magazine found that 72% of hiring professionals have steered towards using skills assessments to evaluate whether candidates are qualified for a job. This shift indicates a move away from traditional reliance on resumes and educational qualifications, focusing instead on the actual abilities candidates bring to the table.

These findings highlight the role of skills based hiring in future proofing recruitment processes, ensuring efficiency and better hiring outcomes. By focusing on the specific abilities required for a role, employers can bypass the traditional reliance on CVs and qualifications, ensuring that candidates are assessed based on their true potential to succeed. This approach not only saves time and reduces costs, but it also helps mitigate hiring bias, creating a more equitable and efficient recruitment process. By assessing candidates based on their actual abilities, rather than just their CVs or backgrounds, businesses can build a more diverse and capable workforce.

As the labour market becomes more competitive and companies face mounting challenges from rising costs such as National Insurance Contributions, skills based hiring offers a practical solution to building stronger, more capable teams, even in tough economic conditions.

Skills based hiring shifts the focus from traditional qualifications and experience to assess candidates based on their actual abilities, competencies, and potential to perform in a role. By using assessments, simulations, and real world tasks, employers can identify the best talent regardless of background, ensuring a more inclusive and high-performing workforce.

It’s clear that this approach is not just a trend, but a strategic move towards a more sustainable and effective hiring process in 2025 and beyond.

Impact of National Insurance Contribution Rise on the UK Labour Market

The planned rise in National Insurance Contributions (NICs) for employers in April 2025 is expected to put additional strain on the UK labour market (OxfordEconomics), potentially increasing unemployment by 0.2% and reducing wage growth. Sectors heavily reliant on lower-paid workers, such as hospitality, retail, and art, are particularly vulnerable to job losses.

For some businesses, particularly those in industries with thin profit margins, this increase in cost could lead to reduced hiring volumes, as companies look to cut back on staffing levels to manage the additional financial burden. This is especially true for businesses reliant on lower paid workers, where the cost of labour becomes a significant portion of overall expenses.

The potential for reduced wage growth in these sectors also means that employers may struggle to attract and retain top talent, especially as workers in these industries face stagnant wages amid rising living costs.

For employers, this means they will need to adapt their recruitment approaches to remain competitive. Efficiency in the hiring process will become more important than ever. Ultimately, the NIC rise could shift the labour market dynamics, with employers in affected sectors needing to balance cost pressures with the need for skilled, capable workers. The ability to adapt and make smarter, more strategic hiring decisions will be key to thriving in this changing environment.

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As always, our mission is to empower you to make smarter, faster hiring decisions and create exceptional experiences for your candidates. Stay connected with us on LinkedIn,Twitter, and Facebook for the latest news and resources. If you have any feedback or ideas for what you’d like to see in our next edition, we’d love to hear from you.

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