Firms report persistent hiring challenges due to a mix of structural labour shortages, stagnant wages, and shifting worker expectations. Even with falling vacancies.
Why is this?
Structural and Economic Factors
- Mismatch of skills vs. vacancies: Many roles require specialist skills that aren’t readily available in the current workforce. This mismatch is especially acute in sectors like engineering, healthcare, and IT.
- Post-pandemic labour shifts: The pandemic reshaped work preferences, with more people seeking flexible or remote roles. Traditional sectors like hospitality and manufacturing have struggled to adapt.
- Immigration changes: Post-Brexit immigration rules have reduced the pool of overseas workers, particularly in lower-wage sectors like agriculture, logistics, and care.
Employer Challenges
- Stagnant salaries and benefits: Over half of UK professionals are actively seeking new jobs due to dissatisfaction with pay and perks. Employers not adjusting compensation packages are losing out on talent.
- Retention issues: Businesses aren’t just struggling to hire – They’re also losing existing staff. Retention is now as big a challenge as recruitment.
- Cost pressures: Rising operational costs mean many firms are cautious about increasing wages or expanding headcount, even when roles are vacant.
Labour Market Trends
- Falling job vacancies: Despite high unemployment, job postings have dropped significantly – down 17% from mid-2024 to late 2025. This suggests economic uncertainty and cautious hiring.
- Increased competition for talent: With 56% of professionals planning to change jobs, the market is highly competitive. Employers must work harder to stand out.
Cultural and Generational Shifts
- Changing expectations: Younger workers prioritise purpose, flexibility, and work-life balance. Firms that don’t offer these struggle to attract Gen Z and Millennials.
- Digital transformation gaps: Businesses slow to adopt modern tech or hybrid work models are less attractive to candidates used to digital-first environments.
It isn’t much comfort, but you are not alone… We hear this everywhere and are experiencing it ourselves. So, what can we do?
Here’s a breakdown of the most effective strategies businesses are using right now:
Build Financial Resilience
- Strengthen cash flow management: Go beyond basic cost-cutting, renegotiate supplier terms, optimise stock holding, slow moving stock is money tied up, reduce unnecessary overhead.
- Scenario-based financial planning: Model best, worst, and moderate-case scenarios to guide decisions under uncertainty.
- Diversify revenue streams: Explore new services or markets that complement your main business but without overextending.
Adapt Strategically
- Pivot services without losing identity: Adjust your offerings to meet current demand while staying true to your brand. For example, a B2B firm might offer bite-sized advisory packages or compliance audits tailored to emerging regulations.
- Embrace digital transformation: Automate processes, adopt cloud tools.
- Stay agile with decision-making: Empower teams to act quickly on data and feedback, avoiding bureaucratic delays.
Retain and Deepen Client Relationships
- Double down on client communication: Be proactive, transparent, and empathetic. Customers value clarity and reassurance during turbulent times.
- Offer value-driven solutions: Create resources that help customers navigate uncertainty – checklists, explainers, or training packs tailored to their business.
- Invest in loyalty: Reward long-term customers with added support or flexible terms to reinforce trust.
Keep One Eye on Growth
- Don’t freeze strategic initiatives: Scaling during uncertainty can be smart if done with clarity and focus. Firms that invest wisely now often emerge stronger.
- Forge strategic partnerships: Collaborate with complementary businesses to share resources, expand reach, or co-create offerings.
- Monitor market signals: Stay informed about policy shifts, tech trends, and competitor moves to spot opportunities early.
