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Navigating the shift: The rise of temporary solutions and skills-based hiring

Insights from Totaljobs hiring trends index.

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A quarter (25%) of businesses are turning to artificial intelligence.
Three out of five businesses are grappling with heightened competition.
75% of employers report candidates demanding higher salaries and benefits.

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Amidst escalating competition in the job market, businesses are increasingly turning to temporary staff, freelancers, and contractors, marking a significant shift in hiring practices. According to the latest Hiring Trends Index from Totaljobs, which surveyed over 1,000 HR Decision Makers in the UK, there has been a notable surge in this trend, with 27% of businesses opting for temporary solutions compared to the previous quarter’s 16%, representing a 69% increase in the proportion of companies adopting this approach.

The survey further reveals that three out of five (59%) businesses are grappling with heightened competition to secure the right skills, a figure that jumps to 74% among companies with over 1,000 employees. This scarcity of skills has led to a noticeable shift in candidate expectations compared to pre-pandemic times. A staggering 75% of employers report candidates demanding higher salaries and benefits, while 69% cite requests for remote work arrangements as a barrier to filling positions.

Consequently, a quarter (25%) of businesses are turning to artificial intelligence (AI) and training initiatives to bridge these skill gaps, with over a third (34%) already integrating AI into their workforce.

In response to these challenges, a vast majority (85%) of businesses are embracing skills-based hiring strategies. This includes updating job adverts to emphasise key skills and competencies (43%), training hiring managers to conduct competency-focused interviews (34%), and expanding talent pools by adjusting screening criteria (34%), with some even removing university degree requirements from job adverts (20%) to widen their search. Additionally, a quarter (26%) of employers plan to intensify efforts to diversify their hiring in the upcoming quarter.

The benefits of this skills-based approach are evident, with 96% of businesses implementing such tactics reporting positive outcomes. These include improvements in talent attraction (39%), finding better candidates (35%), enhancing candidate engagement (34%), and fostering diversity in the talent pool (31%), while also reducing time to hire (29%).

Furthermore, nearly nine out of ten (88%) employers are rewarding staff who successfully complete training or certification programs, with incentives ranging from career progression or promotion opportunities (50%) to pay rises (44%). Looking ahead, half (50%) of employers plan to address critical shortages through recruitment, while 40% intend to increase salaries to attract talent with the necessary skills.

However, despite these proactive measures, the research highlights a crucial gap in long-term planning, as only a fifth (21%) of businesses have conducted a skills gap analysis for workforce and succession planning. Julius Probst, Labour Market Economist at Totaljobs, emphasizes the importance of such long-term planning, noting that while short-term fixes are beneficial, they may leave businesses vulnerable in the ongoing talent competition. Probst underscores the necessity of foresight in designing a talent strategy to prevent perpetual skills gaps and ensure sustained competitiveness in the job market.

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