UK Employers Rethink Recruitment Strategies Amid Rising Employment Costs
A growing number of UK employers are changing how they recruit, with flexible hiring becoming an increasingly important part of workforce planning as businesses respond to higher employment costs and ongoing economic uncertainty.
New research commissioned by employment platform Employment Hero and conducted by YouGov found that almost four in ten UK businesses have reduced permanent recruitment over the past year, while one in four are increasing their use of freelancers and contractors. Rather than signalling a lack of demand for talent, the findings suggest employers are becoming more selective about when they commit to permanent hires.
The shift is creating fresh opportunities for recruitment agencies with established contract and interim divisions, while prompting many jobseekers to consider more flexible career paths.
Permanent Hiring Becomes More Selective
Recruitment firms have reported a more cautious hiring environment throughout the year, with employers carefully reviewing headcount plans before making long-term commitments.
Employment Costs Continue to Rise
According to the YouGov survey commissioned by Employment Hero, involving more than 1,000 UK business leaders, 39% of organisations have reduced full-time recruitment, while the average cost of employing permanent staff has increased by almost 10% over the past 12 months.
The findings come as employers continue to absorb higher labour costs, including increases to National Insurance contributions and the National Living Wage, alongside wider economic uncertainty.
Employers Delay Long-Term Recruitment Decisions
Instead of freezing recruitment altogether, many organisations are choosing to delay permanent appointments until business confidence improves. For recruiters, this means hiring activity continues, but businesses are placing greater emphasis on flexibility and carefully assessing where permanent headcount is genuinely required.
Flexible Hiring Gains Momentum
The research indicates that organisations are increasingly using freelancers and contractors to access expertise without expanding permanent headcount.
Flexibility Becomes the Priority
Among employers increasing contractor recruitment:
- 49% cited greater workforce flexibility.
- 43% wanted to avoid long-term employment commitments.
- 40% were seeking specialist skills for specific projects.
- 34% identified cost as a key consideration.
The findings suggest contract recruitment is evolving beyond a cost-saving measure and becoming a strategic workforce planning tool.
Access to Specialist Skills
Businesses are increasingly engaging contractors to support digital transformation, technology implementation, engineering projects, marketing campaigns and other specialist assignments where expertise is required for a defined period rather than as a permanent resource.
What the Trend Means for Recruiters
The changing hiring landscape presents both challenges and opportunities for recruitment agencies.
Demand for Contractor Recruitment Continues
Agencies focused solely on permanent recruitment may experience longer hiring cycles as employers take more time to approve vacancies. Meanwhile, recruiters with established contractor, interim and freelance talent pools are well positioned to support organisations seeking flexible staffing solutions.
Blended Workforce Models Are Growing
Rather than replacing permanent employees, many organisations are adopting blended workforce models that combine permanent staff with contractors, consultants and freelance specialists.
Jobseekers Face a Changing Employment Market
The shift towards flexible hiring could reshape career planning for many professionals entering or re-entering the labour market.
New Routes into Employment
Experienced specialists with in-demand technical expertise may find increasing opportunities in contract and freelance roles. However, graduates, career changers and those returning to work may encounter fewer traditional entry-level permanent vacancies.
Building Careers Through Flexible Work
Employment Hero's UK Managing Director, Kevin Fitzgerald, said the changing recruitment landscape means workers may need to become more adaptable, with contract and freelance work increasingly forming part of long-term career development.
Outlook for the Recruitment Industry
Workforce Agility Becomes a Strategic Priority
The findings are based on YouGov research commissioned by Employment Hero, but they reflect wider trends across the UK recruitment market as employers balance rising employment costs with the need to secure specialist talent.
Permanent recruitment remains central to the labour market, but businesses are becoming increasingly selective about where they invest long-term hiring budgets. As organisations continue to prioritise workforce agility, recruiters capable of supplying both permanent and contingent talent are likely to be best placed to meet changing client demands.
Source: YouGov survey of more than 1,000 UK business leaders, commissioned by Employment Hero.
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