It’s been an interesting year for the world of talent acquisition. Statistics are showing a decline in vacancies, but at the same time, employers are struggling to recruit for core skills. The labour market remains tight and the power is still in the hands of the candidates. Added to this complexity is the growth in tech and AI innovation, which is changing both the skills that businesses need and the tools that HR can use to attract talent.

As preparations begin for 2025 amidst the growing complexity of the world of work and employment (particularly in light of the Employment Rights Bill and the plans unveiled in the Budget), HR is looking for the data to inform workforce strategies.

According to our 2025 Salary Guide (a study of hiring and pay intentions), next year looks more promising for HR, but it won’t be without its challenges.

What are the core hiring and pay trends for the New Year?

The data suggest that, following a rather disruptive year, hiring plans for 2025 are set for an uptick. In fact, nearly two in five business leaders plan to increase headcount in the coming months. Given the growing skills gaps that continue to plague the UK, the core question is how to best attract the talent needed. Many, it would appear, intend to focus on high-quality compensation packages as a tool for acquisition and retention.

According to our report, 46% of companies plan to increase salaries in 2025. This is most notable in the tech and IT sector, where a third (34%) of employers say they would increase salaries to stay competitive in the hiring market and attract skilled talent. While this may be the case, there is seemingly a disconnect between workers and employers in regards to what matters more. Although business leaders are focusing on financial incentives, almost half (43%) of workers revealed that they would prioritise job security over salary increases, as the uncertain economic landscape creates a growing need for stability.

Generational nuances

This disconnect extends to more than just employees and their employers though: generations of the workforce are also at odds with each other. Although all four workplace generations have increased salary expectations overall, Gen Z appears to be the most demanding, with 67% of employers agreeing that their expectations have risen since last year. Millennials follow close behind at 64%, which could indicate how severely the cost-of-living crisis impacts these two emerging generations.

In comparison, only 37% of employers feel that Gen X have become more demanding where salary is concerned. Baby Boomers represent a more nuanced point of view from the employer perspective, with 22% saying they’re more demanding and 21% saying they’re less demanding.

Flexible benefits being utilised in attraction

Remuneration is about more than just pay packets, though, and employers are increasingly recognising the need to offer a more robust benefits package as well. Interestingly almost half of employers (43%) currently offer flexible benefits, and a further 29% plan to introduce them next year, making this one of the top perks for attracting talent and mitigating the ongoing skills shortages. It also remains one of the most-requested worker perks, with 39% of employees saying they’d like to see this offered in the future.

Although workers are also interested in stress reduction programmes as part of their remuneration package (an addition that could improve productivity and retention rates), they did indicate a desire for benefits that help ease the burden of growing living costs. These include financial support for remote work (50%), a 13-month salary (48%), and benefits which help support daily life (such as fuel allowances, meal vouchers, and subsidised public transport).

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