Since Labour came to power, businesses have faced numerous increases to the cost of employment. To deal with the pressure, firms are reviewing their workforce plans for the year ahead.

The Autumn budget saw rises in employers’ national insurance contributions (NICs) and the minimum wage. Meanwhile, an overhaul of workers’ rights in the employment rights bill could cost firms £5bn, according to the government’s own estimates.

The impact on the labour market is already being felt. The latest figures from the Office for National Statistics show a cooling jobs market as unemployment rose 4.3% and the number of vacancies fell by a further 35,000, marking the 28th consecutive monthly decline.

Alexandra Hall-Chen, principal policy advisor for employment at the Institute of Directors, says the numbers indicate a “concerning trend of employer caution regarding hiring staff. The measures in the employment rights bill and the large increase in employers’ NICs are taking a serious toll on employers’ hiring intentions.”

According to Laura Bunn, HR director and board member at motorway services operator Roadchef, the situation is creating a headache for businesses. The NIC increase is a “big cost”, she says, adding that Roadchef is examining budget reductions elsewhere to offset the added tax burden.

One area where companies can reduce costs is in recruitment. Although this is unlikely to entirely offset the tax increases faced by businesses, reviewing the hiring process could give businesses the scope to grow their workforce at a time when the cost of employment is on the rise.

Here are seven options for employers as they look to cut hiring costs.

Review recruitment processes

There are several hidden costs in the recruitment process, such as the time hiring managers must take out of their schedule to interview candidates. There is also the potential for lost productivity while seeking a replacement for an outgoing member of staff. This can make finding efficiencies valuable.

Streamlining the hiring process by reducing the number of interview stages can be an effective solution. Reviewing job ads also helps ensure they provide a proper job description, salary expectation and work location.

“Although this might not be an obvious way to save money, it’s going to prevent companies from hiring the wrong person in the first place, which can represent a huge cost saving,” says Bar Huberman, HR strategy and practice lead at HR solutions provider Brightmine.

“Be really clear about what the job entails, flexible working opportunities and a salary range to save time on interviewing people who wouldn’t have applied to the role if they’d known this information beforehand.”

Do your research

Companies should ensure they’re pitching the salary at the right level for the role being advertised. This will involve researching the market and benchmarking against what other companies are offering.

“It’s really important to get this right, because if you’re offering a salary that’s too low then you can put people off applying. And if it’s too high, then you’ll be spending too much money,” Huberman adds.

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