War for talent | Temp hires soar in 2024 as firms face increased competition to fill skills gaps

Temp hires soar in 2024 as firms face increased competition to fill skills gaps

As competition in the jobs market heightens, there has been a steep increase in businesses hiring temporary staff, freelancers and contractors this past quarter (27% vs 16%. A 69% increase in the proportion of companies).

The latest Hiring Trends Index by Totaljobs, which surveyed over 1,000 HR Decision Markers in the UK, revealed that three in five (59%) businesses are experiencing increased competition to find the right skills, rising to 74% of companies with over 1,000 employees.

These skills shortages have created a notable change in candidate expectations compared to pre-pandemic levels. 75% of employers say that candidates have higher salary and benefit expectations, with 69% claiming that demands for remote working have now created a barrier to filling positions.

As a result, 25% of businesses are investing in AI and training to fill these gaps. Over a third of those taking action (34%) are already using AI to supplement their workforce.

Employers pivot towards skills-based hiring

In response, the majority (85%) of businesses are using at least one skills-based hiring approach. 43% have updated job adverts to focus specifically on key skills and competencies, and a third (34%) have trained their hiring managers to conduct interviews focused on competency.

A further third (34%) have adjusted screening criteria to expand talent pools, with a fifth (20%) removing university degree requirements from their job adverts to help widen the search. A quarter (26%) of employers plan to increase efforts to diversify hiring in Q2.

Benefits of a skills-based approach

96% of businesses that deployed at least one of these tactics have reported benefits in hiring, with 39% claiming it has improved talent attraction. Over a third (35%) said it helped them find better candidates, with 34% stating that it has improved candidate engagement.

31% went as far as to say that skills-based hiring has improved the diversity of their talent pool, and 29% claim it has reduced time to hire.

Incentivising upskilling

Of those employers who are taking active steps to address skills gaps in the next three months, 88% are rewarding staff that had successfully completed a training or certification program. Half (50%) had met this upskilling with career progression or promotion opportunities, with 44% offering a pay rise in return.

In addition to upskilling existing talent, 50% of employers intend to use recruitment to address critical shortages, while 40% say that they will increase salaries to attract talent with the required skills.

Despite these immediate steps that businesses have taken, the research found that only a fifth (21%) have conducted a skills gap analysis to help with workforce and succession planning in the long-term.

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Julius Probst, Labour Market Economist at Totaljobs, said: “Despite the shallow recession at the end of last year, the UK labour market remains healthy and resilient. Job creation persists, and with the economy showing signs of resurgence, hiring activity is on the rise. However, the labour market remains tight, posing challenges for employers grappling with skill shortages.

“While it’s positive to see the various steps that employers are taking to address skills gaps, many of these are only short-term fixes. Only a fifth of businesses have planned for the long term and conducted a skills gap analysis. As long as employers look to the short-term then they’ll constantly find themselves on the back foot in the competition for talent. Workforce and succession planning will allow businesses to forecast what skills they need – both in the immediate and near future - and design a talent strategy to ensure they don’t fall into a perpetual skills gap.”

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