The Impact of the 2024 Autumn Budget on Recruitment

Increased Hiring Costs

Among the most impactful changes in the Autumn Budget is the rise in National Insurance Contributions (NICs). From April 2025, NICs will increase from 13.8% to 15.0%. This will make the cost of hiring employees a more substantial financial consideration for businesses.

These changes are expected to:

• Encourage hiring managers to be more selective in their recruitment decisions, potentially extending the time to hire and tightening competition for top candidates
• Prompt companies to explore cost-saving measures, such as slowing the rate of wage growth, embracing flexible employment models or investing in technologies to reduce overhead costs
• Place added pressure on recruitment budgets, requiring organisations to rethink their workforce planning strategies.

In addition, the level at which Employers will start paying NICs will reduce from £9,100 to £5,000, representing another cost increase for businesses and further emphasising the need to increase productivity and operational efficiency.

National Minimum Wage Increases

From 2025, the National Minimum Wage will rise by 6.7% for workers aged 21 and over, increasing hourly pay from £11.44 to £12.21. While this pay rise is a big win for employees, it represents a challenge for employers, particularly smaller businesses.

Employers will face:

• Increased wage bills, leading to potential reductions in employee hours or even workforce downsizing
• Tough decisions on budgets, especially in sectors with tighter margins, where balancing profitability and staff retention becomes critical

On the positive side, higher wages may attract more candidates into the workforce. However, employers are likely to adopt stricter hiring criteria to ensure every new hire delivers measurable value.

Investment in Education and Skills Development

A positive highlight of the budget is its focus on developing skills, with £40 million set aside for apprenticeships and £300 million dedicated to further education

This funding is expected to:

• Boost specialised skill sets in emerging sectors such as life sciences, green technologies and advanced industries
• Create opportunities for recruitment agencies to play a pivotal role in helping businesses navigate these new, high growth industries by sourcing skilled talent
• Drive demand for niche roles, opening doors for profesionals seeking to transition into these future-facing fields.

Key Trends to Watch in Recruitment for 2025

As businesses adapt to these economic changes, several recruitment trends are likely to shape the year ahead

1. Strategic hiring decisions: Employers will need to balance short term needs with long term workforce goals, leveraging both temporary and permanent roles
2. Focus on workforce productivity: With rising costs, optimising employee output will be crucial
3. Increased emphasis on planning: Long term workforce strategies will gain importance as organisations seek stability amid fluctuating economic conditions
4. Adoption of flexible working arrangements: Offering cost savings and better work-life balance, flexibility will remain a priority for both employers and employees
5. Enhanced retention strategies: Retaining skilled employees will be a critical focus to reduce recruitment and training expenses

The 2024 Autumn Budget presents both challenges and opportunities for businesses and recruitment professionals. By adopting strategic workforce planning, prioritising retention, and capitalising on emerging sectors, organisations can stay ahead of the curve.