The Future of Jobs: addressing skills shortages and navigating a transforming workforce

In an effort to address these challenges, many employers have resorted to offering higher salaries to attract new talent. Nearly half (48 per cent) of businesses acknowledged offering new recruits salaries that conflicted with those of existing employees. Of these, 73 per cent offered salaries of up to 10 per cent more, while 27 per cent went as high as 20 per cent more. While these measures may fill vacancies in the short term, they can lead to internal inequities and dissatisfaction among current staff - potentially compounding retention issues.

The role of upskilling in the future of work

The World Economic Forum’s Future of Jobs Report 2025 estimates that 78 million new job opportunities will emerge globally by 2030. However, these opportunities will be accompanied by significant disruptions to traditional roles, with urgent upskilling and reskilling being essential. Employers must prioritise workforce development to prepare for these changes, particularly in industries where technology is rapidly advancing.

AI and automation are at the forefront of this transformation. While these technologies can boost efficiency, they also risk displacing certain job functions. At the same time, they create demand for new roles requiring expertise in data analytics, machine learning, and ethical AI implementation. Employers that invest in training their workforce to meet these needs will be better positioned to thrive in an evolving market.

Quiet hiring and the shift toward flexible workforces

In the face of skills shortages and labour market challenges, employers are increasingly turning to innovative workforce strategies like ‘quiet hiring’, where an organisation will bring in temporary or short-term contractors to address immediate skill gaps without formally expanding headcount. This approach allows businesses to remain agile while managing costs.

According to People Management, quiet hiring offers several benefits, including access to specialised talent, faster onboarding, and the flexibility to scale teams as needed. However, it also comes with potential downsides, such as the risk of overburdening existing staff and creating a fragmented workplace culture. To mitigate these risks, organisations should integrate short-term hires into their teams effectively and ensure clear communication about their roles and contributions.

The rewards and risks of outsourcing

Another strategy gaining traction is outsourcing. By leveraging external vendors for specific functions, businesses can address immediate skill shortages without the long-term commitments associated with permanent hires. Outsourcing is particularly prevalent in areas like IT, customer support, and marketing - fields where technology and expertise are constantly evolving.

Whilst outsourcing is not without its challenges, clear communication and robust management practices help ensure success.

Rethinking reward strategies to attract and retain talent

Our most recent UK Reward Management Survey highlights the importance of competitive compensation in navigating today’s labour market. With only 40 per cent of employers expecting an increase in business profitability, offering higher salaries to attract talent can be a double-edged sword. While it may address short-term recruitment needs, it risks creating salary disparities that could alienate existing employees.

To address this, employers should adopt holistic reward strategies that go beyond financial incentives. These might include flexible working arrangements, professional development opportunities, and robust employee wellbeing programs. By focusing on the overall employee experience, businesses can enhance retention and engagement while maintaining financial sustainability.

A collaborative approach to workforce development

Addressing the future of jobs requires collaboration across sectors. Employers, educational institutions, and policymakers must work together to close skills gaps and prepare the workforce for emerging opportunities. Initiatives like public-private partnerships, apprenticeship programs, and government-sponsored upskilling schemes can play a crucial role in building a resilient labour market.

For example, businesses can partner with universities and training providers to align curricula with industry needs. Governments can incentivise upskilling through tax credits and grants, while employees themselves can embrace lifelong learning to remain competitive in a rapidly changing environment.

Preparing for the future of work

The future of jobs is both challenging and full of potential. Skills shortages, labour market competition, and technological advancements are reshaping the way we work, but they also present opportunities for innovation and growth. Employers that invest in upskilling, embrace flexible workforce strategies, and prioritize employee wellbeing will be best positioned to navigate these changes.

Get in touch

By addressing immediate challenges like recruitment and retention while preparing for long-term hurdles, organisations can build a workforce that is ready to thrive in years to come. The key lies in adaptability, collaboration, and a commitment to creating opportunities for all. Contact us today to talk through your approach to your total reward strategy and incentivising your people to embrace life-long learning and remaining agile.