2024 was a year of recalibration in the labor market. <\/p>\n\n\n\n
Amid economic uncertainty, layoffs in the tech sector persisted, with companies restructuring to focus on profitability. Companies like Tesla, Microsoft, Amazon, TikTok, Snap, and Google all made cuts, with the industry losing around 130,000 people<\/a> across 457 companies. <\/p>\n\n\n\n A similar story exists in the financial services sector, where the top 12 investment banks<\/a> slashed 100 front-line dealmakers in Q1 of 2024 alone.<\/p>\n\n\n\n You\u2019d imagine, then, that the talent market would be filled with highly skilled people, ready to slide into place at other organizations. In the case of bankers, this appears to be the case. Eric Li, research director at Coalition Greenwich, explains:<\/p>\n\n\n\n Investment banks remain laser-focused on costs. What we\u2019ve seen is that while the big banks are cutting, smaller boutiques and other investment banks are picking them up. Around 60 of those who lost their jobs have found new roles elsewhere. It\u2019s a great chance for them to pick up talent that would otherwise be too expensive to hire.<\/p>\n<\/blockquote>\n\n\n\n However, many other industries report that skill shortages have made it challenging to find the caliber of candidate they need to fill their open vacancies. SHRM\u2019s Talent Trends report <\/a>reveals that over three in four organizations have had difficulty recruiting for full-time regular positions. Highly skilled medical positions and skilled trades have been the most difficult-to-fill positions in 2024.<\/p>\n\n\n\n One in four organizations indicate full-time regular positions filled in the past 12 months demanded new skills. Organizational growth (55%) and evolving technology (51%) are the primary drivers of these new skill requirements. However, three out of four organizations report facing moderate to significant challenges in finding candidates with the necessary skills.<\/p>\n\n\n\n Talking of skills challenges, SHRM also finds that 37% of candidates don\u2019t have the required technical skills, 30% lack adequate soft skills, and 18% don\u2019t even have the basic skills needed to join their organization.<\/p>\n\n\n\n At the same time, some traditional hiring incentives are being scaled back. For example, the percentage of organizations offering flexible work arrangements has reduced by 16% in 2024 compared to 2022. Improvements to compensation packets, including salary and employee benefits, also fell by 16%. These declines highlight a move away from some of the more generous pandemic-era recruitment strategies<\/a>, even as the need for top talent remains.<\/p>\n\n\n\n So, what do companies have up their sleeve to deal with these gaps in their organizational lineup?<\/p>\n\n\n\n Effectively, last year\u2019s recruiting trends serve as a springboard for the new developments in the market. So, here\u2019s what we expect to see through 2025.<\/p>\n\n\n\n Hirers and job seekers have moved beyond the excitement of artificial intelligence\u2019s arrival and are now experiencing it as a mainstay of the recruitment process. Some 57%<\/u> of applicants<\/a> relied on OpenAI during the application process in 2024 (which is hardly surprising) either to speed up or refine their applications.<\/p>\n\n\n\n Professional resume writers, job coaches, and other online tools have been around for decades. AI is just another version of the same. So, well-trained HR managers are well aware that the resumes they\u2019re reviewing may not have been written by the candidates (and that\u2019s one reason why Toggl eliminated resume screening<\/u> long ago). <\/p>\n\n\n\n The lesson here? To hire top talent in the age of AI, you need to adapt your recruiting process. <\/strong><\/p>\n\n\n\n Instead of giving candidates problems ChatGPT can solve, try testing their skills with open-ended homework assignments<\/u><\/strong><\/a> or soft skills assessments<\/u><\/strong><\/a>. Modern assessment tools include anti-cheating and anti-AI protection, which also prevents candidates from using apps during tests.\u00a0<\/p>\n\n\n\n In a world where everybody is using AI to boost productivity and improve efficiency, it might seem \u201cwrong\u201d to prevent candidates from using AI to help them apply for your job listings. However, doing so allows you to assess the candidates\u2019 actual skills and personality traits rather than evaluate how well they can use ChatGPT to look up the right answers. <\/p>\n\n\n\n It\u2019s not all about preventing AI usage, though. Hiring teams are also exploring ways to use AI for good in the hiring process. For example, T-Mobile relies on an AI-powered tool<\/u><\/a> to remove biased, non-inclusive language from job descriptions.<\/p>\n\n\n\n New HR technology, powered by advanced algorithms, can help hiring teams:<\/p>\n\n\n\n AI already has ample practical use cases in recruiting, and we expect more talent leaders to embrace it by 2025.<\/p>\n\n\n\n As the cost and time-to-hire increase, every new employee becomes a critical hire. The increased emphasis on talent quality will require companies to tighten the recruitment process. Hiring managers will be eager to vet job seekers more rigorously and at a wider scale with the help of skills-based hiring<\/u><\/a>. <\/p>\n\n\n\n For 78% of HR professionals, SHRM reports that pre-employment assessments, which test skills, knowledge, and abilities, have improved the quality of their organization\u2019s hires. 80% of recruiting pros claim to be committed to creating a more diverse workforce<\/a>, and a skills focus is central to this initiative. Note: A skills focus increases talent pools by 10x<\/a>, according to LinkedIn.<\/p>\n\n\n\n That\u2019s because skills-based recruiting moves away from basing hiring decisions on gut feelings toward actual data on candidates\u2019 competency. You can practice collaborative hiring by giving each manager the power to select people with the skills they need. <\/p>\n\n\n Design custom assessments using expert-made questions from our test database<\/a> featuring role-specific and skill-specific tests. If your goal is to build a more competent and diverse workforce in 2025, skills-based hiring<\/a> is the way to go.<\/p>\n<\/div>\n <\/div>\n \n\n\n Prepare for the labor market to open back up again in 2025. Although the current unemployment rate in the US is expected to remain around 4%<\/a>, and a stable 6%<\/a> in the EU, more opportunities will exist.<\/p>\n\n\n\n Over 80% of employers across tech, financial services, and healthcare plan to expand hiring in 2025, signaling renewed labor market optimism after two years of declines. Easing inflation and stabilizing interest rates are fueling employer confidence. 64% say macroeconomic conditions will support hiring in 2025.<\/p>\nJulia Pollak, ZipRecruiter\u2019s Chief Economist<\/cite><\/blockquote>\n\n\n\n At the same time, EY reports 38% of employees<\/u><\/a> are likely to quit in the next year due to poor pay and work-life balance.<\/p>\n\n\n\n For recruiting professionals, the above trends translate to a bigger talent pool\u2026and bigger workloads, too. With an increased supply of candidates and an increase in open roles, there will be a heck of a lot of movement. Recruiters can expect to spend more time wading through hundreds of applications, pre-screening for hard skills, and scheduling rounds of interviews. <\/p>\n\n\n\n And without a strong <\/strong>talent acquisition strategy<\/u><\/strong>, you risk getting some bad hires on board. <\/strong><\/p>\n\n\n\n Skills assessments can help hiring teams quickly find the most suitable candidates. Sadly, many job seekers lack essential hard and soft skills for the jobs they are after. That\u2019s where proof of competence will become synonymous with recruiting top-level talent. <\/p>\n\n\n\n Skills assessments<\/u><\/a> can help hiring teams quickly whittle down the initial flood of applicants and highlight the most suitable candidates. AI for process automation, in turn, can help with secondary hiring processes (background checks, job offer management, onboarding, etc.), helping you reduce time-to-hire and boost productivity.<\/p>\n\n\n\n Although the overall candidate supply is higher this year, skill shortages aren\u2019t going away. Digital transformations, an aging workforce, a decreasing number of STEM graduates, and lower participation among women negatively affect today\u2019s labor market.<\/p>\n\n\n\n Since 2015, the skill sets for jobs have changed by 25%<\/a>, and that number is expected to be 65% by 2030. Yet, both existing employees and active job seekers are behind in developing new competencies. <\/p>\n\n\n\n Modern-day jobs also require softer skills. As AI advances, businesses need to balance robotic output with human instincts, making interpersonal skills highly sought-after.<\/p>\n\n\n\n The most in-demand skills? Here they come:<\/p>\n\n\n\n Talent <\/strong>upskilling<\/strong> and reskilling will be a major recruiting trend in 2025.<\/strong><\/p>\n\n\n\n To address the problem, HR leaders will need to first gain visibility into existing organizational skill gaps and evaluate the effects of tech disruption on the existing roles. <\/p>\n\n\n\n Since 2020, business leaders have been increasingly turning to contingent, seasonal, or consultant employees to address skills gaps, better respond to changing market conditions, and maintain a competitive edge. <\/p>\n\n\n\n In fact, Robert Half\u2019s State of US Hiring report finds that 63% of companies<\/a> plan<\/span> to add contract professionals in the first half of 2025.<\/p>\n\n\n\n Contingent labor is expected to comprise 35% to 40% of the global workforce by 2025.<\/p>\nGartner<\/cite><\/blockquote>\n\n\n\n This trend translates to extra workloads and complexities in compliance management for recruiting teams. Faster hiring cycles, proper worker classification, rapid onboarding (and offboarding) \u2014 a lot of grunt work is required to maintain a contingent workforce. <\/p>\n\n\n\n To streamline external workforce management, create a set of processes, projects, or roles you want to fill in with contractors and map these to anticipate engagement duration. Determine: <\/p>\n\n\n\n Instead of standard job descriptions<\/a>, highlight specific job tasks<\/u> that contractors will need to complete (e.g., produce three blog posts per month) or processes you\u2019d want them to handle (e.g., payroll management). <\/p>\n\n\n\n Finally, don\u2019t forget about compliance. Be upfront about any specific requirements you have \u2014 mandatory liability insurance, a valid professional license, the ability to perform on-site work, and so on. <\/p>\n\n\n\n You will need to change your hiring strategy to recruit and onboard contractors. But the payoff of doing so is greater operational agility, faster hiring cycles, and easier access to in-demand skills<\/a>. <\/p>\n\n\n\n Over the past years, we\u2019ve seen the Great Resignation, Quiet Quitting, Quiet Firing, and Rage Applying. That\u2019s hardly surprising, given that employee engagement has been sinking year-over-year. <\/p>\n\n\n\n Evaluating employee engagement is a top priority for HR professionals in 2025.<\/em><\/p>\n\n\n\n Rising cost of living, salary freezes, forced returns to the offices \u2014 a lot of factors have made the global workforce less optimistic about the future. <\/p>\n\n\n\n The latest recruiting trends, including increased reliance on contingent talent, accelerated adoption of AI, and the return of a recruiter\u2019s market, are making people even more anxious about their job security. <\/p>\n\n\n\n To patch things up in 2025, HR professionals will need to first evaluate the job satisfaction scores and then drill down to the causes of poor engagement. <\/strong><\/p>\n\n\n\n Collect feedback on all levels:<\/p>\n\n\n\n Compare the sentiments to better understand the gaps and overlaps in perception and determine the best course of action. <\/p>\n\n\n\n The recruiting landscape will remain dynamic, with people moving internally and even cross-border to keep progressing. And by offering this, employers can hang onto their top talent and avoid the expense of recruitment. KornFerry finds that 67% of internal employees<\/a> would remain with their employer if they received adequate opportunities for upskilling and advancement.<\/p>\n\n\n\n As costs continue to soar into 2025, sourcing talent from within an organization can be a first step in saving expenses during the recruitment process. Hiring talent internally and promoting talent mobility schemes not only helps save on recruitment expenses like interviewing candidates and working through agencies but it also helps convey business confidence in existing employees\u2019 skills while also providing current staff career growth and development opportunities.<\/p>\nJulia Braun, Chief HR Officer for software provider, SoftwareOne<\/cite><\/blockquote>\n\n\n\n A tough job market, combined with sinking employee engagement rates, means that businesses will likely be forced to keep flexibility on the agenda. However, these recruitment trends allow for hiring more diverse candidates, optimizing operating costs, and increasing corporate resilience.<\/p>\n\n\n\n When done right, a strong internal mobility strategy<\/u> helps close the knowledge and skills gaps, improve employee engagement rates, and minimize the impact of local labor shortages on business operations.<\/p>\n\n\n\n Create a strong internal mobility strategy to boost employee engagement rates.<\/em><\/p>\n\n\n\n Telenet retention is an important part of workforce planning, and even more so in 2025 as the wave of resignations continues. 90% of organizations<\/a> are concerned about retention, according to LinkedIn\u2019s Workplace Learning Report. They consider \u201coffering learning opportunities\u201d as the top retention strategy.<\/p>\n\n\n\n According to employee recognition platform Nectar, 29% of employees<\/a> have quit a job within the first 90 days of starting. \n
Top recruitment trends to expect in 2025<\/span><\/h2>\n\n\n\n
1. The evolution of <\/span>AI adoption<\/h3>\n\n\n\n
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Practical tips for making better use of AI in recruitment<\/span><\/h4>\n\n\n\n
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![\"What](\"https:\/\/toggl.com\/blog\/wp-content\/uploads\/2023\/06\/What-is-Candidate-Experience-How-to-Improve-It-112x68.png\")
\n What is Candidate Experience & How to Improve It<\/span>\n <\/a>\n <\/div>\n \n <\/span>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n \n\n\n
2. Increased commitment to skills-based hiring<\/span><\/h3>\n\n\n\n
![\"Top](\"https:\/\/toggl.com\/blog\/wp-content\/themes\/toggl-mjtweaver\/img\/brain.png\")
\n Top tip:<\/span>\n <\/span>\n \n Practical tips for implementing skills-based hiring in 2025<\/span><\/h4>\n\n\n\n
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![\"How](\"https:\/\/toggl.com\/blog\/wp-content\/uploads\/2024\/10\/Skills-based-hiring-in-2025-112x67.png\")
\n How Skills-Based Hiring Will Transform Talent Acquisition in 2025<\/span>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n \n\n\n3. Strong labor market optimism<\/span><\/strong><\/h3>\n\n\n\n
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Practical tips for managing your candidate pipeline in 202<\/span><\/strong>5<\/h4>\n\n\n\n
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![\"How](\"https:\/\/toggl.com\/blog\/wp-content\/uploads\/2022\/06\/Organizational-culture-fit-112x67.png\")
\n How to Hire for Company Culture Fit the Right Way<\/span>\n <\/a>\n <\/div>\n ![\"11](\"https:\/\/toggl.com\/blog\/wp-content\/uploads\/2023\/01\/Methods-for-screening-candidates-112x68.png\")
\n 11 Popular Methods for Screening Candidates in 2026<\/span>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n \n\n\n4. Increased focus on closing skills gaps<\/span><\/strong><\/h3>\n\n\n\n
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Practical tips for addressing skills gaps in 202<\/span>5<\/h4>\n\n\n\n
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5. Using contractors to plug operational gaps<\/span><\/h3>\n\n\n\n
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Practical tips for hiring contractors in 202<\/span>5<\/h4>\n\n\n\n
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6. Employee engagement is in crisis mode<\/span><\/strong><\/h3>\n\n\n\n
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Practical tips for improving employee engagement in 202<\/span>5<\/h4>\n\n\n\n
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7. Internal mobility is on the rise <\/span><\/strong><\/h3>\n\n\n\n
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Practical tips for improving your talent mobility strategy in 2025<\/span><\/h4>\n\n\n\n
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8. Talent retention remains a top priority <\/span><\/strong><\/h3>\n\n\n\n