New government policies have caused rising employment costs and concerns about potential long-term damage to the domestic labour market. Because of this, UK businesses have been favouring hiring talent based overseas and more use of AI.
Speaking with My Recruiter Jobs, The Legends Agency Group CEO, Alex Fenton, revealed why hiring overseas talent has become a smarter and more affordable option for British businesses.
“The Government claims it is championing young and working people, yet its anti-business agenda is producing the opposite outcome… businesses are increasingly being forced to replace British workers with equally qualified overseas staff who cost a fraction of the price.”
Read the full article on My Recruiter Jobs: “UK Businesses Shift Jobs Overseas and Embrace AI as Tax Pressures Bite”
The National Insurance increase and higher minimum wages, driven by Chancellor Rachel Reeves, have caused employer costs to increase. Additionally, unemployment has risen above 5%, with economists predicting it may rise above 5.3% this year. KPMG and Recruitment & Employment Confederation (REC) jobs reported that permanent placements have fallen since November’s Budget, and temporary hiring rose only modestly as companies prioritised flexibility over long-term recruitment.
This shows that overall demand for staff remains weak. The REC vacancies index has dropped to 43.8, marking a vacancy decline for the 27th consecutive month in January. According to Neil Carberry, chief executive of the REC, businesses are facing tough trade-offs, like having to create jobs in the UK or overseas, or determining which jobs can become automated.
To cut costs, British businesses have turned to offshoring. Companies are increasingly hiring overseas workers for back-office roles, with South Africa emerging as a key destination for UK firms seeking lower costs. Examples of roles UK businesses have been filling overseas are administration, accounting, rota management, and customer service across a range of different sectors.
While businesses are offshoring, they are also investing more heavily in automation and AI to replace or reduce human roles. This trend has mainly been seen in administrative and data-driven functions. Positively, KPMG UK has noted that competition for specialist skills in areas such as engineering, IT, and AI remains intense, pushing up starting salaries in high-demand sectors.
It’s clear that the UK labour market now faces a period of unique structural transformation: overseas hiring and automation are no longer being used as long-term growth avenues, but rather as central survival strategies.
