The skills squeeze: how employers need to adapt in 2026 and beyond
Hiring across the region is cautiously picking up after a period of uncertainty, but skills gaps remain. Hewett Recruitment’s latest Salary & Benefits Report, produced with Herefordshire and Worcestershire Chamber of Commerce, shows employers now grappling with work-readiness, planning and long-term talent pipelines…
After a period of stalled recruitment and economic uncertainty, hiring activity across Herefordshire and Worcestershire is beginning to show signs of life. But for employers cautiously returning to the market, familiar challenges are resurfacing.
When vacancies do arise, the “perfect candidate” often proves elusive, and businesses are being forced to make tougher decisions about how they build capability for the long term in an environment beset by ever increasing challenges.
The latest Salary & Benefits Report from Hewett Recruitment, produced in conjunction with Herefordshire and Worcestershire Chamber of Commerce, captures that tension. While 83% of responding businesses attempted to recruit in the last 12 months, 65% reported challenges in the recruitment process.
Ben Mannion, Owner/Director and Executive Search Recruitment Specialist at Hewett, says the local story is nuanced. After a year where permanent hiring dropped back as businesses held back under the uncertainty of macro economic conditions, the mood is slowly starting to shift.
“We definitely saw a drop off in perm demand as the year wore on,” he says. “Since then, we’ve seen an uptick in demand and that’s been sustained through into the new year, which is certainly a positive sign”
Laura Hewett, Owner and Director at Hewett, links that shift to one thing businesses value more than anything. Certainty.
“Uncertainty for businesses is the worst thing,” she says. “At least when you know what the news is, even if it’s bad, you can deal with it and work around it.”
The headline numbers hide the underlying constraint. Employers might be ready to hire, but they are struggling to find candidates with the right mix of technical capability and work-ready behaviours. Ben points to familiar gaps, including engineering and accountancy, but says the harder issue is forecasting what skills will even look like a few years from now given the scale of technological change and the breadth of challenges businesses face, from unpredictable global trade policy to ongoing uncertainty in the UK policy landscape.
“When local employers were asked what skills their business is going to need in the next five years or 10 years, they couldn’t tell you,” he says. “Things are moving so rapidly at the moment. It’s very difficult to predict what type of roles are going to exist in the future.”
That makes the traditional approach of replacing like-for-like increasingly unreliable, particularly for SMEs that do not have the time or headroom to run long workforce planning cycles.
Why entry-level feels like the pressure point
For many employers, the skills problem is starting earlier. Ben and Laura both point to the narrowing of entry-level routes that once helped young people build confidence and professionalism through work.
“You want movement,” Ben says. “Someone retiring at the top leads to an opportunity, that leads to an opportunity. But at the moment, those entry-level roles are really hard to come by, particularly for graduates.”
Employers still talk about “core skills” as the missing ingredient. Communication, teamwork, decision-making, initiative, and simply understanding what good looks like in a workplace.
Laura says Hewett has been supporting clients to assess for those skills more intentionally, especially when recruiting people new to the workplace.
“If you do things outside school, or you take on responsibilities, even just a paper round, anything you can do to show that you are ready for work,” she says. “Showcase it in your CV.”
Ben takes the point further, arguing that the ability to use technology safely and effectively depends on those same core skills.
“When you look at AI and automation, what being able to use that safely and effectively relies on is having well developed core skills,” he says. “It’s questioning the data. It’s interpreting it. It’s knowing how to write the right prompt.”
AI is reshaping the skills ladder in unexpected ways
One of the most striking insights from the interview is that disruption is not only landing in the places people might assume.
Ben says some manual and industrial roles remain difficult to automate quickly, particularly where processes are highly variable.
“A lot of the industrial work that we put temps into, there’s not a robot on the planet that is going to be able to do some of that work for quite a long time,” he says. “A lot of manufacturers locally will tell you we can’t do automation because we change our lines every hour or so.”
At the same time, some professional entry routes are already tightening. Ben points to graduate software development as a clear example.
“We’ve got several of our clients who say, ‘We don’t need grad developers. We get AI to do the first cut, and then we pass that to the senior developer.’”
Some roles are changing faster than pay bands and job titles can keep up. That makes skills development inside the business, and clear progression routes, more valuable than ever.
The opportunity is building pipelines, not chasing unicorns
In the report, cost pressure still shows up as a factor shaping hiring decisions. 31% said National Insurance changes or the upcoming Employment Rights Bill led them to delay or cancel hiring plans, while 55% said plans were unchanged and 13% said they were actively hiring despite the changes.
Even so, this is not simply a story about firms defaulting to temporary labour. Only 8% said they have increased reliance on temporary agency workers to manage cost pressures, while 88% said they have not.
Instead, Ben and Laura argue the most resilient response is a blended approach. Keep recruiting for experience where it is essential, but build apprenticeships and early careers routes that grow your own talent and strengthen retention.
“For the success of your business long term, have a blended approach,” Ben says, “with a series of apprentices coming through the ranks.”
Laura points to their own experience of recruiting an apprentice based on core skills and attitude, supported by a more structured assessment process.
“She’s brilliant,” Laura says. “She’s got a great attitude.”
The wider opportunity is also about widening the talent pool, not shrinking it. The report’s findings suggest many organisations are continuing to embed equality, diversity and inclusion into business priorities. 80% said EDI is part of company values and objectives, up from 77% the year before.
For Laura, the direction of travel matters. “More businesses have become inclusive in the two counties across the last year,” she says, pointing to growing awareness around neurodiversity and creating environments where different people can thrive.
Where pay and benefits support the skills strategy
Skills are the story, but reward still plays a role in attraction and retention. The report suggests businesses are using benefits to stay competitive, particularly where higher salary inflation is difficult.
Annual leave is one of the clearest examples. Laura says it surprised her. “Last year, only 40% of companies were offering 25 days or more, but this year it’s over 60%.”
The report backs that up. 25 days is now the most common offer at 39.72%, with 28 days at 9.93%.
Flexibility also remains central. 75% reported no change to remote working, while 22% reported an increase in flexible working hours.
These are not just “nice to haves”. In a tight market, they are levers that support retention and widen access to candidates who might otherwise be unable to take a role.
A skills-first 2026
It’s clear from the report that the skills gap is no longer a background issue. It is a frontline constraint on growth, productivity and resilience in Herefordshire and Worcestershire.
The businesses best placed to respond are the ones that treat skills as a pipeline challenge, not a hiring headache. That means clearer workforce planning, more deliberate recruitment processes, and more focus on core skills and work readiness. It also means creating routes for apprentices and early-career talent, widening the net on who can thrive, and using pay, flexibility and benefits to support long-term retention.
Skills are more acute than ever. The opportunity is still there, but it rewards the employers who build it on purpose.
