Skills Shortages and the Price of Talent

Has Flexibility Has Become Part of the Pay Package?

The UK employment market isn't recovering evenly. It is splitting in two.

On one side are roles where recruitment has become more measured. Vacancy numbers have fallen from their post-pandemic highs, salary growth has moderated and employers generally have a wider choice of candidates.

On the other are specialist and knowledge-based roles where demand continues to outstrip supply. Here, organisations are still competing fiercely for talent, paying market premiums and offering greater flexibility to secure the people they need.

This distinction is becoming increasingly important because it changes how employers compete. The conversation is no longer simply about salary or office attendance. Instead, organisations are competing on their entire employment proposition.

The evidence increasingly suggests that flexibility has become another form of reward.

A more selective job market

Recent headlines have painted a picture of a cooling employment market. There is certainly truth in that. The Office for National Statistics (ONS) reports that UK vacancies have continued to fall from the record levels seen in 2022, while earnings growth has moderated as inflation has eased.

However, headline figures only tell part of the story.

The latest job market data also points to continuing shortages in many specialist occupations, particularly those requiring technical expertise or professional qualifications.

Employers may be recruiting more cautiously overall, but they continue to compete aggressively for skills that directly improve productivity, strengthen cyber resilience, support digital transformation or help organisations navigate increasingly complex regulatory environments.

Ashdown's own 2026 Salary Guide reflects this changing situation. Drawing on analysis from more than 3,400 organisations, 23,000 vacancies and over 360,000 active candidates, it suggests employers are becoming increasingly targeted in their recruitment activity. Rather than broad expansion, hiring is focused on roles that deliver measurable commercial value, with salary investment becoming more selective as a result.

This is no longer one employment market.

It is increasingly two.

Salary premiums are becoming more focused

For much of the post-pandemic period, salary inflation affected almost every profession. Today, that picture is changing.

Ashdown's latest salary survey found that almost half of employers expect salary increases broadly in line with inflation, while just over a quarter anticipate increases of between 3% and 5%. Only a small minority expect significantly higher pay growth across their workforce.

That does not mean salary premiums have disappeared.

It means they have become more targeted.

Instead of increasing salaries across entire departments, employers are increasingly directing investment towards roles where recruitment remains difficult or where specialist expertise creates the greatest commercial impact.

This represents a significant shift in reward strategy. Rather than paying everyone more, organisations are paying more where the market demands it.

Flexibility has become the second premium

Salary, however, is no longer the only way employers compete.

The Chartered Institute of Personnel and Development (CIPD) reports that over 90% of UK employers now offer some form of flexible working, while almost two-thirds believe advertising flexibility helps attract candidates and address skills shortages. Around three-quarters continue to operate hybrid working arrangements despite increased discussion around office attendance.

These figures suggest flexibility has evolved from an employee benefit into a strategic recruitment tool.

For many candidates, particularly those with specialist expertise, a role is no longer judged purely on its salary. Career development, organisational culture, leadership, wellbeing and flexibility all contribute to the overall value of an opportunity.

Increasingly, employers are competing on the total employment proposition rather than pay alone.

The relationship between skills, earnings and flexibility

One of the most revealing pieces of evidence comes from the ONS.

Its research shows that access to hybrid working is far from evenly distributed across the workforce.

Around 28% of working adults in Great Britain now work in a hybrid pattern. However, hybrid working is substantially more common among higher earners, graduates and professional occupations. Approximately 45% of employees earning more than £50,000 work in hybrid arrangements, compared with only around 8% of those earning less than £20,000. Employees educated to degree level are also significantly more likely to work hybrid than those with no formal qualifications.

The ONS data demonstrates a clear relationship between earnings, qualifications and access to hybrid working. It does not explain why that relationship exists, but recruitment experience offers a compelling explanation.

Professional and specialist skills are often more difficult to replace. Where employers face a limited supply of suitable candidates, bargaining power shifts. Candidates with sought-after expertise frequently have greater influence over both salary and working arrangements than those in occupations where recruitment is less constrained.

Flexibility, therefore, increasingly follows scarcity.

Office attendance is evolving rather than reversing

Despite headlines suggesting a widespread return to the office, the evidence points to something more nuanced.

Ashdown's recruitment data indicates that employer expectations around office attendance have become more consistent over the past year. Fully remote opportunities have reduced modestly, while hybrid working has settled into a more structured pattern, with two or three office days becoming the norm across many professional disciplines.

This mirrors what many employers appear to be seeking: greater opportunities for collaboration, mentoring and organisational cohesion without abandoning the flexibility that has become an important part of attracting talent.

Rather than witnessing the end of hybrid working, we appear to be seeing its maturation.
The debate has moved on from whether employees should attend the workplace to how often they should do so to achieve the best outcomes for both individuals and organisations.

The commercial challenge for employers

This evolution has important implications for business leaders.

Office attendance policies are no longer simply operational decisions. They have become recruitment decisions.

Employers insisting on rigid attendance requirements may reduce their available talent pool before interviews have even begun. Equally, organisations offering unlimited flexibility may encounter different challenges around collaboration, knowledge sharing and organisational culture.

Finding the right balance has therefore become a commercial rather than purely cultural decision.

There is another consequence that is only beginning to emerge.

As organisations become more transparent about pay, the market premiums required to attract specialist talent are becoming increasingly visible to existing employees. Reward strategies must therefore balance external competitiveness with internal fairness. That challenge is likely to become more significant as salary transparency continues to increase and employees gain greater visibility of market rates.

The Ashdown perspective

One trend has become increasingly clear over the past twelve months.

Employers are becoming more disciplined rather than more generous.

Rather than increasing salaries across entire functions, they are concentrating investment where the commercial return is greatest. At the same time, expectations around office attendance have become more consistent, with the market largely settling around structured hybrid working instead of the fully remote models that became commonplace immediately after the pandemic.

The organisations attracting the strongest talent are rarely those paying the highest salaries across the board.

Instead, they are those offering the most compelling overall proposition: competitive remuneration, meaningful career development, effective leadership and a balanced approach to flexible working.

Ultimately, the debate around office attendance should not be framed as a choice between employer control and employee preference.

It is increasingly a question of job market economics.

Where skills are plentiful, organisations can dictate terms. Where skills are scarce, candidates have greater influence over both salary and how work is structured.

The evidence suggests that flexibility has become another form of reward - not replacing salary, but complementing it.

The organisations that recognise this shift will be better placed to attract, retain and develop the specialist talent that drives innovation and growth. Those that do not may discover that their office attendance policy has become an unintended barrier to recruitment.

Perhaps the question is no longer, "How many days should people spend in the office?".

A better question might be, "Is our employment proposition strong enough to attract the skills our business will need tomorrow?"