The UK’s position as a destination for global talent is at risk unless the country accelerates efforts to adapt its workforce and labour market policies, according to new research comparing labour markets across 35 countries released today by Hays, the global leader in specialist recruitment and workforce solutions.
The UK’s global standing: strengths and challenges:
- The UK is the middleman – it ranks 18th out of 35 in global talent competitiveness, a measure of how effectively a country attracts, develops, and retains skilled workers. That ranking is better than Spain (32nd) and Ireland (33rd), however worse than Germany (15th) and France (17th).
- The research shows that the UK ranks 29th in talent value (a measure of how investment in people delivers returns) and 27th in labour market flexibility (a measure of how easily the labour market can adapt to changing business needs) among the 35 countries assessed.
- The UK (12th) is behind on talent development compared to European peers—Sweden (1st), Switzerland (2nd), Demark (3rd), the Netherlands (4th), Germany (6th) and France (8th) all rank higher on education and skills investment.
- The Netherlands, Germany, and Sweden further outperform the UK in talent value (a measure of how investment in people delivers returns), participation (how engaged and resilient the workforce is), and innovation (a measure of how well a country’s workforce and institutions are equipped to drive technological progress). This is in large part because those nations invest more in digital infrastructure and R&D, reduce barriers of entry for more types of workers, and achieve stronger productivity relative to labour costs.
- While the UK remains a global leader in STEM and finance, regulatory and policy shifts put the labour market at further risk. By comparison, the US (ranked 5th overall) is rated as more flexible (i.e. adaptable to changing business needs) and innovative, with a deeper tech talent pool.
Dirk Hahn, Chief Executive Officer of Hays:
“Hays’ findings show how the global landscape for talent is evolving at unprecedented speed, with countries investing strategically to build more innovative, resilient and future-ready workforces amid increasing economic uncertainty. As organisations navigate this complexity, the ability to identify and harness the right talent ecosystems will become a defining factor for long-term success. The findings reinforce there are many contributing factors to a strong workforce, and each market can and should consider that combination differently, but by understanding these trends, businesses can make smarter decisions about where to invest, grow and compete on the world stage.”
Headwinds to future UK growth
Hays’ report highlights several headwinds facing the UK labour market. The research highlights that the UK lags behind most of its peers in both delivering strong returns on workforce investment and responding quickly to changing business needs. This signals that, without targeted action to improve workforce productivity and adaptability, the UK risks falling behind more agile and cost-effective markets, potentially impacting its ability to attract investment, drive innovation, and sustain long-term growth.
This is only set to be compounded by ongoing economic uncertainty and global volatility, which is keeping candidates from leaving their current roles to pursue opportunities and employers from expanding teams or replacing permanent roles – the time required to fill vacancies continues to lengthen across all sectors. Further, wage inflation, including a significant 18% minimum wage rise for young workers, together with higher employer National Insurance Contributions, could make permanent hiring less attractive for many businesses.
From a policy perspective, recent regulatory and policy shifts, such as post-Brexit immigration rules and changes to the Shortage Occupation List, have made it increasingly difficult for employers, particularly in retail, hospitality, and construction, to access the international talent they need.
A call for action and collaboration
To reverse these trends and ensure the UK remains a destination of choice for global talent and investment, the findings revealed in Hays’ research shows the need for greater coordinated action across government, business, and education. This takes a two-pronged approach: employers need to blend workforce models that combine permanent, contract, and project-based roles, while also investing in skills development, automation, and digital transformation to keep pace with evolving market needs.
At the same time, policymakers need to foster public-private collaboration to close critical skills gaps and to invest in technical and vocational education, with a particular focus on strengthening regional skills development programmes. Encouragingly, there are signs that government is already aligned with this view that the UK needs to adapt to remain competitive: any move to potentially abolish fees for Global Talent visa holders could clear a path to attract and retain even more world-class talent across the technology and STEM sectors.
Tom Way, CEO, Hays UK & Ireland:
“The UK remains one of the strongest employment markets globally, but several factors are beginning to challenge that position. To safeguard our future competitiveness, we must invest in people, embrace new workforce models, and facilitate greater public-private collaboration, and it will take private industry and government working in lockstep to secure this.”
The Hays Global Talent Tracker was developed in partnership with Oxford Economics in early 2025, analysing labour market data across 35 countries. The research benchmarks national workforces using a composite index built from five pillars – talent value, participation, development, flexibility, and innovation – drawing on a wide range of economic, demographic, and skills-based indicators. Read the full report here - Hays Global Talent Tracker.