The UK tech sector is adjusting to a new cost factor in 2025. It’s not AI or talent shortages this time, but a rise in National Insurance contributions. This change is reshaping both how companies hire and how professionals view their earnings.
Increased contributions affect both employers and employees. For businesses, it means higher costs per hire. For candidates, it reduces take-home pay. In a market where competition for talent is already tight, this change creates fresh challenges for how companies attract, reward, and retain skilled people.
Why It Matters Right Now
National Insurance increases are more than a budget issue. They influence candidate decisions and reshape hiring strategies.
Employers are seeing:
- Higher hiring costs
- Pressure to review salary bands
- Tighter budget planning
Employees are feeling:
- A drop in net income
- A shift in what defines a good offer
- A need for long-term value, not just headline salary
How the Tech Sector Is Responding
Tech companies often move fast, and this policy change is prompting new thinking.
Startups and scale-ups are:
- Slowing some hiring plans
- Looking at regional talent pools
- Exploring nearshoring for critical skills
Salary conversations are evolving.
Candidates are more focused on what comes with the job. This includes:
- Equity options
- Enhanced pensions
- Health and wellbeing support
- Learning and development plans
What Employers Can Do Now
Here is our advice on how companies can stay competitive:
Be transparent from the start
Clear communication about full compensation packages builds trust. Show the value beyond the payslip.
Prioritise flexibility and wellbeing
Remote work, mental health support, and generous leave policies all help tip the balance when candidates compare offers.
Think beyond London
Cities like Bristol, Oxford, and Manchester offer highly skilled talent with lower cost pressures. These markets are growing and often bring better retention.
Strengthen your employer brand
People want to work for companies that stand for something. Showcase your purpose, values, and the real impact of the work.
What Candidates Are Thinking
At Keen People, we’re seeing more professionals focus on total reward rather than salary alone. Flexibility, wellbeing, career progression, and company culture now play a bigger role in decision-making.
Candidates are asking:
- Does this role offer long-term security?
- Will I feel valued beyond my payslip?
- Can I grow here?
Turning Challenge into Opportunity
Yes, National Insurance increases bring financial pressure. But they also provide a reason to improve how companies engage with talent. Better packages, clearer communication, and stronger cultural alignment can lead to higher retention and better hiring outcomes.
Change often presents opportunity. Now is the time to reframe recruitment strategies, strengthen employer branding, and design job offers that reflect what matters most in today’s tech workforce.
If you’re reviewing your hiring approach or adjusting to new cost pressures, we can help you turn insight into action.