As employers grapple with economic uncertainty, rising costs, and the impact of automation, a new report from talent discovery platform TestGorilla finds that more employers are turning to skills-first hiring. The State of Skills-Based Hiring 2025 shows that 77% of UK employers now use skills tests to evaluate candidates, with the same proportion saying these tests outperform CVs in predicting job success. Meanwhile, half have removed degree requirements from roles—a 28% increase from last year.
The report also highlights a growing disconnect in the hiring market. Employers in the UK face mounting pressure to fill roles strategically and are increasingly turning to AI: 6 in 10 now use it in hiring, and 97% of those who do say it has improved the process. Yet 62% are finding it harder than last year to source top talent and 72% of job seekers say it's harder to land a role. Even as AI improves hiring efficiency, the core challenge remains: matching skilled candidates with the roles that need them most.
This challenge is prompting a broader reassessment of hiring criteria, particularly the growing value of soft skills in a job market transformed by automation. While demand for AI-specific skills has dropped from 52% to 38%, soft skills are in sharp focus. Among organisations using skills tests, 69% now assess soft skills, and 60% of employers say soft skills are more important now than they were five years ago. There’s growing recognition that effective hiring means evaluating the whole person; not just their technical ability, but how they think, behave, and align culturally. 72% of employers agree this approach leads to better outcomes.
Wouter Durville, CEO and Co-Founder of TestGorilla, comments, “In a hiring landscape shaped by uncertainty and rapid change, traditional signals like CVs, degrees, and gut instinct no longer cut it. Employers are under pressure to close skills gaps while making fewer, more strategic hires. That demands greater clarity than ever on what candidates can actually do, and whether they have the right skills to succeed.
“This year’s findings confirm what forward-thinking organisations already know: skills-based hiring is not just fairer, it’s smarter. It reduces mis-hires, improves retention, and is much better than traditional methods at predicting job success.
“We’re also seeing a dual shift: rising AI use paired with a growing focus on the human skills machines can’t replicate. Employers want people who can think critically, adapt, and collaborate. That’s why more are investing in tools to assess values, behaviours, and soft skills, not just technical ability. The best hiring strategies now combine objective data with a holistic view of the candidate—their skills, values, and cultural alignment.
“While budget constraints remain a challenge, the ROI on skills-based hiring is clear. Employers who lead on this front are making better hires, building more resilient teams, and positioning themselves to thrive in a fast-changing economy. Whether it’s building green infrastructure, leading in AI, or driving Britain’s quantum future, the UK’s success depends on matching the right people to the right roles at scale.”
Key Findings:
Skills-based hiring here to stay:
- 85% of employers use skills-based hiring methods (up from 56% in 2022)
- 85% of UK employers are satisfied with hires made in the last 12 months—with highest satisfaction (89%) among those using skills tests
- Employers say skills tests reduce hiring costs (57%) and mis-hires (66%), and improve retention (62%)
AI in recruitment and future skills:
- 61% of UK employers are using AI in hiring, with 97% of those reporting it has improved their hiring process
- 37% of job seekers use AI to complete applications, including 22% of those aged 60+
- 38% of employers are actively hiring for AI-related skills (down from 52% in 2024), while 69% of those using skills tests now assess soft skills
Holistic hiring works:
- 86% of job seekers and 77% of employers in the UK say evaluating the whole person—skills, personality, and cultural alignment—leads to better results
- 60% of employers say soft skills are more important now than five years ago
- 75% of UK employers admit to hiring a candidate with strong technical skills who did not perform well due to lack of soft skills and cultural alignment
Diversity and inclusion still on the table:
- 84% of UK employers say building an inclusive culture is important and 79% prioritise diverse teams, despite global rollback of DEI initiatives
Degrees on the decline:
50% of UK employers and 57% of US employers have removed degree requirements from roles, a year-on-year increase of 28% and 90% respectively