The UK labour market has reached a 12-year low, with employment levels declining significantly due to rising labour costs and global economic uncertainties. Recent surveys indicate that employer confidence has plummeted, leading to widespread hiring freezes and job cuts.
According to the Chartered Institute of Personnel and Development (CIPD), employer expectations for staff increases have dropped to their lowest non-pandemic level since 2014. The net balance of employers expecting to hire versus those planning cuts fell to 8%, down from 13% last quarter. This decline is most severe among large private-sector businesses and retailers, and public-sector organizations, particularly in education, are also facing challenges. Nearly a quarter of employers anticipate making redundancies in the coming months.
A separate survey by KPMG and the Recruitment and Employment Confederation (REC) confirms weakening demand for both permanent and temporary staff, with increased job-seeking driven by layoffs due to restructuring. The steepest drop in permanent hires was in southern England, whereas London saw the mildest decline. Sectors like nursing, hospitality, and retail witnessed the most significant cuts in hiring.
Business sentiment has been impacted by higher labour costs from minimum wage and national insurance increases effective in April and global uncertainties, including U.S. tariff policies. BDO reports UK employment at a 12-year low and business confidence at its weakest since early 2021. Despite rising starting salaries, overall pay growth remains below long-term averages.
The UK government is closely monitoring these developments and considering measures to stimulate employment and address the challenges facing the labour market.
