UK Employment Confidence Hits Rock Bottom
May 13, 2025, 12:16 pm
The UK job market is in a tailspin. Confidence among employers has plummeted to levels not seen since the pandemic. Economic uncertainty looms like a dark cloud, casting shadows over hiring plans. Rising costs and new regulations are squeezing businesses, leaving them gasping for air.
Recent data from the CIPD reveals a stark reality. The number of employers expecting to increase their workforce has dropped to a record low. The net employment balance (NEB) fell from +13 to +8 in just one quarter. This is the lowest figure recorded outside of the pandemic since the CIPD began tracking this metric in 2014.
The retail sector is feeling the brunt of this downturn. Its NEB has nosedived from +23 in autumn 2024 to a staggering -19 this quarter. Only 11% of retail employers anticipate hiring more staff in the next three months. Meanwhile, 30% expect to reduce their workforce. This paints a bleak picture for an industry already struggling to recover from the pandemic's aftershocks.
The public sector is not immune either. Its NEB has slipped into negative territory, dropping from +3 to -4. The private sector is also in decline, with its NEB falling from +16 to +11. This downward trend is alarming. It signals a broader malaise affecting various sectors, particularly education and retail.
One in four employers, or 24%, are planning redundancies in the coming months. This figure remains unchanged from the previous quarter but is a significant increase from 21% in autumn. The education sector is particularly hard hit, with NEBs of -13 in compulsory education and -7 in non-compulsory education.
Employers are feeling the pinch. The rising costs of National Insurance Contributions and the National Living Wage are taking their toll. The recent budget hike, which increased the National Living Wage by 6.7% for workers aged 21 and over, has added to the financial strain. Employers are grappling with these new costs while trying to navigate a landscape fraught with uncertainty.
The Employment Rights Bill is another factor complicating the situation. As it moves through Parliament, employers are left wondering how it will impact their hiring strategies. The bill aims to improve worker rights, but it also raises concerns about increased costs and potential disruptions. Employers are anxious about how to balance compliance with their need to invest in their workforce.
Despite these challenges, a glimmer of hope remains. Approximately 61% of employers still plan to recruit in the next three months, albeit down from 64% last quarter and 67% in autumn 2024. This suggests that while confidence is low, some businesses are still willing to take the plunge.
However, the decline in hiring intentions is primarily driven by large private sector employers. Only 32% of them expect to increase staffing levels, down from 39% last quarter. This shift indicates a growing reluctance among larger firms to expand their workforce amid rising costs and regulatory changes.
The CIPD's findings highlight a critical juncture for the UK job market. Employers are caught in a vice, squeezed by rising costs and regulatory pressures. The government's role is crucial. It must work closely with businesses to create a supportive environment that encourages investment in people and technology.
The report also sheds light on redundancy practices. Over a quarter of employers (27%) conducted redundancy programs in the past year. Among those, half offered enhanced packages beyond the legal minimum. This indicates a willingness to support affected workers, even as businesses face their own challenges.
Smaller employers, those with fewer than 250 employees, are more likely to offer statutory redundancy pay compared to larger firms. This trend underscores the varying capabilities of businesses to weather economic storms. Smaller firms often operate on tighter margins, making them more vulnerable to fluctuations in the market.
As the UK navigates this turbulent economic landscape, the path forward remains uncertain. Employers are feeling the weight of rising costs and regulatory changes. The Employment Rights Bill, while well-intentioned, adds another layer of complexity.
The government must prioritize a clear implementation plan for the bill, providing guidance and support to businesses, especially smaller ones. Without this, the risk of reduced investment in training and technology looms large.
In conclusion, the UK job market is at a crossroads. Confidence is low, and hiring intentions are dwindling. The retail and education sectors are particularly vulnerable. As businesses grapple with rising costs and regulatory pressures, the government's response will be pivotal. The time for action is now. The future of the UK workforce hangs in the balance.
Recent data from the CIPD reveals a stark reality. The number of employers expecting to increase their workforce has dropped to a record low. The net employment balance (NEB) fell from +13 to +8 in just one quarter. This is the lowest figure recorded outside of the pandemic since the CIPD began tracking this metric in 2014.
The retail sector is feeling the brunt of this downturn. Its NEB has nosedived from +23 in autumn 2024 to a staggering -19 this quarter. Only 11% of retail employers anticipate hiring more staff in the next three months. Meanwhile, 30% expect to reduce their workforce. This paints a bleak picture for an industry already struggling to recover from the pandemic's aftershocks.
The public sector is not immune either. Its NEB has slipped into negative territory, dropping from +3 to -4. The private sector is also in decline, with its NEB falling from +16 to +11. This downward trend is alarming. It signals a broader malaise affecting various sectors, particularly education and retail.
One in four employers, or 24%, are planning redundancies in the coming months. This figure remains unchanged from the previous quarter but is a significant increase from 21% in autumn. The education sector is particularly hard hit, with NEBs of -13 in compulsory education and -7 in non-compulsory education.
Employers are feeling the pinch. The rising costs of National Insurance Contributions and the National Living Wage are taking their toll. The recent budget hike, which increased the National Living Wage by 6.7% for workers aged 21 and over, has added to the financial strain. Employers are grappling with these new costs while trying to navigate a landscape fraught with uncertainty.
The Employment Rights Bill is another factor complicating the situation. As it moves through Parliament, employers are left wondering how it will impact their hiring strategies. The bill aims to improve worker rights, but it also raises concerns about increased costs and potential disruptions. Employers are anxious about how to balance compliance with their need to invest in their workforce.
Despite these challenges, a glimmer of hope remains. Approximately 61% of employers still plan to recruit in the next three months, albeit down from 64% last quarter and 67% in autumn 2024. This suggests that while confidence is low, some businesses are still willing to take the plunge.
However, the decline in hiring intentions is primarily driven by large private sector employers. Only 32% of them expect to increase staffing levels, down from 39% last quarter. This shift indicates a growing reluctance among larger firms to expand their workforce amid rising costs and regulatory changes.
The CIPD's findings highlight a critical juncture for the UK job market. Employers are caught in a vice, squeezed by rising costs and regulatory pressures. The government's role is crucial. It must work closely with businesses to create a supportive environment that encourages investment in people and technology.
The report also sheds light on redundancy practices. Over a quarter of employers (27%) conducted redundancy programs in the past year. Among those, half offered enhanced packages beyond the legal minimum. This indicates a willingness to support affected workers, even as businesses face their own challenges.
Smaller employers, those with fewer than 250 employees, are more likely to offer statutory redundancy pay compared to larger firms. This trend underscores the varying capabilities of businesses to weather economic storms. Smaller firms often operate on tighter margins, making them more vulnerable to fluctuations in the market.
As the UK navigates this turbulent economic landscape, the path forward remains uncertain. Employers are feeling the weight of rising costs and regulatory changes. The Employment Rights Bill, while well-intentioned, adds another layer of complexity.
The government must prioritize a clear implementation plan for the bill, providing guidance and support to businesses, especially smaller ones. Without this, the risk of reduced investment in training and technology looms large.
In conclusion, the UK job market is at a crossroads. Confidence is low, and hiring intentions are dwindling. The retail and education sectors are particularly vulnerable. As businesses grapple with rising costs and regulatory pressures, the government's response will be pivotal. The time for action is now. The future of the UK workforce hangs in the balance.