Spring 2025 Labour Market Outlook reveals record-low hiring intentions and persistent pay pressures
14 May 2025 — Business confidence in the UK has hit its lowest level outside the pandemic, with hiring intentions weakening and one in four employers planning redundancies in the next three months, according to the Chartered Institute of Personnel and Development’s (CIPD) latest Labour Market Outlook.
The findings make for depressing reading for economists and job seekers alike, with widespread expectations of job losses, low pay settlements and increased uncertainty.
Key Findings
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Employment Balance at Record Low
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The net employment balance—measuring hiring intentions—fell to +8, the lowest since 2014 (excluding 2020). Private sector confidence dropped to +11, while the public sector slipped into negative territory (-4).
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Retail, construction, and healthcare saw the sharpest declines, with 30% of retail firms expecting staff cuts.
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Redundancies on the Horizon
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24% of employers plan redundancies by June 2025, consistent with the previous quarter but up from 21% in autumn 2024.
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Median workforce reduction: 5%. Smaller firms were more likely to offer only statutory redundancy pay (54% vs. 37% at large firms).
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Pay Settlements Hold at 3%
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Median pay increase expectations remain at 3% across all sectors, aligning with the current CPIH inflation rate (3.4%). Public sector pay awards rose slightly to 3%, closing the gap with private firms.
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Hard-to-Fill Vacancies Persist
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33% of employers report hard-to-fill roles, notably in education (49%) and healthcare (55%).
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Drivers of Uncertainty
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Economic Pressures: Rising National Insurance and National Living Wage costs have dampened employer optimism.
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Global Risks: U.S. tariffs and geopolitical instability threaten UK trade, with £80bn in exports directly or indirectly linked to the U.S.
CIPD Calls on Government to Slow Pace of Change
A spokesman from the CIPD said:
“Rising employment costs – including increases to National Insurance and the National Living Wage – are forcing many organisations to scale back recruitment, limit training investment, and consider price increases. Uncertainty around the Employment Rights Bill and global events is adding to employers’ caution.
The CIPD is calling on the Government to work closely with employers and set out a clear, phased rollout of the Bill to minimise disruption and safeguard investment in people and skills.
The CIPD also offered employers the following advice:
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Retention Focus: Monitor workloads and invest in upskilling to address talent gaps.
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Fair Redundancies: Offer enhanced packages where possible to support financial wellbeing and mitigate reputational risks.
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Inclusive Hiring: Broaden recruitment strategies to tackle persistent vacancies.
James Cockett, CIPD Senior Labour Market Economist, warned:
“Employers are walking a tightrope between cost pressures and retention. Knee-jerk cuts risk leaving firms unprepared for recovery.”
Employers can read the full report here.
Citation: Bon, E. (2025) Labour Market Outlook – spring 2025. CIPD.
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References
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Survey: 2,004 UK employers, weighted by sector/size. Fieldwork: March–April 2025.
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CPIH inflation: Office for National Statistics, April 2025.