Hiring intentions across Britain have fallen to record lows as companies grapple with soaring employment costs and economic uncertainty, with young people facing the steepest drop in recruitment.
According to three separate surveys released on Monday, employers are holding back on recruitment, wage growth is stalling, and business confidence is faltering — leaving bosses “stuck in limbo” as they await clarity from the upcoming autumn budget.
Private sector recruitment slumps
The Chartered Institute of Personnel and Development (CIPD) reported that only 57% of private sector employers plan to recruit in the next three months, down from 65% in autumn 2024. The decline comes as businesses contend with a combined £25 billion rise in employer national insurance contributions (NICs) introduced in April, alongside other mounting costs.
A separate report from KPMG and the Recruitment and Employment Confederation (REC) revealed that UK recruitment activity fell sharply in July, affecting both permanent and temporary positions. The study recorded the steepest drop in job vacancies since April, while staff availability rose at one of the fastest rates since records began in 1997.
Weak pay growth and sector trends
The slowdown has hit salaries, with starting pay rising at its weakest rate in almost four and a half years. Demand for permanent staff fell across nine of ten job categories, with only engineering seeing stable hiring. Retail experienced the steepest decline in vacancies, while construction saw the smallest drop.
REC deputy chief executive Kate Shoesmith said modest rises in pay supported last week’s interest rate cut by the Bank of England — the fifth in a year — and called for further measures to stabilise business costs ahead of the autumn budget.
Young workers hit hardest
The CIPD warned that the hospitality and care sectors, along with businesses employing young people, have been disproportionately affected by rising costs. About 37% of employers hiring under-21s reported a significant rise in employment costs due to NICs changes, compared to 23% among those not hiring young workers — despite under-21s being exempt from employer NICs.
The CIPD urged the government to expand support for youth employment and training, and ensure that proposed changes to the employment rights bill do not further deter hiring.
Business confidence remains fragile
BDO’s latest business confidence snapshot highlighted weak GDP growth, high labour and energy costs, and ongoing uncertainty over Donald Trump’s proposed global tariffs as key factors weighing on investment decisions.
“There are signs of recovery, but they are fragile,” said Scott Knight, BDO’s head of growth. “Business leaders are stuck in limbo, waiting for clearer signals from the government that further investment will be worth the gamble.”
