Jobs market ‘stops moving’ as employment costs weigh on hirers

The UK jobs market has largely halted its growth as rising employment costs discourage businesses from hiring and hinder jobseekers' advancement. Private sector employment intentions have hit their lowest level since the COVID-19 pandemic, according to the Chartered Institute of Personnel and Development (CIPD). The organization found that hiring levels among UK firms have weakened while redundancy levels remain stagnant, indicating a "low hire, low fire" environment as the "new normal."

CIPD's senior labour market economist, James Cockett, stated that a stagnant labour market limits opportunities for first-time jobseekers, prevents progression for existing employees, and diminishes the talent pool crucial for skill refreshment and innovation.

Only 57% of private sector employers plan to hire within the next three months, marking another joint low outside of the pandemic, according to the CIPD's survey of over 2,000 businesses. The net employment balance, which compares employers expecting headcount increases to those planning decreases, remains near its lowest level outside of the pandemic, at plus nine. Just a quarter (26%) of bosses anticipate staffing levels rising in the next quarter, while 17% predict a decrease.

Despite falling overall vacancies, 31% of employers still report hard-to-fill vacancies, suggesting that industries like construction, healthcare, and social care are experiencing skills shortages. The CIPD urged to lower employer national insurance contributions (NICs), introduced by former Chancellor Rachel Reeves, as well as cancelling the planned abolition of age-based wage levels.

These measures, the HR trade body argued, would make it easier for businesses to create more entry-level jobs and give employers the confidence needed to hire, particularly young people.