Navigating The Job Market Slowdown 

The UK job market is dealing with an uphill battle, as new analysis means that considerations about inflation and rates of interest are inflicting companies to be cautious relating to hiring. 

Analysis from careers web site Reed.co.uk, as reported by LBC, has revealed that job listings have seen a pointy drop over the previous 12 months, leaving many jobseekers in a tricky spot.

One seemingly trigger is a rise in employer Nationwide Insurance coverage Contributions (NICs), which has stored the price of employment rising, throwing many SME recruitment plans into chaos.

Extra layoffs, fewer job alternatives

The reign of redundancies from final 12 months has continued into 2025. Main retailers together with Aldi, New Look, and Ocado made job cuts earlier this 12 months in efforts to guard profitability. The tech sector has been a steady supply of layoffs as nicely, with firms like Google, Dyson, and Meta downsizing the workforce significantly within the final 12 months.

The pattern seems to be set to proceed, as a Labour Market Outlook report by CIPD reveals that redundancy expectations have elevated from 22% to 27% for private-sector companies.

However whereas some firms are pressured to let employees go in an effort to decrease staffing prices and shield revenue margins, the overwhelming majority will go for hiring freezes. 

In our survey of 531 small enterprise house owners, accomplished on the finish of final 12 months, we discovered that 12% of SMEs report no plans to rent this 12 months.

It’s no shock, then, {that a} research by Reed has revealed that new job listings have declined by 23% in comparison with the earlier 12 months. The findings have been first reported by LBC. 

What’s behind the hiring freeze?

One of many most important causes behind the decline in job adverts is the rise within the employer NIC fee — from 13.8% to fifteen% — which got here into impact final Sunday, on April 6.

The change has positioned important monetary stress on SMEs, with many turning to cost-cutting measures to remain afloat. One report by Personnel At present discovered that 46% of employers believed that the NIC enhance would influence hiring plans. 22% additionally cited restricted budgets as a result of NICs as the explanation for freezing or delaying hiring.

What’s extra, the rise within the Nationwide Minimal Wage (NMW) has made hiring low-income employees costlier. Mixed with ongoing financial uncertainty and rising costs, it’s no surprise that companies are hesitant to decide to long-term hiring.

The office mannequin may be an element. Lease and utility payments are two enterprise overheads which have elevated essentially the most previously half decade. 58% of absolutely office-based firms informed us they’d made layoffs to streamline prices in 2024, versus solely 45% of distant companies.

How ought to SMEs reply?

Whereas smaller companies might not be capable to afford to rent new employees proper now, expertise stays essential to enterprise development and maintaining in a aggressive market. In any case, in our survey of SME leaders, 52% of companies reported {that a} gifted and motivated workforce was a key contributor to their success final 12 months.

And let’s not overlook to issue within the abilities scarcity both. Whereas it’s a lower in comparison with final 12 months, 76% of employers reported problem in filling roles as a result of an absence of expertise. 

With hiring off the playing cards, now is an efficient time for companies to judge their worker profit packages and search out intelligent, cost-efficient methods to retain, not recruit, employees. 

These don’t have to interrupt the financial institution both. Perks like versatile working, in-house coaching alternatives, or the choice to work from anyplace can go a protracted strategy to maintain expert employees round. Plus, it received’t damage to draw the precise candidates when hiring picks again up.

The highway forward

The UK jobs market goes by means of a tough patch. With overwhelming financial and monetary pressures, it’s a very good time for companies to take a step again and take into consideration what they really want to develop, and methods to dangle on to the individuals who could make that occur.

As issues settle, the companies that concentrate on taking care of their groups and providing actual worth for workers would be the ones that come out on high.