The employment situation in the UK continues to take a depressing turn, with hiring delayed as tax rises and other pressures loom.
ManpowerGroup’s latest quarterly Employment Outlook Survey (MEOS), a key economic indicator for the Bank of England and UK government, shows that planned hiring volume is down -27% on the quarter. That’s as economic realities contend with pent-up demand for new skills and economic growth.
“Of those employers who do expect a change in headcount, their planned hiring volume is down 27% on the quarter with plenty of businesses holding back on recruiting until they’ve taken full stock of next month’s cost increases. Because of this, we’re anticipating the UK’s hiring recession will remain an issue until summer at the earliest.” said Michael Stull, managing director, ManpowerGroup.
“With less hiring taking place, many employees are understandably reluctant to consider changing roles. Given this, employers must prioritise workforce optimisation and internal mobility. Offering opportunities to upskill and finding ways to keep teams motivated and energised will drive much-needed productivity during this period of stagnation. The Government’s vast policy changes announced in the Autumn budget will be coming into effect in Q2. This means the hiring recession we’ve been experiencing looks set to continue until the impact is fully realised by cautious business leaders.” He added.
How will business staffing respond?
The report suggests employers will need to treat the workforce as they would in an economic recession; looking to boost productivity from the workforce for the rest of the year. Those businesses which are able to work smarter in the next few months will be in a better position for when the wider economy does turn around. Going against that trend, those in the Transport & Logistics, Defence and Public sectors are more likely to boost employment in the coming months.
While the labour market remains stagnant, the Energy & Utilities sector is reporting the most movement, with only 27% of employers planning no change to their headcount in Q2. Followed by IT (35%) and Finance & Real Estate (37%). With fewer employers standing still in when it comes to hiring there is potential for more growth to come in these sectors for Q2 2025.
Stull continues: “Looking forward, it’s great to see some glimmers of positivity in the UK’s Energy, Utilities and Real Estate sectors. These are where we hope to see growth, especially when the economy is flat, as it would signal investment is coming back into the country.”
Of those industries which are reporting planned changes to headcounts in the coming quarter, ManpowerGroup anticipates -27% in hiring volume for the whole of the UK, but some industries buck the trend – Industrials & Materials, Real Estate and Transport and Logistics. These industries forecast net positive changes to hiring volume in the coming quarter.
With public sector recruitment up, there are questions about when investment in areas such as the increase in national defence expenditure and plans to drive up housebuilding will have a knock-on impact on businesses in the private sector.
Stull concludes: “For the time being, economic uncertainty and cost pressures remain a real issue for many employers as the negative sentiment, alongside flat consumer spending and growing insolvencies all adds to a sense there is only so much more they can do. They will likely continue to hold tight until we see the full impact of next month’s tax rises. Therefore, we urge those who can to navigate the uncertainty and find new solutions to drive productivity and efficiencies. They will likely reap the rewards later in the year when it is hoped the market will stabilise and improve.”