Employers in the UK are postponing major hiring and workforce decisions, with 42 percent planning no changes to their employee headcount in the second quarter of 2025, according to the latest ManpowerGroup Employment Outlook Survey.
An additional 11 percent are uncertain about their staffing levels.
The ManpowerGroup Employment Outlook Survey is released quarterly and is considered a key economic indicator by the Bank of England and the UK government. The latest findings suggest that hiring activity remains subdued, with businesses waiting to assess the impact of upcoming cost increases before making recruitment decisions.
Michael Stull, managing director at ManpowerGroup, said, “Of those employers who do expect a change in headcount, their planned hiring volume is down 27 percent 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.”
He added that with fewer job opportunities available, employees are less inclined to change roles, making internal workforce optimisation a priority. Upskilling and maintaining engagement will be critical for employers aiming to sustain productivity during this period of economic stagnation.
Impact of Policy Changes on Hiring Trends
The hiring slowdown is being compounded by policy changes introduced in the Autumn Budget, which will come into effect in the second quarter of 2025. Stull noted that uncertainty around these changes is prompting employers to treat workforce management as they would in an economic downturn, focusing on improving efficiency rather than expansion.
Despite the overall hiring stagnation, some industries are experiencing more movement. The Energy and Utilities sector has the lowest proportion of businesses keeping headcounts unchanged at 27 percent, followed by IT (35%) and Finance and Real Estate (37%). These sectors show potential for growth despite the challenging economic environment.
Stull said, “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.”
Although overall hiring volumes in the UK are expected to decline by 27 percent, some industries are bucking the trend. The Industrials and Materials, Real Estate and Transport and Logistics sectors are forecasting net positive changes to headcount in the coming quarter.
Public Sector Recruitment and Business Outlook
Public sector hiring is on the rise, with increased investment in national defence and housing development potentially leading to wider economic benefits. However, questions remain about when these public sector initiatives will translate into private sector growth.
Stull added, “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. It’s likely they will continue to hold tight until we’ve seen the full impact of next month’s tax rises.”
He urged business leaders to “find new solutions to drive productivity and efficiencies”, adding that they will likely reap the rewards later in the year, when the market will hopefully stabilise and improve.
Neil Carberry, Chief Executive of the Recruitment and Employment Confederation (REC), commented, “The glimmers of hope in today’s Manpower employment outlook are there, but faint. Recent anecdotes from our recruiters about a stabilising job market and latent demand for hiring that hasn’t yet launched can be seen in this data.”
Carberry added that firms remain very cautious, awaiting the full impact of the Autumn Budget changes and the Employment Rights Bill on business costs.
Employment Rights Bill: the Report Stage
The Employment Rights Bill returns to the House of Commons in the report stage today (11 March).
Ronni Zehavi, CEO and Co-Founder of HR tech platform HiBob, said that the Bill has the potential to “bring greater job security, better working conditions and increased financial gain to an estimated 10 million UK employees”.
He added, “Not all businesses are in favour of the Bill and we’ve recently seen Labour scale back the Right to Switch Off, so it seems an opportune time to remember just how much productivity is lost when employees are over-worked or not looked after. Across the working UK population, we lost 17.1 million working days to stress, depression or anxiety in 2022/23.
“That time is the equivalent of over five billion pounds of lost output for the country and massively outweighs the cost of legislation changes for the majority of employers.”
Zehavi argued that happier employees protected by solid legislation are more likely to perform better.
“The cost of introducing workplace changes will pay off long term if the company invests in its culture, creating a place where people want to do their best work,” he added.