UK Hiring and Pay Growth Slow to Multi-Year Lows
Hiring intentions among UK businesses have dropped to their weakest level since the COVID-19 pandemic, while starting pay growth has slowed to its lowest pace in over four years, according to surveys released Monday. The data adds to growing evidence of a cooling UK jobs market.
Hiring Intentions at Lowest Since 2021
The Chartered Institute of Personnel and Development (CIPD) reported that only 57% of private-sector employers plan to hire staff in the next three months — the lowest figure since early 2021. This is slightly down from 58% in the previous quarterly survey.
The HR industry body said higher employer social security charges, introduced by Finance Minister Rachel Reeves, and an increased minimum wage are weighing on jobs, particularly in hospitality and social care.
CIPD economist James Cockett added that planned changes to employment law — making it harder to dismiss employees in their first two years — are also discouraging firms from hiring younger and less experienced workers.
Broader Pressures on the Labour Market
Other surveys have reported similar trends, with weak domestic demand and ongoing uncertainty over U.S. trade tariffs adding to the challenges.
Official data due Tuesday is expected to show the UK unemployment rate at 4.7% in the three months to June — close to a four-year high. Economists polled by Reuters will also watch for signs of slowing wage growth, as anticipated by the Bank of England (BoE).
Last week, four of nine BoE policymakers opposed the quarter-point rate cut to 4%, indicating they will need more evidence that domestic inflation pressures are easing.
Pay Growth Stalls
CIPD members expect to raise pay by a median 3% over the next year — unchanged for the past five quarters.
Separately, the Recruitment and Employment Confederation (REC) said starting salary growth in July was the weakest since March 2021, while pay for temporary staff grew at the slowest pace in five months.
Economic Uncertainty Hits Permanent Hiring
“Economic uncertainty, the complexities of AI adoption, and global headwinds are all weighing on business planning,” said Jon Holt, CEO of KPMG, which sponsors the REC survey.
REC noted that higher payroll costs and low business confidence led to a steep drop in permanent appointments in July.
