UK faces 'jobs drought' as vacancies fall for 'unprecedented' 38th month in a row, warns recruitment chief

New figures from the Office for National Statistics (ONS) show the number of job vacancies dropped by 10,000 in the three months to August, leaving just 728,000 open roles across the country. Payrolled employee numbers also fell by 142,000 in the year to July 2025.

Writing exclusively for LBC Opinion, James Reed, chairman and CEO of recruitment giant Reed, said the market feels “different from anything I have seen in my four decades working in recruitment,” pointing to a toxic mix of higher National Insurance costs for employers and the rapid adoption of AI in the workplace.

“Many employers we work with report hiring freezes, reduced headcounts or delays in taking on new staff as direct responses,” Reed said. “We may be facing as big a disruption to the workforce as we saw in the 1980s, except this time white-collar jobs rather than blue-collar ones will bear the brunt.”

A Reed survey of 500 employers found 22 per cent had cut recruitment because of higher National Insurance bills, while 15 per cent said the same of AI. More than one in five firms reported they had implemented a hiring freeze.

The government raised employers’ National Insurance from 13.8 per cent to 15 per cent last year while lowering the threshold at which it becomes payable, measures Reed described as a “£25 billion tax hike on business.”

Meanwhile, AI is increasingly being used to cut costs, with many entry-level and graduate roles under threat. Graduate job postings on Reed.co.uk have plunged from over 180,000 in 2021 to just 50,000 last year.

Jobseekers are feeling the pressure. A separate Reed survey of 2,000 applicants found 41 per cent said there were too few vacancies, 39 per cent reported too many applicants per role, and nearly the same number said pay was failing to keep pace with the cost of living. More than half are worried about job security.

There are some “bright spots,” Reed noted, with sectors like social care and hospitality still hiring. But he warned the risks for young people and those rejoining the workforce were especially stark, as the entry-level roles that traditionally act as stepping stones are under strain.

In response, Reed has launched the “Million Jobs Giveaway,” offering employers up to one million free job listings on its website between now and the end of the year.

The aim is to boost the number of roles available in the New Year, traditionally one of the busiest periods for jobseekers.

Reed urged the government to do more when the Chancellor delivers the November Budget, including revisiting the NI rise, cutting VAT on energy bills, reforming business rates, and investing in skills training and apprenticeships.

“If we do nothing, the jobs drought risks becoming a desert,” he said. “If employers stop hiring, a generation of graduates and school leavers risks being left behind. Economic growth and social mobility will suffer.”

Work and Pensions Secretary Pat McFadden said there were bright spots in the latest jobs market data.

He said: "Today's figures show signs of progress with economic inactivity and redundancies continuing to fall.

"But we must futureproof our workforce by giving people the opportunities and skills they need to secure the jobs of tomorrow.

"It is vital that our £240 million Get Britain Working plan is felt by people across the country, whether it's through targeted support for young people entering the workforce, or joining up work, health and skills support.

"The true strength of the UK's economy lies in the British people, which is why we are unlocking opportunity in every part of the country to drive forward economic growth under our plan for change."