Number of employers expecting to hire staff in short term falls to record low, as 1 in 4 expecting to make redundancies

12 May 2025, 00:46

The number of employers expecting to increase staff numbers in the next three months has fallen to a record low outside of the pandemic, new research suggests.

It comes as another study showed a substantial increase in the amount of applicants per job.

A survey of 2,000 businesses found issues such as rising employment costs and growing global uncertainties, leading to a reluctance from employers to recruit new staff.

The Chartered Institute of Personnel and Development (CIPD) said the rate of employers expecting to increase headcount has fallen sharply among large private sector employers, and in retail in particular.

One in four employers plan to make redundancies in the next three months, said the report.

James Cockett, senior labour market economist at the CIPD, said: "From April, employers across the UK have begun to feel the full effect of increases to National Insurance Contributions and the National Living Wage outlined in last year's budget.

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"They're also looking at the potential impact of the Employment Rights Bill on employment costs and plans, and this comes at a time of global uncertainty. Employer confidence is low, which is being reflected in their hiring plans.

"The Employment Rights Bill is landing in a fundamentally different landscape to the one expected when it formed part of the Labour manifesto in summer of last year.

"It was always going to be a huge change for employers but they're operating in an even more complex world now. It's vital the government works closely with employers to balance the very real risk of reductions in investment in people, training and technology with their desire to reduce poor employment practice."

Meanwhile, another study has shown that the number of candidates for advertised jobs has increased substantially.

The recent increase was largely because of job losses amid company restructuring efforts and redundancies, as well as a reduction in recruitment activity.

This is according to research conducted among 400 recruitment agencies.

Demand for staff weakened in April, said the Recruitment and Employment Confederation (REC) and KPMG.

Neil Carberry, REC chief executive, said: "Given the wave of costs firms faced in April, maintaining the gradual improvement in numbers we have seen over the past few months is on the good end of our expectations.

"While we are yet to see real momentum build, hopes of an improving picture in the second half of the year should be buoyed by today's data.

"The biggest single drag factor on activity right now is uncertainty. Some of that can't be helped, but payroll tax costs and regulation design is in the Government's gift.

"Businesses have welcomed positive discussions with ministers on the Employment Rights Bill, but now it is time for real changes to address employers' fears and boost hiring.

"A sensible timetable and practical changes that reduce the red tape for firms in complying with the Bill will go a long way to calming nerves about taking a chance on someone."