Another 11 percent of employers are unsure about their staffing level.
The ManpowerGroup Employment Outlook Survey, released quarterly, is considered by the Bank of England as a key indicator of the UK economy. The latest findings indicate that hiring activity is still subdued. Businesses are waiting to see how upcoming cost increases will affect them before making any recruitment decisions.
Michael Stull said that the ManpowerGroup managing director, Michael Stull stated, “Of employers who expect a change in their headcount, they have a planned hiring volume down by 27 percent from last quarter. Many businesses are holding off on recruitment until they take heed of next month’s price increases.” We expect the UK’s employment recession to continue until the summer, at the very least.
He said that because there are fewer opportunities for employees to switch roles, they’re less likely to do so, and internal workforce optimization is a priority. Employers who want to maintain productivity in this economic slump will need to focus on upskilling employees and keeping them engaged.
The impact of policy changes on hiring trends
Policy changes announced in the Autumn Budget will take effect in the second half of 2025, compounding the hiring slowdown. Stull stated that the uncertainty surrounding these policy changes has caused employers to manage their workforces as they would during an economic recession, focusing more on efficiency than expansion.
Some industries have seen more hiring, despite the stagnation in general. Energy and Utilities has the lowest percentage of companies that keep their headcounts the same at just 27 percent. IT (35%), Finance and Real Estate (37%) and IT are next. These sectors have potential to grow despite the difficult economic climate.
Stull stated, “Looking ahead, it’s wonderful to see some glimmers in the UK’s Energy Utilities, and Real Estate Sectors.” We hope to see growth in these sectors, particularly when the economy stagnates, because it will signal that investment is returning into the country.
Some industries defy the trend, despite the fact that the UK’s overall hiring volume is expected to fall by 27 percent. In the next quarter, headcount is expected to increase in Real Estate, Transport and Logistics and Industrials and Materials.
Public Sector Employment and Business Outlook
The public sector is hiring more people, and increased investments in national defense and housing development could lead to wider economic benefits. Nevertheless, it remains to be seen when these public initiatives will lead to private sector growth.
Stull said, “For now, economic uncertainty and costs pressures are a real problem for many employers, as the negative feeling, along with flat consumer spending, and growing insolvencies, all add to a feeling that there is not much they can do. They will likely continue to wait until they see the full effect of next month’s taxes.
He encouraged business leaders to “find innovative solutions to drive efficiency and productivity”, and said that they would likely reap the benefits later in the year when the market stabilizes and improves.
Neil Carberry (CEO of the Recruitment and Employment Confederation, REC) commented: “The glimmers are faint, but there in today’s Manpower Employment Outlook.” These data show recent anecdotes about a stabilising labour market and latent hiring demand that hasn’t been launched.
Carberry said that businesses remain cautious as they wait to see the full impact on costs of the changes in the Autumn Budget and the Employment Rights Bill.
Employment Rights Bill: Report Stage
Today (11 March), the Employment Rights Bill is brought back to the House of Commons for the report stage.
Ronni Zehavi is the CEO and co-founder of HiBob’s HR tech platform. She said the Bill could “bring better job security, improved working conditions, and increased financial gains to an estimated ten million UK employees”.
He continued, “Not every business is in favor of the Bill, and we’ve seen Labour recently scale back the Right to Switch Off. So it seems like a good time to remind ourselves just how much productivity can be lost when employees are not taken care of or are overworked. In 2022/23, stress, depression, or anxiety affected 17.1 million UK workers.
The cost of changing legislation for most employers is far greater than the time lost, which is equivalent to over five billion pounds in lost output.
Zehavi believes that employees who are happier and protected by solid laws will perform better.
He added that “the cost of introducing changes to the workplace will pay off in the long run if a company invests into its culture and creates a place where employees want to do their very best work.”
