UK employers continue to take a cautious approach to hiring, with the latest Labour Market Outlook from the CIPD finding that employer confidence remains close to record lows, outside of the pandemic, and has shown no signs of recovery since spring 2025.
The survey of more than 2,000 UK employers found that:
- The net employment balance – the difference between employers expecting staff levels to rise and those expecting them to fall in the next three months – remains at +9, close to its lowest level outside the pandemic
- Private sector employment intentions are at a joint low outside the pandemic of +11, first reached in spring 2025, and largely unchanged since
- Just 57% of private sector employers plan to recruit in the next three months, also a joint low outside the pandemic
The data suggests that employers are locked into a prolonged period of subdued hiring activity, focused on containing costs and maintaining existing staffing levels rather than increasing headcount.
The result is a static “low‑hire, low‑fire” labour market that shows little sign of breaking out of its current pattern. The CIPD says that if the government wants to play a role in boosting job creation, particularly for young people, it should focus on reducing the cost of hiring and creating the conditions employers need to invest and grow.
It is specifically calling on the government to:
- Ensure proposed new measures giving zero hours contract workers new rights to guaranteed minimum hours currently being consulted on don't further restrict job opportunities for young people
- Restore the employer National Insurance threshold to £9,100 a year to help encourage the creation of part-time roles, which often Provide young people with their first step into work
- Pause plans to align the minimum wage for 18–20-year-olds with the adult rate
- Be bolder in tackling the NEET crisis and introduce an Apprenticeship Guarantee for all 16–24-year-olds, something nine in ten employers' support.
James Cockett, senior labour market economist at the CIPD and author of the report, said:
“Our data suggests that the UK labour market has largely stopped moving. Hiring has weakened, but redundancy levels haven't risen, leaving us in a ‘low hire, low fire' environment that's increasingly looking like a ‘new normal'. A stagnant labour market closes off routes in to work for first-time jobseekers, blocks progression for existing employees, and erodes the talent pipeline organisations rely on to refresh skills and support innovation.
“Our findings suggest that bolder measures are needed to give employers the confidence they need to hire, and in particular, to support young people into work. To help get the jobs market moving again the government should consider reversing the reduction in the employer NICs secondary threshold which has made it harder for businesses to create the entry-level jobs young people need. It should also pause the further equalisation of the youth and adult National Minimum Wage rates.
“The government also needs to ensure that proposed new rights for zero hours workers are not so complex and costly for employers to implement that they cease to provide these types of flexible jobs, further reducing employment opportunities for young people.”
Key findings from the report include:
Recruitment remains stuck in first gear
Overall, just 62% of employers plan to recruit in the next three months, which has remained consistent since spring 2025. Hiring intentions among private sector employers stand at just 57%, matching the record low outside of the pandemic.
Labour market remains subdued
Just 26% of employers expect staffing levels to increase in the coming quarter, while 17% anticipate a decrease and almost half expect no change. Private sector employment intentions remain particularly subdued at +11, matching the record low outside of the pandemic, first reached in spring 2025. Public sector confidence has improved slightly, rising from -7 in spring 2026 to -1 this quarter.
Pay rises set to remain unchanged
Median expected basic pay increases remain at 3%, where they have now stayed for over two years. There is also significant stability in both public and private sector pay awards. However, with inflation expected to rise further, real pay growth is likely to slow and could turn negative in the months ahead.
Skills shortages continue despite less vacancies
Even though there are fewer vacancies, 31% of employers still report hard-to-fill vacancies and 14% anticipate significant recruitment difficulties in the next six months. This indicates that while labour demand has cooled, underlying skills mismatch and labour shortages remain a challenge for some industries including construction, healthcare and social care in particular.
