Full Breakdown
UK Labour Market Faces Continued Decline in Recruitment Activity
10/11/2025, 2:15:02 PM
Overview of the Current Labour Market Situation
In September 2025, the UK labour market experienced a significant decline in recruitment activity, mirroring trends observed in August. The Recruitment and Employment Confederation (REC) and KPMG reported a continued downturn in hiring, with a notable increase in the number of candidates seeking both permanent and temporary roles. This shift has exerted downward pressure on pay, with only marginal increases in starting salaries and temporary pay rates. The report highlighted that the decline in permanent staff hiring has persisted for over three years, although the rate of contraction was the slowest in the past year.
Key Factors Influencing Recruitment Trends
The primary drivers behind the reduced hiring activity include weak employer confidence, economic uncertainty, and rising cost pressures. The Office for National Statistics confirmed a decrease in total vacancies, with unfilled roles reaching their lowest levels since early 2021. The public sector experienced the steepest drop in permanent roles, while the private sector saw a slightly softer contraction. Notably, the retail and hospitality sectors faced sharp declines in demand for permanent staff, whereas the engineering sector recorded a modest increase.
Insights from Industry Leaders
Jon Holt, Chief Executive and UK Senior Partner at KPMG, acknowledged the cautious stance of employers in hiring decisions. He noted that despite the challenging economic landscape, there are signs of resilience among chief executives, who are adapting their investment strategies to focus on areas such as artificial intelligence and talent upskilling. Holt expressed hope that forthcoming signals from the Chancellor could bolster business confidence and support renewed hiring as the UK approaches 2026.
Criticism and Concerns
Neil Carberry, Chief Executive of REC, emphasized the need for a boost in confidence within the wider economy to stimulate hiring. He pointed out that while there are indications of stabilization in the permanent job market, the overall economic picture remains challenging for employers. Carberry highlighted the importance of a pro-business Autumn Budget, advocating against tax increases that could further burden businesses.
Verbatim Quotes
- “Comments Commenting on the latest survey results, Jon Holt, Group Commenting on the latest survey results, Jon Holt, Group Chief Executive and UK Senior Partner KPMG, said: “With very little positive news out there on the economy in recent months, and lots of speculation about the Budget, it is understandable that employers are cautious with their hiring.” — Jon Holt, Chief Executive and UK Senior Partner, KPMG
- “The jobs market has not yet turned a corner and remains tough, but we saw stabilisation in some of the numbers last month.” — Jon Holt, KPMG
- “We can hope that the jobs market and the economy may be moving towards calmer waters, but falling vacancies is a reminder that what is really needed is a shot of confidence in the wider economy to get things going.” — Neil Carberry, Chief Executive, REC
Conclusion and Future Outlook
The UK labour market remains under pressure, with ongoing declines in recruitment activity and subdued pay growth. While there are signs of stabilization in certain areas, the overall environment is characterized by uncertainty. The upcoming Autumn Budget is anticipated to play a crucial role in shaping business confidence and potentially revitalizing the hiring landscape as the economy moves forward.
