Labour Market Outlook

The CIPD’s quarterly Labour Market Outlook is one of the most authoritative employment indicators in the UK and provides forward-looking labour market data and analysis on employers’ recruitment, redundancy and pay intentions.

The LMO is published every February, May, August and November. Its insights help HR professionals and employers anticipate labour market movements and to adjust and prepare accordingly. It also feeds into our consultations and engagement with the UK Government and policy-makers.

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Labour Market Outlook – Summer 2025

National Insurance costs add pressure to employer confidence

Employer confidence remains low, with the net employment balance at +9 - little changed from +8 last quarter and still among the lowest levels recorded outside the pandemic. Private sector hiring intentions are subdued, with just 57% planning to recruit in the next three months. Pay expectations remain at 3% - unchanged for five quarters.

Rising employment costs - driven by the increase in employer National Insurance and higher minimum wage thresholds - are hitting lower-paying sectors hardest. Employers of young people and part-time staff report the biggest cost rises, despite exemptions for under-21s.

In the public sector, the net employment balance stands at –6. Recruitment pressures have eased, but this reflects reduced hiring activity and government plans to shrink the workforce - including NHS recruitment freezes and wider reforms.

New immigration rules introduced in July are already having an impact. The net employment balance in social care has dropped from +23 to –2, following the closure of the Social Care Worker route and new restrictions on overseas recruitment.

While employers should try to focus on retaining talent and strengthening early career opportunities where possible, the CIPD is calling on government to assess the cumulative impact of rising employment costs and policy changes - particularly on lower-paying sectors and young people. A clearer long-term plan is needed to support business investment in jobs, skills and workforce planning.

Download the full report to access in-depth data, sector-specific breakdowns, and expert analysis to inform your workforce planning and strategic decision-making.

Labour Market Outlook - Summer 2025

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	Employer confidence remains low The net employment balance stays at +9, close to its lowest point outside the pandemic. Employers remain cautious about workforce growth over the next three months.
	Staff decrease expected in the public sector The public sector net employment balance has fallen from –4 to –6, meaning more employers expect to cut staff than increase headcount.
	National Insurance begins to show impact April’s NI changes have raised costs for 84% of employers, with a third (32%) seeing a large rise. Lower-paying industries and those employing young workers have been hardest hit.
	Hard-to-fill vacancies have decreased The share of public sector employers reporting hard-to-fill vacancies has dropped from 44% in spring to 34%, with half now reporting no vacancies at all.
	Pay expectations remain even Median basic pay awards hold at 3% across the public and private sectors for the fifth consecutive quarter.