Labour Market Outlook
A forward-looking indicator of UK labour market trends with unique insights on recruitment, redundancy and pay
A forward-looking indicator of UK labour market trends with unique insights on recruitment, redundancy and pay
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.
Employer confidence fell sharply this quarter, with the net employment balance dropping from +21 to +13 – the steepest decline recorded outside of the pandemic. Hiring activity is slowing, while redundancy intentions have climbed to their highest level in a decade, with the exception of 2020. The private sector has been particularly hard hit, with redundancy expectations rising from 22% to 27%.
Rising employment costs, driven by National Insurance contribution increases and the reduction in the ‘secondary threshold’, are forcing many businesses to rethink their workforce strategies. Employers anticipate higher costs, and intend to respond by increasing prices, scaling back recruitment and reducing investment in business growth and training.
While across the board the median expected pay increase remains at 3%, public sector pay expectations have dipped from 4% to 2.5%.
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Net employment balance drops sharplyThe net employment balance suffered the sharpest fall on record outside the pandemic, dropping from +21 to +13. The score measures the gap between employers expecting staff increases and those anticipating decreases in the next three months. |
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Private sector confidence plummetsThe net employment balance in the private sector dropped from +24 to +16, its lowest level in over a decade, excluding the pandemic. |
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One in four plan redundanciesOne in four employers (25%) are planning redundancies in the next three months, the highest level in a decade outside the pandemic. |
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Expected rise to employment costsTwo in five employers expect Budget measures, including the NICs rate hike and lower secondary threshold, to significantly raise employment costs. |
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Price increases planned to address costsIn response to rising employment costs, 42% of affected employers plan to raise prices, while 32% aim to cut staff through redundancies or reduced hiring. |
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