Britain’s labour market has effectively ground to a halt, with businesses citing rising employment costs as a key barrier to taking on new staff.
Private sector employment intentions have fallen to plus 11, the lowest level ever recorded outside of the Covid-19 pandemic, according to new data from the Chartered Institute of Personnel and Development (CIPD).
The CIPD, which represents the UK’s human resources sector, found that hiring levels among British firms have weakened while redundancy levels have simultaneously failed to rise.
This combination has left the country locked in what the organisation describes as a “low hire, low fire” environment that is fast becoming the “new normal.”
The findings are based on a CIPD survey of more than 2,000 businesses, painting a concerning picture of a labour market that has lost its dynamism and ability to absorb new workers.
Just three in five private sector employers, representing 57 per cent of those surveyed, plan to hire over the next three months, marking another joint low outside of pandemic conditions.
The net employment balance, which measures the difference between employers expecting headcount to rise versus those planning cuts, remains stuck at plus nine, near its lowest point outside of the pandemic.
Only a quarter of employers, 26 per cent, expect staffing levels to rise in the coming quarter, while 17 per cent are actively anticipating a decrease in their workforce.
“A stagnant labour market closes off routes into work for first-time jobseekers, blocks progression for existing employees, and erodes the talent pipeline organisations rely on to refresh skills and support innovation,” said James Cockett, CIPD’s senior labour market economist.
Despite the broader cooling in labour demand, 31 per cent of employers are still reporting hard-to-fill vacancies, highlighting persistent skills shortages in sectors including construction, healthcare, and social care.
The CIPD is now calling on Andy Burnham to reverse the hikes to employer national insurance contributions introduced by former Chancellor Rachel Reeves.
Cancelling the planned abolition of age-based wage levels would also help businesses create more entry-level roles, the HR trade body argued.
“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,” Cockett said.