Michael Stull, Managing Director at ManpowerGroup UK
“Today’s ONS labour market report confirms what many UK businesses are already feeling: mounting pressure to do more with less. PAYE numbers show the number of payrolled employees is continuing to decline falling by 55,000 between March and April and 115,000 over the year; unemployment has risen since the last quarter now at 4.6% and economic inactivity remains elevated but has seen a drop to 21.3% since the last quarter — all while employers face the squeeze of rising wage bills, National Insurance hikes, and ongoing global trade and geopolitical disruption.
“The latest ManpowerGroup Employment Outlook has dropped to +19% — a sharp 12-point fall (the sharpest fall since Q2/Q3 2020 of -17%) — but this is not a collapse. It’s a measured reset. Employers are pausing to protect productivity, not abandoning growth altogether. Double the number of employers on last quarter are struggling with economic uncertainty, 64% naming this as their top concern. Businesses have to balance controlling costs while investing in the future. It would appear that managing headcounts are an easy way to keep costs low and find the room to invest in tech.
“The sectors most impacted are communications and marketing, often the first budgets to be impacted in times of trouble with the dual impact of increased use of AI impacting hiring decisions; industrials & energy are slowing with production slowdowns and feeling the impact of trade tariff uncertainty more than any other sector; finally, public sector spending is being cut and with that hiring will be impacted but this shouldn’t come as a surprise to the market.
“We’re seeing a pivot in the market. Employers are leaning into temporary hiring – a flexible lower risk route as they test demand and control costs as well as the challenge of persistent attrition and disengagement, which are quietly draining productivity.”
REC Chief Executive Neil Carberry said:
“These figures remind us of the old adage that the jobs market shadows the economy, a few months behind. A tough winter, as firms struggled to grow was compounded by increases in NI, the tax on jobs. More recent employer surveys are somewhat more hopeful, but these figures emphasise again the need for the government to support businesses through a truly effective industrial strategy. Making sure that unnecessary additional burdens on hiring are removed from the Employment Rights Bill will be vital, especially as today’s numbers suggest more workers who were previously inactive are trying to return to work.”