A surge in redundancy intentions has raised red flags about the state of employer confidence in early 2025, with experts pointing to economic pressures that are squeezing workforce stability across the UK.
New data from the Chartered Institute of Personnel and Development (CIPD) reveals that a quarter of UK employers are planning redundancies between January and March 2025—up from 21% in the previous quarter and the highest figure recorded outside of the pandemic.
This increase is being driven by several factors, most notably rising labour costs. The National Living Wage is set to rise to £12.21 in April, while changes to National Insurance contributions are expected to further increase employer overheads. According to the CIPD’s Labour Market Outlook, 90% of businesses expect their employment costs to rise this year, and nearly half (43%) predict a significant impact.
“Employers are having to make difficult decisions in the face of cost increases,” said Jon Boys, Senior Labour Market Economist at the CIPD. “For some, this means reviewing workforce size and structure, which explains the rise in redundancy intentions.”
Organisations in lower-margin sectors such as retail, hospitality, and logistics are particularly exposed. Many report scaling back recruitment plans, with only 39% of employers planning to grow their workforce this quarter—down sharply from 48% six months ago.
At the same time, there are signs that some employers are pausing or reducing investment in training and development. The CIPD notes that 19% of employers have already taken steps to cut training budgets, a move that could limit career development opportunities and impact retention.
Diversity and inclusion advocates warn that redundancy plans must be handled with fairness and accountability. “Marginalised groups are often first to feel the impact of job cuts,” said a spokesperson from the Diversity and Inclusion Research Centre. “We encourage employers to use inclusive decision-making frameworks and to offer redeployment options where possible.”
The CIPD is calling for government action to support employers, including targeted tax incentives for workforce development and greater investment in training schemes, especially for SMEs. It is also urging policymakers to strengthen protections for workers and to ensure redundancies are a last resort.
For workers, the climate is undeniably tough. HR professionals caution that multiple rounds of layoffs can impact morale and productivity. Employers are advised to communicate openly with staff, explore flexible work arrangements, and retain talent through strategic workforce planning.
While some industries face a more difficult road ahead, others—particularly in green technology, healthcare, and professional services—continue to hire. The challenge is matching those opportunities with the right talent and ensuring that economic turbulence doesn’t undo progress made in equity and workforce development.