Starting Salaries Stall as Recruitment Demand Falls

Starting salaries in the UK have slowed to their weakest growth rate since early 2021, reflecting a broader drop in demand for workers and a shifting post-pandemic labour market. According to new data from the Recruitment & Employment Confederation (REC) and the Chartered Institute of Personnel and Development (CIPD), wage growth for new hires has cooled sharply over the past quarter.

Vacancy growth has also stalled, with fewer employers actively looking for staff and more candidates competing for the same roles. The slowdown has been particularly marked in entry-level hiring, where competition is now intense and employers can afford to be more selective.

Sectoral Impact Hits Underrepresented Groups

The sectors most affected—retail, hospitality, and social care—are those that have historically employed large numbers of young people, women, and workers from ethnic minority and migrant backgrounds. With fewer jobs available, these groups risk facing higher barriers to entry, especially as rising living costs push more people to seek employment in already competitive industries.

The situation is creating a dual challenge: employers are hesitant to increase pay due to rising operational costs, while jobseekers are experiencing stagnant wages that fail to keep pace with inflation.

Why It Matters for Diversity and Inclusion

For organisations committed to diversity, equity, and inclusion (DEI), the risk is clear. When recruitment slows, employers may default to familiar hiring networks or processes that inadvertently exclude underrepresented candidates. DEI advocates stress that this is the moment to double down on inclusive hiring—ensuring that the slowdown doesn’t reverse hard-won gains in workplace representation.

Practical steps could include anonymising CVs to reduce unconscious bias, widening the geographic reach of job adverts, and working with community-based organisations to connect with talent from a broader range of backgrounds.

Looking Ahead

While some economists predict that the slowdown will ease if the economy stabilises in 2026, others warn that a prolonged period of low vacancy growth could have long-term consequences for workforce diversity. As one HR director told CIPD researchers:

“When things get tight, there’s always a temptation to hire safe and familiar. The challenge now is to resist that instinct and remember that innovation comes from difference.”