The UK labour market is experiencing a major shift as new data reveals the biggest rise in job seekers since December 2020. Figures released by the Recruitment and Employment Confederation (REC) and KPMG show a sharp increase in candidate availability during March 2025, driven by business restructuring, layoffs and a general slowdown in permanent hiring.
Permanent job placements have now been declining for more than two years, though the pace of that decline has eased slightly in recent months. Staff availability — particularly for permanent roles — is rising at its fastest rate in over three years, while temporary wage growth has reached a three-month high. In contrast, pay growth for permanent jobs has remained modest, reflecting continued caution among employers.
The Office for National Statistics (ONS) reported a redundancy rate of 4.2 per 1,000 employees between November 2024 and January 2025, one of the highest levels seen since the pandemic. With businesses still navigating inflationary pressures, rising payroll taxes, and international supply chain challenges, many have paused long-term hiring plans.
Despite this, some sectors continue to hire. The healthcare, logistics and hospitality industries are all reporting skills shortages, particularly in frontline roles. Employers in these sectors are seeking candidates with practical experience, digital skills, or sector-specific training, even as they adapt to budget constraints.
Recruitment firms say job seekers are facing growing competition, especially for administrative and entry-level roles. However, opportunities remain for those able to demonstrate adaptability and relevant skill sets. Agencies are encouraging candidates to broaden their job searches and take advantage of upskilling programmes and government-funded training schemes.
There are growing concerns that the downturn is disproportionately affecting certain groups. Early findings suggest that disabled job seekers, younger workers and those from racially diverse backgrounds are bearing the brunt of hiring freezes and redundancies. Organisations such as Business in the Community are calling for inclusive hiring strategies to prevent existing inequalities from worsening.
Employers, too, are making changes. Some are reviewing their talent pipelines, exploring flexible contracts, and enhancing employee value propositions in order to remain attractive to skilled workers. Others are expanding apprenticeship and return-to-work programmes to widen access to job opportunities.
The REC has urged the government to take action, recommending new incentives for employers who hire from underrepresented groups, and targeted investment in training, particularly for regions with high unemployment. Chief Executive Neil Carberry said: “This is a crucial moment to support inclusive economic recovery. Employers want to hire — but they need the right conditions to do so.”
Looking ahead, analysts believe the second half of 2025 could bring improvement. If inflation continues to ease and interest rates remain stable, confidence among employers may rise. Recruitment activity is expected to pick up first in professional services, health and social care, and infrastructure-linked sectors.
While the rise in job seekers reflects short-term economic pressures, it also presents an opportunity to rethink hiring practices, close skill gaps, and build a workforce that is more inclusive and resilient. For that to happen, coordinated action from government, business and educators will be essential.
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