Despite a slight decline in job confidence across the UK, experts say it reflects a stabilisation to pre-pandemic levels rather than a looming crisis.
Specialist recruitment firm Robert Half’s latest Jobs Confidence Index, developed in collaboration with the Centre for Economics and Business Research, indicates a drop to its lowest point since Q1 2023.
However, all four confidence pillars — job security, pay, progression and macroeconomic confidence — remain positive, with over half (54.8%) of employees expressing confidence in their job security despite current economic conditions.
Employer Strategies in a Competitive Hiring Landscape
A separate Robert Half survey reveals that 82% of businesses intend to make professional hires in the first half of 2025, encompassing permanent, contract and project-based roles. This sustained demand shows a need for employers to present compelling offers to attract skilled talent. While salaries continue to be the primary motivator for career moves (43%), benefits (28%) and opportunities for career progression (25%) are increasingly influential factors.
Matt Weston, senior managing director UK & Ireland at Robert Half, said the labour market was undergoing a period of adjustment, yet workers maintained optimism. He said hiring conditions had stabilised and wage growth remained positive; and he cautioned employers to adapt to evolving workforce expectations to attract top talent.
“We can’t overlook the fact that there are still opportunities out there for job seekers and they are looking for far more from a role than just remuneration,” said Weston. “Employers willing to adapt to evolving workforce expectations will be the ones able to attract the best talent.”
He said “professionals are clearly prioritising their career development – in fact the level of those looking for a new job to support this is increasing. Businesses have to be aware of the mindset of the workforce, because in a skills short market top talent is still in the driving seat.”
Weston added that the “current environment rewards employers who offer strong benefits packages, professional development opportunities and a compelling work culture”, but that for companies, it was “a moment to build resilience, enhance employer branding and refine recruitment strategies. Those that don’t act now risk falling behind when it’s time to scale up recruitment”.
Economic Indicators and Their Implications
Recent data indicates that UK average earnings, excluding bonuses, rose by 5.9% between November 2024 and January 2025 compared to the previous year, translating to a 3.2% increase when adjusted for inflation. However, upcoming tax hikes, including higher National Insurance contributions for businesses starting April 1, may offset these gains, potentially leading to increased consumer costs and job cuts.
Additionally, the inflation rate rose to 3% in January, surpassing the Bank of England’s 2% target, with expectations of peaking at 3.7% this year due to rising costs in energy, water and transportation. Unemployment rates have remained steady at 4.4%, with overall employment showing minimal growth. Employers are reportedly scaling back hiring and pay rises in preparation for higher taxes and costs.
In response to these economic challenges, the Bank of England has maintained interest rates at 4.5%, citing global uncertainty and stable inflation expectations despite slightly slowing economic growth. This decision reflects concerns about inflation risks and trade conflicts, with policymakers adopting a cautious approach to future rate adjustments. Market predictions now suggest that the next rate cut might not occur until August.
Technological Investments Influencing Employment Strategies
Facing increased employment costs due to higher National Insurance contributions, over half (51%) of UK business leaders plan to prioritise investment in artificial intelligence (AI) over hiring. This shift aims to boost productivity and manage rising expenses.
The Labour government’s proposed workers’ rights reforms are expected to further increase employer costs, causing 57% of executives to consider reducing hiring in 2025. This trend reflects a broader move towards technological solutions in response to economic pressures.
Financial Times
Outlook for the UK Job Market
To navigate this competitive landscape, observers say organisations must invest in employee experience, refine hiring strategies embrace AI, adapt to hybrid work models and remain competitive. By understanding key challenges and opportunities, businesses can position themselves for success in the evolving UK job market.
While worker confidence has experienced a slight decline, the stabilisation reflects a return to pre-pandemic norms rather than a crisis. Employers must adapt to changing workforce expectations, economic pressures and technological advancements to attract and retain top talent in 2025 and beyond.