Adecco Labour Market Outlook

Introducing Our 2025 Labour Market Outlook

As we move through 2025, the UK economy presents a mixed picture, navigating the ongoing impact of preceding turbulence. The first half of 2024 saw a return to growth, driven by improved market conditions and increased business confidence. However, the latter half of the year was less positive, as businesses faced the dual challenges of low growth and economic uncertainty in Q3, and the subsequent financial headwinds outlined in the Autumn Budget. Concerns around rising business costs, particularly National Insurance contributions (NICs) and national minimum wage increases, have added to the complexity of workforce planning for the year ahead.

Yet, despite these hurdles, many key economic indicators remain positive. Inflation has returned close to the Bank of England’s target, unemployment remains low, and GDP is projected to grow by 2.0% in 2025, according to the latest outlook from the Office for Budget Responsibility (OBR). These signs of stability provide businesses with an opportunity to plan ahead with greater confidence, even in the face of ongoing uncertainty.

Labour Market Trends: A Cooling Yet Stabilising Landscape

One of the most significant labour market trends we are witnessing is a gradual cooling. Vacancy levels have steadily declined since the peak in 2022 and are now consistent with those last seen in 2019. Many employers, wary of economic fluctuations, have paused or slowed hiring, creating a more measured recruitment environment.

At the same time, staff availability is on the rise, easing some of the talent shortages that have characterised recent years. The latest data from the REC’s Report on Jobs suggests that total staff availability rose sharply since June, particularly for permanent workers. This marks a shift away from the previously candidate-driven market, where job seekers had the upper hand in negotiations. However, this does not mean an end to competition for talent – highly skilled and niche roles remain challenging to fill, as talent scarcity continues to impact critical demand roles and key sectors.

Changing Candidate Sentiment: The Rise of ‘The Great Stay’

Candidate behaviour is also shifting. With fresh economic turbulence in their minds, more professionals are prioritising long-term job stability over frequent career moves. Our latest Global Workforce of the Future Survey found that 41% of UK respondents cited job security as their top concern, second only to pay. This change has contributed to what we’re calling ‘The Great Stay’ – a trend where employees opt to remain in their current roles rather than actively seeking new opportunities.

This shift has far-reaching implications for employers. Retention strategies are becoming just as important as attraction strategies, with businesses needing to invest in employee engagement, career development, and meaningful workplace experiences to maintain a strong, committed workforce. Simply offering a competitive salary may no longer be enough – companies must create environments where employees see long-term growth and stability. This marks an opportune time for businesses to invest in their learning and development strategies to enhance overall workforce retention, productivity and succession planning for the years ahead.

Looking Ahead: Business Planning and Workforce Strategy for 2025

Despite some lingering challenges, the outlook for 2025 is positive. Employment is expected to grow by 240,000 net new jobs across the year. Businesses that take a proactive approach to workforce planning will be well-positioned to capitalise on the greater availability of candidates.

The start of the year is a good time for organisations to reassess priorities, refine talent acquisition strategies, and align workforce needs with business goals.

To help businesses navigate this evolving landscape, our 2025 Labour Market Outlook offers a comprehensive analysis of:

• The current state of the UK labour market and economic projections
• Sector-specific hiring trends and workforce challenges
• Regional employment patterns and talent availability
• Policy insights, including how Labour government priorities could shape the labour market in the months and years ahead

Understanding these dynamics will be key to making informed decisions, securing top talent, and driving sustainable growth in 2025 and beyond.

Gain the Insights You Need

Download our 2025 Labour Market Outlook today and equip your business with the insights needed to stay ahead of the curve. Whether you’re looking to refine your hiring strategy, improve retention, or better understand the broader economic landscape, this report will provide the clarity and direction you need for the year ahead.

Download Now and take the next step towards building a resilient, future-ready workforce.