April 2025 UK Labour Market Report: Cautious Hiring Amid Global Economic Pressures

Stay informed with the latest insights into the UK employment landscape from KPMG and REC ‘UK Report on Jobs’, featuring analysis from leading recruitment consultancies, like Redline Group. This authoritative monthly report offers an in-depth analysis of labour market trends influencing hiring decisions across the UK.

The April 2025 findings reveal a job market shaped by caution and complexity as employers navigate both domestic challenges and global uncertainty.

Key Highlights from the April 2025 Report

• Hiring Activity: Permanent staff appointments continue to decline across most sectors, marking more than two and a half years of contraction. Temporary and contract roles also recorded modest reductions, highlighting ongoing challenges in both short-term and long-term hiring.
• Rising Staff Availability: For the first time in over four years, there has been a sharp increase in candidate availability for both permanent and temporary roles. This shift is driven by redundancies and a slowdown in job creation, resulting in a growing talent pool.
• Vacancy Trends and Wage Dynamics: While job vacancies are declining at a slower pace, salary growth remains subdued compared to historical averages. Permanent starting salaries showed slight upward momentum, while contract and temporary pay rates have risen more notably, suggesting increased competition for skilled contractors, particularly in electronics, software/systems, and engineering sectors.
• Regional and Sectoral Variations: The report highlights differing regional trends. London reported a slight rise in permanent hiring, in contrast to steeper declines seen in other parts of the UK. Sector-specific performance also varies, with engineering and high-tech sectors remaining resilient.

Expert Commentary: Navigating a Shifting Labour Market

Jon Holt, Group Chief Executive and UK Senior Partner at KPMG, commented on the volatile market dynamics:

“At a time when global uncertainty is peaking and businesses are assessing the impact of market volatility alongside rising employment costs, the latest data demonstrates how the economic reality continues to weigh heavy on the labour market. With cost management a focus, those employers who are hiring are focused on securing the best talent, and while the rate of pay inflation has improved from last month’s four-year low, growth in starting salaries remains below the historic average.
Recent global events have put pressure on any growth prospects in the UK, so it is unlikely that we will see an improvement in the data in the near term. Therefore, redoubling employee engagement programmes and maintaining morale for existing employees, who will also be concerned about uncertainty in the market, will ensure that businesses are ready to take advantage of any green shoots when they do appear.”

Neil Carberry, REC Chief Executive, added further context on the nuanced market scenario:

“Today’s report shows that there were some signs of progress in the jobs market in March with permanent hiring in London ticking up a little, while the drops in other locations were not as sharp as those seen at the start of the year. The decline in contract/temporary billings at the UK-level also moderated. Given the substantial effects of the Government’s decision to increase payroll taxes hugely, these figures were if anything slightly better than expected and suggest that there is potential in the market. Nevertheless, activity in the UK jobs market has now been subdued for almost two and a half years.

A cyclical hiring upturn was always likely in 2025, but the near-term prospects for this have been made more uncertain by the actions of the US Government in upending the global trade system. We cannot ignore the immediate and second-order effects of this context even if the UK is better positioned than many nations to weather the storm. Announcing support for the auto sector is one thing but the faster we have clarity on how the industrial strategy will support all sectors the more likely employer sentiment on hiring and investing will remain stable. And it is even more important now that the Government reconsiders the scale of rising costs of employment after this week’s rise in National Insurance—a full review of the impact of the Employment Rights Bill, and changes to simplify compliance costs, would be welcomed by businesses across the country.”

UK Labour Market Statistics – April 2025

• Vacancies: 816,000 job openings were reported between December and February 2025 – down by 100,000 year-on-year, though still 2.5% above pre-pandemic levels.
• Inflation: The Consumer Price Index (CPI) rose by 2.8% in the 12 months to February 2025. The Bank of England forecasts inflation to reach 3.7% by Q3 before easing to 2.0% by Q4 2027.

In-Demand Skills and Sector Focus

Engineering & Technology Shortages

High-demand permanent and contract roles include: