What businesses need to know from the latest labour market trends
The CIPD Labour Market Outlook – Summer 2025 provides crucial insights into the current state of the UK labour market, highlighting important trends and challenges that small and medium-sized enterprises (SMEs) need to be aware of. Below, I summarise the key findings from the report and suggest practical advice to help businesses navigate this ever evolving landscape.
Key Findings from the CIPD Labour Market Outlook – Summer 2025
- The report suggests that some employers are still struggling to fill vacancies, with skills shortages in sectors such as hospitality, healthcare, and technology.
- While wage growth seems to have stabilised, the rate remains above pre-pandemic levels, driven by competition for skilled workers and inflationary pressures. The challenge for businesses will be to balance attracting talent with managing payroll costs.
- There has been an increase in the adoption of flexible and hybrid working arrangements. Employees increasingly expect flexibility, and SMEs offering this are seeing improved recruitment and retention outcomes. Despite this, some organisations continue to mandate employees to return to the office.
- Employers are prioritising mental health and wellbeing, recognising its positive impact on productivity and morale. SMEs who can and are investing in wellbeing initiatives report higher employee engagement.
The numbers
- Only 57% of private sector employers plan to recruit in the next three months, down from 65% in autumn 2024—marking the lowest level outside the pandemic.
- 84% of UK employers report increased employment costs due to the April 2025 hike in National Insurance Contributions (NICs), alongside rises in the National Minimum and Living Wage
- Private sector recruitment intentions have dropped to 57%, the lowest level outside of the pandemic. This signals a cautious approach from employers amid rising costs and policy uncertainty.
Top 5 Tips for SMEs
- Review Your Recruitment Strategy: Consider widening your talent search by targeting underrepresented groups, utilising social media, or partnering with local colleges and training providers.
- Offer Flexible Working Options: Embrace hybrid, remote, or flexible hour arrangements to attract and retain employees who value work-life balance.
- Invest in Learning and Development: Upskilling your existing workforce can help address skills gaps and boost morale. Provide access to training, mentorship, and career progression opportunities.
- Prioritise Employee Wellbeing: Implement initiatives that support mental health, such as Employee Assistance Programmes, wellbeing days, or regular check-ins. A healthy workforce is a productive one.
- Benchmark Pay and Benefits: Stay competitive by regularly reviewing salaries and benefits packages against industry standards. Consider non-financial perks like additional leave or recognition schemes.
Finally, the labour market may appear to be tightening, but with the right strategies, employers can remain resilient and responsive. Seton HR Solutions is here to help you navigate these changes with confidence. Whether it’s refining your policies, preparing for legislative changes, leadership development or building a culture of innovation and accountability.
If you’d like to explore how these insights may apply to your organisation, please get in touch.
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