Latest UK labour market data highlights need for clearer guidance on employment reforms

CIPD data – widely reported by the UK media today – shows that UK employers are facing rising costs, global uncertainty and record-low hiring confidence. We outline what the UK government must do in response – and how people professionals, with the CIPD’s support, can help businesses adapt and thrive.  

 
People professionals will be a vital support to businesses 

The latest CIPD Labour Market Outlook reveals that employer confidence has fallen to its lowest point on record outside the pandemic. People professionals have a key role to play in helping organisations plan and build resilience, and we offer practical guidance for those navigating these challenges.  

How the UK Government can support businesses anticipating the Employment Rights Bill 

As organisations navigate economic headwinds, they are also preparing for significant regulatory change. The Employment Rights Bill is landing at a time of heightened costs and caution. Many employers are hesitant to invest without further clarity. 

We’re calling on the government to work closely with employers – especially small and medium enterprises (SMEs) – to ensure the Bill is implemented in a way that supports business growth and good work. A clear, phased rollout plan with practical guidance will help reduce uncertainty and allow employers to adapt. 

With the right people strategies, businesses can still thrive amidst challenges  

The fall in the net employment balance signals employers' growing caution. With hiring slowing, people professionals have a real opportunity to show their value – by taking a longer-term view and aligning people practices with business strategy.  
 
As a minimum, people teams should be monitoring workloads, developing skills and supporting flexibility – to empower their existing workforces to do their best work and drive business outcomes.  And the CIPD’s practical tools, research and guidance are here to help people professionals to find solutions that work for both people and business during tough times. 

 
Vacancies remain hard to fill, but inclusive hiring strategies could help 

Although fewer employers plan to recruit, hard-to-fill vacancies remain widespread. Overall, 33% of employers report difficulties, rising to 44% in the public sector. 

To address these challenges, organisations should reassess their employee value proposition and adopt inclusive, flexible hiring practices that widen access to talent. 

Short-term cuts and knee-jerk reactions could risk long-term setbacks 

One in four employers expect to make redundancies in the next three months. Growing concerns around the Employment Rights Bill are understandably adding to this cautious outlook, but we recommend avoiding short-term cuts where possible.  

Enhanced redundancy packages can protect wellbeing and trust 

50% of employers who made redundancies over the past year offered enhanced packages beyond the legal minimum. 

Fair and responsible redundancy practices support those affected while also reinforcing trust with remaining staff and protecting organisational reputation. 

Reskilling and upskilling will keep people engaged and future-ready 

In a tight operating environment, reskilling and upskilling are essential to sustain productivity, engagement and retention. 

People professionals can help their organisations build future-ready workforces by investing in learning, digital tools and adaptability - particularly as wider economic and geopolitical challenges continue to evolve. 

Read the full Labour Market Outlook Spring 2025 report for comprehensive data and guidance to support your workforce strategy.