The CIPD’s quarterly Labour Market Outlook is one of the most authoritative employment indicators in the UK and provides forward-looking labour market data and analysis on employers’ recruitment, redundancy and pay intentions.

The LMO is published every February, May, August and November. Its insights help HR professionals and employers anticipate labour market movements and to adjust and prepare accordingly. It also feeds into our consultations and engagement with the UK Government and policy-makers.

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Labour Market Outlook – Winter 2025/26 

Low hiring intentions persist amid concerns over rising employment costs from Employment Rights Act

Our latest Labour Market Outlook finds that employer confidence remains subdued, with hiring intentions at historically low levels outside the pandemic. The net employment balance stands at +7 this quarter, while employment intentions in the public sector have fallen further to −11, meaning more employers expect staff numbers to decrease than increase over the next three months. 

Weak hiring intentions mean recruitment pressures remain limited. Just 15% of employers anticipate significant difficulties filling vacancies in the next six months. Meanwhile, the median expected basic pay increase remains steady at 3% across all sectors. 

However, employers are increasingly concerned about rising employment costs, with three-quarters expecting the Employment Rights Act to increase their costs, adding to pressures on recruitment and workforce planning. 

Download the full report to access in-depth data, sector-specific breakdowns, and expert analysis to inform your workforce planning and strategic decision-making.

Labour Market Outlook - Winter 2025/26

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Spring Net employment balance

Employer confidence remains low

The net employment balance (the difference between employers expecting staff levels to increase and those expecting them to decrease over the next three months) remains low this quarter at +7, indicating continued caution in recruitment across the economy.  

 

Net employment balance private/public

Staff decrease expected in the public sector

Employment intentions in the public sector have fallen further to −11 this quarter, meaning more employers expect staff numbers to decline than increase over the next three months. Public sector hiring intentions have now remained below zero for four consecutive quarters. 

 

Pay expectations remain even

Pay expectations remain even 

The median expected basic pay increase remains at 3% for the seventh consecutive quarter overall and across all sectors.

 

AI tools impact

Employment Rights Act expected to increase employer costs 

Three-quarters of employers expect the Employment Rights Act (ERA) to increase their employment costs, potentially influencing future hiring and workforce planning decisions. 

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