UK Hiring Hits 2-Year Low Amid Wage Squeeze, Tax Fears

- Key indexes show contraction as 25% of firms plan redundancies. - Sectors like hospitality, retail, and care face rising wage pressures and narrow margins. UK hiring activity plunged in July to its steepest decline in two years, driven by rising costs, tax concerns, and weak business confidence. According to key reports, businesses are adopting cautious recruitment strategies amid mounting fiscal pressures and economic uncertainties. On August 10, 2025, KPMG and the Recruitment & Employment Confederation (REC) reported that the UK’s permanent placements index fell to 40. This figure represents a critical contraction point and one of the lowest levels in recent years. Permanent staffing volumes saw a "further steep decline" as fragile economic confidence and rising payroll costs weighed on hiring decisions. In the report, Jon Holt, group chief executive at KPMG, stated, “Ongoing geopolitical turbulence and the threat of rising costs, alongside the promise of technology efficiencies, mean companies continue to wait and see with their hiring.” The Chartered Institute of Personnel and Development (CIPD) echoed this cautious sentiment in its report, highlighting restrained hiring plans across industries. By August, only 57% of private sector firms intended to recruit over the next three months, down from 65% in autumn 2024. Additionally, one in four businesses anticipated making redundancies, especially in sectors such as hospitality and care, where shrinking profit margins amplify the strain from rising wage costs. Several factors are driving this slowdown. Employers are struggling with increased labour costs, especially after the April 2025 National Insurance contribution hikes. The CIPD report revealed that these changes caused 84% of organisations to experience rising employment expenses. Uncertainty over potential tax hikes in the upcoming autumn budget has also made businesses hesitant, and economists warn that these fiscal measures will likely undermine labour market stability. Furthermore, businesses are cautiously eyeing the anticipated Employment Rights Bill, weighing its potential compliance costs and operational impacts as they determine their hiring outlook. The slowdown has disproportionately affected lower-wage sectors like hospitality, retail, and social care. The KPMG/REC report noted ongoing hiring contractions in these industries, a trend that highlights their vulnerability to rising labour costs and limited financial buffers. Conversely, sectors like engineering appear to have maintained steadier hiring activity. However, official employment data paints a mixed picture. The Office for National Statistics (ONS) reported that the employment rate for March to May 2025 rose to 75.2%, an improvement over the same period last year. Despite this, the number of payrolled employees decreased by 135,000 between May 2024 and May 2025. Furthermore, July marked the 36th consecutive month of falling job vacancies. Economists remain skeptical of strong recovery claims, cautioning that ONS data may obscure broader stagnation in the labour market. According to CoinMarketCap, Ethereum (ETH) traded at $3,142 as of August 11, 2025, at 14:00 UTC, and its 24-hour trading volume fell 1.8%. Meanwhile, Bitcoin (BTC) traded at $34,585, a 0.5% increase over the same period.