The UK job market has started to shift. After several years of post-COVID bounce-back and labour shortages, we’re now seeing signs of a clear cooling. For HR professionals and employers, that brings both challenges and opportunities.
A Labour Market Losing Momentum
Unemployment has crept up to 4.6%* – the highest in four years. According to the latest figures from the ONS, the number of vacancies has dropped for the 13th consecutive month, now sitting around 736,000*. That’s a significant fall compared to where we were this time last year.
More people are entering the job market – whether due to redundancies or returning to work – and businesses are hiring more cautiously. Wage growth has slowed slightly, and employers across most sectors are thinking twice before committing to permanent headcount increases.
What’s Driving the Shift?
Several factors are at play. The increased cost of employment – from National Insurance changes to a higher minimum wage – is putting pressure on business budgets. Many are holding off on hiring unless it’s absolutely essential.
At the same time, economic growth is stalling. With the economy contracting over the past couple of months, confidence has taken a hit. The Bank of England has hinted at interest rate cuts, but so far it’s had limited impact on hiring behaviour.
The Impact on HR Roles
HR is not immune to these trends. There’s been a noticeable drop in demand for junior HR professionals. Entry-level roles, in particular, appear to be down significantly, and graduates or those early in their HR careers are finding fewer opportunities.
That said, there is still demand at the senior end of the market. Businesses are looking for strategic HR leaders who can guide them through uncertainty, manage change effectively, and help retain their existing workforce.
In some areas, particularly the public sector, we’re also seeing restructuring. The UK government, for example, is cutting traditional HR roles in favour of hiring more data and digital specialists as part of its transformation plans.
HR in Transition
Despite a softer job market, HR still plays a vital role – and in some ways, an even more important one. As organisations try to do more with less, they need HR teams who can deliver real value. That might mean improving employee experience, managing hybrid workforces, or navigating upcoming regulatory changes like the new Employment Rights Bill.
There’s also a growing need for HR professionals with strong digital capabilities. AI tools and data platforms are reshaping how recruitment, performance management and employee engagement are delivered. HR professionals who can work with these technologies – or at least understand their impact – will be better placed to thrive.
What Now?
If you’re working in HR or hiring for people roles, here are some things to consider:
- Be flexible: Interim and part-time HR roles remain active, especially in SMEs or growing businesses.
- Upskill: Whether it’s tech, data, or employment law, adding new strings to your bow will help you stand out.
- Think strategically: HR needs to be more than operational – focus on where you can have the biggest impact on productivity, engagement and retention.
- Support growth, even in a downturn: HR can play a big role in helping organisations scale sustainably by developing internal talent and strengthening culture.
Final Thoughts
The UK jobs market is clearly cooling, and HR isn’t exempt from that. But while junior roles are fewer and hiring is more selective, strategic HR professionals are still in demand. The key is adaptability – staying sharp, staying relevant, and showing how HR can support business outcomes, especially when times are tough.
If you’d like more detail on salary trends, regional variations, or how SMEs can strengthen their HR capability in this climate, please just ask away. You can contact me at candice.thompson@hunteradams.co.uk
*Figures from the Office of National Statistics – https://www.ons.gov.uk/
This article is by Candice Thompson, Head of Recruitment at Hunter Adams.
