HR in Transition: The UK Job Market Outlook 2025
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, business leaders and those working in human resources. This brings both challenges and opportunities, from workforce planning to talent acquisition.
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 after a career break, creating more competition for HR jobs and other people-focused roles.. Wage growth has slowed slightly, and employers across most sectors are thinking twice before committing to permanent headcount increases.
What’s Driving the Shift?
A few big factors are driving this shift. 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 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 a limited impact on hiring behaviour.
According to the Office for National Statistics (ONS) in August 2025, vacancies have been in steady decline, falling by nearly 44,000 over the spring, the 37th straight quarterly drop. However, pay growth has remained stubbornly strong, averaging around 5%, still well above levels in much of Europe. It means employers are hiring less, but still paying for talent where it really matters.
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, particularly for experienced HR business partners, HR directors, and interim HR leaders who can step in during restructuring and change. Employers want senior HR leaders who can steady the ship, manage uncertainty and help keep their people engaged. 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. This might involve enhancing employee experience, managing hybrid workforces, or navigating upcoming regulatory changes, such as the Employment Rights Bill 2024 and other anticipated employment law changes in 2025.
There’s also a growing need for HR professionals with strong digital capabilities. AI tools, HR systems, and data platforms are transforming the delivery of recruitment, performance management, employee engagement and employee retention. HR professionals who can work with these technologies – or at least understand their impact – will be better placed to thrive.
Hybrid work isn’t going anywhere; it’s now the baseline. According to CV Genuis, In 2025, 43% of the UK workforce works hybrid or entirely remotely, and two-thirds say they’d consider quitting if asked to go back to the office full-time. That means HR teams must focus on creating an employee experience that feels fair, flexible, and meaningful.
What Now?
If you’re working in HR or hiring for people roles, here are some things to consider:
- Stay flexible: Interim HR roles and part-time HR support 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 most significant 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 demonstrating how HR can support business outcomes, especially during challenging times.
If you’d like more details on salary trends, regional variations, or how SMEs can strengthen their HR capabilities, from executive coaching to outplacement services, in this climate, please don’t hesitate to ask. You can contact me at candice.thompson@hunteradams.co.uk. Let’s chat about what’s happening in your business.
*Figures from the Office of National Statistics – https://www.ons.gov.uk/
This article is by Candice Thompson, Head of Recruitment at Hunter Adams.
