Payrolled Headcount Dips, Signalling Tougher Times for Recruiters
Recruitment professionals across the UK are facing increased headwinds as the latest labour market data for May 2025 shows a continuing decline in job creation and hiring activity. The number of payrolled employees fell by 47,000 (0.2%) between February and March, and is down 63,000 year-on-year, suggesting a slowdown in workforce expansion.
Over the first quarter of 2025, payrolled employee numbers slipped by 53,000 — a clear signal to recruiters that the hiring landscape is softening. Provisional figures for April are more sobering still, showing a further fall of 33,000, bringing total payrolled employment to 30.3 million, down 106,000 from the previous year.
Vacancies Sink Below Pre-Pandemic Levels
Perhaps most concerning for the recruitment sector is the continued decline in vacancies, now at 761,000 — 42,000 fewer than the previous quarter, and below early 2020 levels for the first time in four years. This marks the 34th consecutive quarterly drop, with 13 of 18 sectors seeing reductions.
For recruiters, this sustained decline means fewer open roles, more competition among candidates, and a tighter market for agency placements.
Stable Employment, But Job Switching May Slow
While the overall employment rate remained steady at 75.0%, and economic inactivity fell slightly to 21.4%, the unemployment rate ticked up to 4.5% — a potential early sign of redundancies or failed job transitions. Recruiters should monitor shifts in candidate sentiment, as more active jobseekers may enter the market, but opportunities narrow.
Wages Still Rising – But Real Growth Slows
Earnings growth remains robust, with regular pay up 5.6% and total pay up 5.5% year-on-year. However, when adjusted for inflation, real wage growth is easing: 1.8% for regular pay and 1.7% for total pay using CPIH.
This may lead to fewer counter-offers, slower salary negotiations, and greater budget constraints for employers — all relevant trends for recruiters advising clients on competitive hiring strategies.
What Recruiters Need to Know Now
With labour market volatility, updated LFS methodology, and data quality challenges, interpreting trends requires care. However, the message is clear: job volumes are down, caution is rising, and adaptability is key for recruiters navigating 2025.
Recruitment firms should double down on client retention, diversify sector focus, and enhance candidate engagement strategies to weather what may be a more cautious hiring climate ahead.
Vacancies and jobs in the UK: May 2025
- The estimated number of vacancies in the UK fell by 42,000, or 5.3%, on the quarter, to 761,000 in February to April 2025, which was the 34th consecutive quarterly decline.
- Total estimated vacancies were down by 131,000, or 14.7%, in February to April 2025 from the level of a year ago, and 34,000 (4.3%) below their pre-coronavirus (COVID-19) January to March 2020 level.
- The number of unemployed people per vacancy was 2.1 in January to March 2025, up from 1.9 in the previous quarter (October to December 2024).
Office for National Statistics (ONS), released 13 May 2025, ONS website, statistical bulletin: Labour market overview, UK: May 2025
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