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UK jobs market shows modest rise in new postings as tax pressures weigh

by June 20, 2025
June 20, 2025
UK jobs market shows modest rise in new postings as tax pressures weigh

The UK jobs market posted a modest rise in new job adverts last month, suggesting early signs of resilience despite economic headwinds and growing pressure on employers from tax increases.

According to new data from the Recruitment and Employment Confederation (REC), the number of new job adverts rose by 0.3 per cent in May to 726,084, a small uptick that follows a prolonged slowdown in hiring. However, the total number of active job postings fell by 1.8 per cent to 1.44 million, underlining the market’s sluggish pace.

Neil Carberry, chief executive of the REC, said the labour market is “more stuck than going backwards”, noting that the slow growth in postings marks a second consecutive month of slight improvement, rather than a sign of deeper contraction.

“Despite the headwinds of tax rises and lower growth there seems to be some resilience,” Carberry said. “After a long jobs market slowdown, a second month of weak growth in new postings is a sign more of hope than concern.”

The tentative recovery comes against a backdrop of rising employer costs. A recent hike in national employment contributions and new government policies that will expand employee rights — including enhanced sick pay, maternity protections and unfair dismissal safeguards — have prompted employers to review hiring plans.

The government’s move to raise £25 billion in extra revenue through employment taxes has compounded the strain on a labour market already affected by over 15 months of declining vacancies.

Recent figures from HM Revenue and Customs show the number of payroll employees fell by 109,000 in May, the steepest decline since the early days of the Covid-19 pandemic. The unemployment rate rose to 4.6 per cent in the latest quarter, the highest since 2021, according to the Office for National Statistics.

Despite these warning signs, Carberry struck a cautiously optimistic tone.

“While the global growth picture is weaker than anyone would like, the UK is relatively well-positioned to take advantage of what opportunities there are,” he said. “We are past the interest rate peak, the UK looks good value by comparison to the US, has banked progress on trade deals, and has a stable legal and political picture for the next few years.”

The jobs data follows a string of mixed economic signals. While GDP growth slowed in April, there are tentative signs of improving consumer confidence and softer inflation, which could lead to lower interest rates later in the year. However, rising business costs and ongoing uncertainty about global demand continue to weigh heavily on the hiring outlook.

Recruiters say the coming months will be critical in determining whether the recent uptick in postings develops into a sustained recovery or stalls under the weight of policy and macroeconomic pressures. For now, employers appear cautious but not retreating — and that, say experts, may be the best the market can hope for in the short term.

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UK jobs market shows modest rise in new postings as tax pressures weigh

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