The construction industry saw a large dip in job vacancies this quarter.
Recent labour market data points to a slowdown in UK recruitment activity as employers adapt to shifting economic conditions.
The Office for National Statistics (ONS) reports notable declines in vacancies and payrolled employees. Meanwhile, the composition of employment is shifting, with increases in part-time roles and multiple job holding.
Rather than making cuts, the data suggests many businesses are instead taking a measured approach to recruitment, prioritising financial resilience and flexibility.
“Today’s figures indicate declining employer demand for labour in the UK job market,” says Alex Hall-Chen, Principal Policy Advisor for Employment at the Institute of Directors.
“The business case for hiring has been weakened by a perfect storm of last month’s increased employer National Insurance contributions and above-inflation increases to the minimum wage, alongside a wave of measures in the Employment Rights Bill.”
The four graphs below reveal how hiring behaviour is shifting, and what it could mean for business decisions in the months ahead.
Vacancies continue to fall across sectors
Between February and April 2025, the number of UK job vacancies dropped to 761,000 – the lowest since before the COVID-19 pandemic. This marks the 34th consecutive quarter of decline.
The fall in vacancies was not evenly distributed across industries. Construction saw the largest percentage drop this quarter at 26.7%, while manufacturing also declined significantly, losing 9000 vacancies.
The only sector to record a year-on-year increase was water supply, sewerage, waste and remediation, which added 1000 vacancies (up 9.7%).
The unemployment-to-vacancy ratio also increased from 1.9 to 2.1 over the latest quarter, suggesting more jobseekers are competing for fewer positions.
This may well prompt conversations with clients about how best to manage workforce needs without compromising on resilience.
A downward trend in payrolled employment
Early estimates for April 2025 suggest the number of payrolled employees decreased by 33,000 during the month. Compared with April 2024, payroll numbers were down by 106,000 – a change of 0.3%.
For businesses and particularly for SMEs, the reduction in payrolled employees may reflect defensive cost-cutting.
For accountants, it signals a shift in how clients may approach workforce planning. Rather than expanding, many are looking to consolidate or delay recruitment altogether.
Employment rates stall despite rising wages
Despite a 5.6% growth in regular earnings, the UK employment rate held flat at 75.0% in the first quarter of 2025. Meanwhile, unemployment edged up to 4.5%, indicating that wage pressures have not translated into increased hiring.
The nature of employment is also evolving. Part-time roles are on the rise, and the number of people holding second jobs has risen to 1.317 million, or 3.9% of those in employment – the highest rate in over a decade.
For advisers in finance and accounting, this means workforce planning is no longer just a headcount discussion. Understanding how employment models affect cost, compliance and productivity is becoming an increasingly strategic part of business support.
What this means for accountants
For accountants supporting clients across affected sectors, these trends point to a new phase of workforce planning.
Rising costs including payroll taxes, minimum wage adjustments and compliance obligations are prompting employers to reassess long-held workforce strategies.
This creates opportunities for accountants to offer advisory support in budgeting, scenario modelling and employment cost analysis.
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