The number of UK employers expecting to increase headcounts in the next quarter has fallen to the lowest point outside of the pandemic, the CIPD has found. Amid rising employment costs and global economic uncertainty, retail is now one of the fastest declining sectors for employment opportunities, its data suggests.

Pandemic-era lows for UK job prospects

Original research of over 2,000 employers in the CIPD’s Labour Market Outlook report showed that the UK’s overall Net Employment Balance (NEB) fell from +13 last quarter to +8 this quarter.

This -5 index point drop to the UK’s overall NEB, which measures the difference between employers expecting to increase staffing and those planning headcount level cuts in the next quarter, is now at a record low outside of the pandemic.

“From April, employers across the UK have begun to feel the full effect of increases to National Insurance Contributions (NICs) and the National Living Wage (NLW) outlined in last year’s Budget,” James Cockett, Senior Labour Market Economist at the CIPD, said.

Retail fastest declining sector for hiring opportunities

Retail was the fastest declining sector for job opportunities, with NEB falling from +23 in Autumn 2024 to –19 this quarter, a -42 index point decrease in just six months. This also follows a quarter-on-quarter dip, down -20 index points from Winter 2024, when the retail NEB score fell to +1.

Now, just one in ten (11%) retail employers plan to increase staffing levels in the next quarter, with three in ten (30%) expecting a reduction in headcount levels.

“Employer confidence is low, which is being reflected in their hiring plans,” Cockett added.

Post-Budget wage cost pressures start to bite

In April, research from Retail Economics and YOOBIC found that UK retailers face a £5.6billion surge in costs this financial year – equivalent to 195,000 full-time retail jobs – as the impact of the Autumn Budget starts to bite. This £5.6billion rise in costs is being driven by changes in retail business rates relief, higher minimum wages and NLW as well as increases to NICs.

Separate research from WorkJam, which polled 100 retailers at Retail Technology Show, showed post-Budget pressures were already starting to impact retail employment plans. Over half (53%) of the retailers it polled said they have already frozen recruitment due to government budget pressures, while 60% expect to make redundancies within the next six months.