The UK's employment landscape has shown signs of a significant slowdown over the last 12 months according to the inaugural global Annual Jobs Report from Employment Hero, an HR, payroll and recruitment software solutions provider.
As of July 2025, while the employment rate remains positive on a year-on-year (YoY) basis, standing at 3.1%, this growth rate has decelerated markedly. This indicates a weakening labour market compared to the same period in 2024, when the YoY growth rate was consistently hovering around 8%. This slowdown coincides with the National Insurance reforms introduced in April.
The UK 2025 data is drawn from aggregated insights from more than 350,000 small businesses and 2 million employees in Australia, New Zealand, and the UK, alongside a YouGov survey of 3,635 workers.
In the UK, year-on-year gains are down and new job opportunities are only just picking up. In this weaker labour market, employees are holding onto their roles and 'job-hugging' is on the rise. The report also found that more than half of workers (55%) are now prioritising job security, putting their ambitions on hold while they await signs of sustained labour market growth and improved business confidence. This rises to 65% among 18–34-year-olds.
The research data also reveals that six out of 10 employees (59%) think that the UK labour market is getting worse, while half (51%) would not feel confident about being able to find a new job within three months. This reflects wider sentiment around the intensely competitive nature of the labour market – four out of 10 (40%) feel there is too much competition for jobs, increasing to 53% among 18–34-year-olds.
"While the labour market is showing early signs of recovery, our data shows we've still got a long way to go before workers feel confident again," said Kevin Fitzgerald, UK Managing Director at Employment Hero. "With most people holding a negative view of the jobs market, it's no surprise we're seeing more 'job hugging' as employees look to weather the storm. But this isn't a long-term solution. Job mobility is key for growth - both for people and businesses.
"Recent changes to the tax regime have also knocked confidence," he added. "The rise in employer National Insurance Contributions has had a ripple effect right across the economy, and we're now at a critical juncture. As we head towards the Autumn Budget, avoiding more tax changes that trigger knee-jerk reactions from businesses will be vital if we want to build on the early signs of recovery."
