{"ok":true,"article":{"id":70,"slug":"uk-jobs-market-cooling-pay-growth","title":"UK Jobs Market Cools As Wage Growth Masks Weak Hiring","summary":"UK hiring weakens sharply even as starting salaries rise, reflecting uneven labour market pressures","body":"The UK labour market closed out 2025 with a familiar yet troubling pattern: hiring continues to weaken even as pay growth picks up pace for those still entering the workforce. According to the latest survey by the Recruitment and Employment Confederation and KPMG, the pace of new appointments fell for the thirty-ninth consecutive month in December, extending an era of subdued hiring that has persisted since early 2022. At the same time starting salaries for permanent roles rose at the fastest rate since May, although overall wage growth remains well below longer-term averages.\n\n\n[AD_SNIPPET:article-banner]\n\n\nThe sustained downturn in recruitment activity reflects broader economic caution among UK employers. Firms have pointed to rising business costs, ongoing uncertainty about government policy, and recent increases in payroll taxes as factors that weigh on decisions to expand headcount. According to recruiters, permanent placements hit a four-month low and temporary hiring also weakened, with vacancies declining and candidate availability rising, suggesting that more people are seeking work even as fewer roles are created.\n\nBusiness confidence surveys conducted alongside labour market data paint a similar picture. At the end of 2025, UK business confidence weakened markedly, with firms reporting reduced hiring intentions, slower turnover expectations, and heightened cost pressures. This malaise was evident across sectors, although some manufacturing firms remained cautiously optimistic about the impact of new industrial policies.\n\nLabour market indicators have become increasingly mixed over the past year. While wage growth for permanent roles has risen faster than earlier in 2025, overall pay settlements have been modest compared with historical norms. Earlier in the year, pay settlement rates dipped to their lowest levels since late 2021, underlining the complex interplay between wage pressures and broader economic slack.\n\nThe Bank of England is likely to scrutinise these trends closely. On one hand, softer recruitment suggests loosening labour market conditions that could ease inflationary pressures over time. On the other, rising starting salaries and robust pay growth for some roles complicate the picture for policymakers tasked with balancing price stability with support for jobs and growth. The BoE’s recent decision to trim interest rates reflected these conflicting signals, and further changes to monetary policy will hinge on how labour market data evolve in the first half of 2026.\n\nStructural trends also shape the current employment landscape. Certain segments of the UK jobs market, notably in financial services and technology, continue to experience strong demand for specialised skills, even as general hiring softens. Recruiters have noted a notable rise in vacancies for AI and tech-related roles, while clerical and administrative positions have seen relatively sharper declines.\n\n\n[AD_SNIPPET:article-banner]\n\n\nTaken together, the data portray a labour market in transition rather than collapse. Hiring remains subdued and business confidence fragile, yet wage growth and pockets of robust demand for specialised talent suggest that the labour market is coping with structural shifts rather than simply contracting. The challenge for policymakers and employers alike will be to nurture confidence and investment in a context where the pressures that slow hiring persist even as some workers continue to benefit from upward wage adjustments.","thumbnail_url":"https://yakkio.com/uploads/user_uploads/u_1768354456078_1kjl52r6m9d.webp","published":true,"created_at":"2026-01-14T01:34:02.674Z","updated_at":"2026-01-14T01:34:37.439Z","linked_topic_id":null,"manual_topic_slug":"uk-economy-still-stuck-or-starting-to-shift","linked_article_slug":null,"linked_topic_slug":"uk-economy-still-stuck-or-starting-to-shift","linked_topic_title":"UK Economy – Still Stuck or Starting to Shift?","linked_article_slug_actual":null,"linked_article_title":null,"linked_article_summary":null,"linked_article_thumbnail_url":null,"linked_article_created_at":null,"linked_article_author_handle":null,"author_handle":null,"article_type":"analysis","channel_id":11,"channel_slug":"quiet-collapse","channel_name":"Quiet Collapse","display_author_handle":"QuietCollapse"}}