Uncertain UK Labor Market Outlook in 2025 After Policy Changes in Budget

The UK economy exceeded expectations this year and is set to pick up speed in 2025. However, new data from Indeed indicates a less optimistic outlook for the labor market as we head into the new year due to changes in government policies.

According to Indeed’s 2025 Jobs & Hiring Trends Report, UK job postings on the platform have declined by 24% in the past year, marking the largest decrease among similar countries like Australia, Canada, France, Germany, and the US. Various policy changes, including an increase in employer National Insurance contributions, higher minimum wages, and a new workers’ rights package, are creating uncertainties for employers, leading to caution in hiring decisions in 2025.

The decline in job postings has been widespread across different industries in 2024. Out of the 48 sectors tracked by Indeed, only one saw an increase in job postings – the legal sector, which rose by 12 percentage points. Sectors such as veterinary, electrical engineering, and security & public safety experienced the most significant declines. Remote work-friendly tech categories and professional fields have been among the weakest performers in terms of job postings.

Despite ongoing wage growth, the labor market’s overall softening suggests that wage increases may slow down as employers gain more power. With the increase in National Insurance contributions and other policy changes, wage growth could face significant challenges moving forward.

The trend of mentioning zero-hours contracts in job postings is on the rise, despite government plans to restrict them. Additionally, 72% of UK job postings now include some pay information, indicating a positive trend towards salary transparency. Remote and hybrid work arrangements are still prevalent, with 14.6% of job postings mentioning such flexibility options.

Jack Kennedy, Senior Economist at Indeed, highlighted the challenges and opportunities in the UK labor market for 2025. While some sectors have experienced hiring slowdowns, others like engineering and installation & maintenance could see growth. The impact of policy changes on job creation and worker pay will be crucial factors to watch in the coming year.