Employment and inactivity: The UK employment rate for people aged 16–64 was 75.2% in May–July 2025, while economic inactivity fell to 21.1%. Claimant count data show 1.686 million people claiming unemployment-related benefits.

Vacancies are falling: Vacancies dropped by 10,000 (1.4%) on the quarter to 728,000 between June and August 2025, the 38th consecutive decline. There are 2.3 jobseekers for every vacancy, up from 2.2 earlier in the year, as more people compete for fewer roles.

Payrolled jobs and workforce jobs: Payrolled employees fell by 125,000 (0.4%) over the year to May–July 2025, while total workforce jobs were 36.8 million in June 2025.

Wages: Regular pay grew by 4.8% and total pay by 4.7% year-on-year. Real wage growth adjusted for inflation (CPIH) was modest at 0.7%, reflecting the squeeze on household budgets. Wage growth is cooling but still higher than the eurozone and U.S. averages.

Hiring sentiment: Job postings are below pre-pandemic levels, with the UK being the only major economy showing this trend. Flexibility, transparency and work-life balance are becoming more important to workers.

Declining vacancies and sector dynamics

The decline in vacancies is broad-based. In February–April 2025, vacancies fell in 13 of 18 industry sectors, with the construction sector seeing the steepest percentage drop (–26.7%) and a loss of 11,000 vacancies. Other service activities fell 17%. Year-on-year, vacancies decreased in 17 of 18 sectors; only water supply, sewerage and waste management recorded a small rise of 1,000 vacancies. Compared with pre-pandemic levels, wholesale and retail trade still has 29,000 fewer vacancies.

Despite the overall decline, some industries are expanding. Workforce jobs data for December 2024 (latest available) show human health and social work jobs up by 178,000 (3.7%) and professional, scientific and technical activities up by 120,000 (3.6%). These sectors continue to add head-count even as hiring slows elsewhere.

Wage growth, salary transparency and benefits

Pay growth remains a key focus for job-seekers. Regular pay increased by 4.8% year-on-year, but the pace is slowing, hitting a three-year low of 5.7% in early 2025. Employers are responding by offering more transparent pay information – 72% of job postings now include salary details, up from 47.7% in 2019. Signing bonuses have declined as companies prioritise higher base pay.

Workers increasingly value benefits beyond pay. A growing share of roles offer flexible working; 15.8% of job postings now include flexible arrangements. Surveys show 53% of workers would forgo a promotion for remote work, and 51% would accept lower pay for full flexibility. Employers that mandate office returns may struggle to retain talent.

Skills shortages and growing industries

While vacancies are falling overall, shortages remain acute in specific sectors:

• Logistics, manufacturing and skilled trades: Visa restrictions and demographic factors have left these sectors short of blue-collar workers. Wage gains for blue-collar roles remain notable.

• IT, data, engineering, sales and customer-facing roles: Candidate availability is tighter for these white-collar jobs. Employers need to emphasise competitive benefits, career progression and inclusive culture to attract talent.

• Healthcare and social work: Demand is driven by an ageing population. NHS England’s full-time equivalent (FTE) workforce grew 34.5%, reaching 1.31 million FTE staff in 2023; NHS Scotland and Wales saw rises of 18% and 31.8%. Healthcare practitioners and social workers remain essential, with opportunities spanning mental health, aged care and community services.

• Technology and artificial intelligence: Programming and software development skills are in high demand. Software developers earn an average salary of £54,413, with ranges from £48k to £64k. Artificial intelligence skills are scarce – 71% of organisations expect to use AI but only 25% have the necessary skills. AI specialists can command salaries more than 21% higher than average.

• Education: The teaching profession remains evergreen. Demand for qualified teachers is strong and special educational needs (SEN) assistants are particularly sought after; SEN pupils numbered 1.7 million in 2024 (18.4% of all pupils).

• Engineering: Engineering roles are high on the shortage occupation list. The sector has a Net Employment Outlook of +24%, yet 81% of companies struggle to find suitable candidates. Growth areas include clean energy, infrastructure and hybrid work projects.

• Green and sustainability roles: Environmental officers are in demand as sustainability initiatives grow. Green job adverts increased 9.2%, reaching 272,178 postings in 2024. Energy/carbon managers are emerging roles that oversee emissions and energy strategies.

• Other specialist roles: Physical therapists and personal trainers benefit from a fitness boom. Aircraft mechanics are needed as air travel recovers; the aviation industry expects to require 716,000 new maintenance technicians over the next 20 years. Construction trades will need over 250,000 additional workers by 2028 to meet demand for housing and infrastructure.

Worker preferences: flexibility, transparency and culture

Candidate priorities are shifting. Three-quarters of job-seekers avoid roles without a salary range, and 74% expect progress updates throughout the hiring process. More than half prefer to complete applications on a mobile device. Gen Z and Millennials value diversity, equity and inclusion; 50% of workers expect employers to promote an inclusive culture.

Employers can attract talent by:

• Listing salary ranges and offering competitive base pay.

• Offering remote or hybrid options and flexible schedules.

• Streamlining application processes for mobile use.

• Demonstrating commitment to diversity, equity and inclusion.

• Highlighting career progression and learning opportunities.

Challenges and outlook

The cooling labour market presents several challenges:

• Fewer vacancies: Vacancies have fallen for nearly three years and are now below pre-pandemic levels. Sectors such as retail, secretarial/clerical and hospitality are seeing steep reductions.

• Increased competition: With 2.3 jobseekers per vacancy, candidates need to differentiate themselves through skills, experience and adaptability.

• Modest real wage gains: Wage growth is slowing while inflation remains high. Workers may feel little improvement in purchasing power despite nominal pay rises.

• Employer caution: Hiring decisions are more conservative, with recruiters reporting a steeper reduction in permanent placements and slower salary growth.

Despite these headwinds, opportunities remain. High-demand sectors (healthcare, technology, education, engineering and green roles) continue to recruit. Job-seekers who build in-demand skills, demonstrate flexibility and leverage remote opportunities can still find rewarding roles. Employers who adopt transparent pay practices, offer flexible working and foster inclusive cultures will stand out to top talent.

Conclusion

The UK job market of 2025 is characterised by fewer vacancies and heightened competition, but also by pockets of growth in essential services, technology and sustainability. For job-seekers, focusing on sectors with persistent shortages and upskilling in digital, engineering and green skills will improve prospects. Employers should adapt to shifting worker preferences by prioritising salary transparency, flexibility and inclusivity. As the labour market evolves, Abruv will continue to monitor trends and provide actionable insights to help both candidates and organisations navigate the changing landscape.