In partnership with Pertemps Network Group, our Employment Trends Survey provides a cross-economy insight into business views on the UK labour market, and whether it is acting as a strength or strain in their mission to deliver growth.
Key findings include:
Jobs
- The proportion of business respondents intending to grow their workforce over the next twelve months has almost halved from last year (48% to 26%) while those expecting their workforce size to shrink has doubled over the same period (13% to 27%). The result is slightly more businesses intending to reduce their workforce size than grow it (27% and 26%, respectively).
- Only a quarter of businesses (24%) feel confident about hiring.
Pay
- In total, half of respondents (52%) intend to offer pay increases above (11%) or in line (41%) with inflation at the next pay review. This represents a fall on levels recorded last year (20% and 50%, respectively).
- The proportion of businesses intending to set a general pay freeze is up from last year (4% to 16%) and around 1 in 10 firms (11%) intend to offer pay increases below the rate of inflation.
Employment Rights Bill
- The Government has spent the last year trying to convince businesses that its ‘Plan to Make Work Pay’ is pro-business and pro-worker and that it will boost productivity and support growth. This survey finds that businesses are more sceptical of these claims than ever, with more than three-quarters (78%) worried that they cannot afford the changes without it negatively affecting growth, business investment, jobs or discretionary employee benefits. This is up significantly from 54% last year. The proportion of respondents who strongly disagree with the statement that it will be affordable without unintended consequences has doubled from 23% to 48%.
- The Employment Rights Bill ranked as the second biggest threat to business competitiveness, selected by half of respondents (53%), reinforcing employer feedback that the benefits of the Bill are overstated and the trade-offs they will face when implementing it will be more severe than the Government thinks.
Skills
- The balance of businesses intending to invest in training over the next twelve months is negative (-11%) and markedly down on investment intentions recorded in 2024 (+22%). This has been driven by the proportion of firms who intend to invest more in training (13%) falling sharply since 2024 (32%) and 2023 (38%), and those looking to cut their investment doubling over the past twelve months (9% to 23%). The findings reflect employer feedback that rising business costs – particularly the recent NLW and NICs rise – have forced firms to deprioritise important but optional investments, such as skills and training.
- Twice as many firms believe that the Growth and Skills Levy should be designed so that it is a pot of funding ringfenced for businesses to invest in a range of modular and accredited training (42%) than believe that businesses should only expect to be able to spend a proportion of their Levy, with the rest used to fund other government national skills initiatives (22%).
- Two thirds of businesses (67%) reported that the absence of a clear roadmap detailing the exact courses which will be eligible for Growth and Skills Levy funding from April 2026 will hinder their organisation’s ability to deliver training and plan effectively.
