The UK labour market has been marked by significant shifts in 2025: employers have adjusted hiring strategies, workers have become more vocal about expectations, and skills-based recruitment has moved firmly into the mainstream. While activity slowed in places, the year has provided clarity on what matters most in attracting and retaining talent.
In this blog, we’ll look at five key themes that stand out from 2025’s most notable news stories, featured in our ‘
Things to know’ series, and share how recruitment partners like us can help employers turn these lessons into strong hiring strategies for 2026.
1. Hiring slowdowns reflect economic caution
Recruitment activity slowed significantly across 2025, particularly in permanent placements. Employers hesitated to commit to long-term hires, reflecting wider economic uncertainty.
- Sky’s job cuts in September highlighted how sectors under structural change - in this case, media shifting to streaming - reduced headcount despite overall demand elsewhere.
- The Construction slowdown warning in December reinforced how sector-specific pressures can ripple through hiring confidence.
Lesson for 2026: Partner with your recruitment agency to stay connected with talent even during quieter periods. Agencies keep worker pipelines warm, so when demand picks up, you’re not starting from scratch.
2. Salary expectations took centre stage
Pay was a defining issue of 2025, with workers increasingly vocal about compensation.
- The increase in the National Minimum Wage in April and the planned rise in the National Living Wage for 2026 have kept pay front of mind for both employers and workers.
- Adult social care workers receiving a pay boost in October showed how targeted increases can be used to address retention in critical sectors.
Lesson for 2026: Agencies can provide real-time insights into pay trends and help you shape competitive packages that attract and retain talent. By working with your recruitment partner, you can benchmark salaries against the wider market.
3. Workforce participation shifted
The labour market saw notable shifts in participation, with economic inactivity remaining a stubborn challenge.
- The Office for National Statistics (ONS) data in May showed the economic inactivity rate declining, but also highlighted the rise in second job holders, evidence of workers adapting to cost-of-living pressures.
- Flexible working is becoming a must-have in 2025, according to a new study in October, underlining how participation is increasingly tied to workplace structures, not just pay.
Lesson for 2026: Offer flexible working options, support wellbeing, and give employees chances to grow. These practical steps help people stay in work and reduce the risk of losing talent.
4. Emerging technology reshaping recruitment
2025 saw many new technologies continuing to grow and develop within the UK workforce, acting as a strategic driver in recruitment, rather than just a support tool.
- Proposed Digital IDs announced by the UK Government in October show a shift towards modernised compliance processes and the desire to reduce administrative burdens and streamline job-seeker experience to improve the job market.
- A focus on cyber-security hiring and learning trades such as carpentry or electrical work in response to an increased use of AI in office roles.
Lesson for 2026: Agencies are adopting AI screening, digital IDs, and compliance tech to streamline hiring. By working with a recruiter, you benefit from faster processes, smoother compliance, and a job-seeker experience that feels modern and transparent, all backed by human expertise to ensure the right fit.
5. Skills-based hiring gained momentum
2025 marked a clear move toward skills‑first recruitment, with employers shifting focus from CVs to practical abilities and training pathways to close talent gaps.
- Skills England launched in June to coordinate national training and skills development, reinforcing the move toward a skills-first economy.
- Royal Mail’s £1M apprenticeship fund, announced in July, and the West Midlands’ 13,000 new apprenticeships, announced in August, showed employers investing directly in skills pipelines.
Lesson for 2026: Look beyond CVs by making skills tests and apprenticeships part of your recruitment. Partnering with your recruiter and expressing which skills would be beneficial to the role is also a great practical way to access a diverse pool of workers.
Looking Ahead to 2026
The lessons of 2025 point to a recruitment landscape that is more strategic, worker-focused, and resilient. Employers who embraced skills-first hiring, refined pay strategies, and invested in retention are already better positioned for the year ahead.
As 2026 begins, it is important to keep in mind:
- Stay connected with your recruiters, even in quieter periods.
- Share pay information openly and fairly.
- Make flexibility and wellbeing part of everyday practice.
- Keep hiring simple and efficient.
- Put skills at the centre of recruitment decisions.
If you’re ready to put these lessons into practice, talk to our team; we’ll help you turn 2026 into a year of confident, skills‑first hiring.
