A new survey by the Chartered Institute of Personnel and Development (CIPD) has revealed a marked drop in employer confidence, with redundancy intentions climbing significantly in early 2025. The findings come as businesses across the UK prepare for a period of economic adjustment and rising operating costs.
The quarterly Labour Market Outlook survey found that 25% of UK employers planned to make redundancies in the three months to March 2025—an increase from 21% in the previous quarter. This is the highest level of redundancy planning outside of the pandemic period in over a decade.
The survey, based on responses from over 2,000 employers, highlights increasing concern over labour costs. A rise in the National Living Wage to £12.21 from April 2025 and changes to National Insurance contributions are expected to significantly raise employment costs. According to the report, 90% of employers expect their employment costs to rise in 2025, with 43% predicting a “significant” impact.
“Employers are having to make difficult decisions in the face of cost increases,” said Jon Boys, Senior Labour Market Economist at the CIPD. “For some, this means reviewing workforce size and structure, which explains the rise in redundancy intentions.”
Employers in sectors such as retail, hospitality, and manufacturing are particularly vulnerable, where tight profit margins make absorbing cost increases more difficult. The CIPD notes that 19% of organisations are considering reducing their training budgets, and others are postponing recruitment.
The survey also revealed a drop in recruitment confidence. Only 39% of employers said they plan to increase their workforce over the next quarter, compared to 48% six months ago. Meanwhile, just under 20% said they were unsure about their hiring plans, indicating widespread indecision.
The CIPD is calling for government action to support employers, including increased investment in training, targeted tax incentives, and stronger support for apprenticeships. The organisation argues that such measures are essential to stabilising the labour market and protecting jobs.
The report also highlighted that job quality is becoming an increasing focus. Employers are being advised to improve working conditions, flexible working opportunities, and progression pathways to retain key staff during periods of economic strain.
HR professionals warn that repeated redundancy cycles can damage morale and organisational culture, making it harder to rebuild when conditions improve. Businesses are being encouraged to consider alternatives such as redeployment, flexible hours, or job sharing before proceeding with job cuts.
As the UK heads further into 2025, the employment landscape is clearly shifting. Employers will need to make difficult decisions in the face of rising costs, while employees face increased uncertainty. For jobseekers and those currently in employment, staying informed and adaptable will be key to navigating the months ahead.