The UK recruitment and staffing industry endured a challenging Q2, as economic headwinds, declining vacancy rates, and stagnating demand for permanent roles continued. Yet despite those obstacles, there are some signs of hope for the labour market are emerging.
“Q2 of this year has been a tale of two halves for the recruitment industry, as is often the case when analysing labour market trends,” said Paulo. “Some portions of the labour market have seen positive shifts emerging, whereas others have continued to decline in both opportunity and growth.”
According to the latest Labour Market Overview from the Office for National Statistics, the employment rate for those aged 16-64 edged up to 75.2%, a strong piece of data to suggest people are securing work more easily, and also in a positive vein the number of people in employment reached over 34 million in the last quarter, indicating that Britain continues to strive collectively for jobs and to contribute to the workforce.
However, the unemployment rate rose to 4.7% in the quarter, and economic inactivity remained stubbornly high at 21%. Perhaps most strikingly, job vacancies fell for the 36th consecutive month, dropping to just 727,000 in April – June, the lowest level in three years.
Despite the difficult backdrop, Paulo has struck a note of cautious optimism. “The staffing market in the UK is currently going through a unique and highly challenging phase, unlike anything we’ve seen before,” he said. “Our resilient performance in Q2, with over 21,000 job opportunities created and managed across our business, highlights our adaptability and enduring relevance in the UK labour market, but these declining numbers across the board cannot continue if we’re to have a thriving economy.”
The Recruitment & Employment Confederation reported that June 2025 saw the fastest decline in permanent placements for nearly two years. This coincides with continued employer caution, cost-containment strategies, and the after-effects of policy changes such as the rise in National Minimum Wage and increased National Insurance contributions. Despite these strains however, the REC reported in July that employer confidence in the UK economy improved between April and June
Nonetheless, Paulo pointed to developments that could stimulate medium-term recovery. “Now more than ever, discussions between recruitment experts, those at the forefront of industry with large workforce capacity and the UK government are vital,” he noted. “For example, we need to discuss action points around urgent support in upskilling and retraining workers, especially as AI and automation begin to replace more ‘less skilled’ roles.”
The UK Government’s new Industrial Strategy could be a welcome catalyst. Focused on areas such as net-zero energy, digital transformation, life sciences, and advanced manufacturing, the strategy pledges to invest in infrastructure and skills, both essential for revitalising job creation.
Also offering promise is the newly finalised UK–US trade and tariff agreements. The deal promises to boost cross-border investment and services trade, key sectors for employment growth. If realised, it could bring increased demand across the UK’s more resilient labour segments, especially temporary staffing and specialist roles in technology and logistics.
“The market is tough, no question,” Paulo said. “But we are seeing green shoots of progress. There’s a path back to sustainable growth, but more action must be taken and with a greater urgency.”
