As redundancies rise and hiring slows, SMEs are rethinking strategies. Here’s how businesses can stay resilient through shifting job market trends

The UK job market is experiencing a significant cooling-off period. With a sharp decline in job listings, continued layoffs, and hiring freezes across multiple sectors, the latest job market trends suggest a cautious and uncertain economic climate — particularly for small and medium-sized enterprises (SMEs).

Job Market Trends Point to a Slowdown

New research from careers platform Reed.co.uk, shared via LBC, reveals a stark 23% year-on-year drop in new job adverts. This decline reflects growing employer concerns around inflation, rising interest rates, and elevated business costs.

One of the most influential job market trends behind the hiring slowdown is the recent hike in employer National Insurance Contributions (NICs). As of April 6, the NIC rate jumped from 13.8% to 15%, significantly increasing the cost of employment. According to a report from Personnel Today, 46% of employers expect the NIC increase to impact their hiring plans, with 22% citing it as a direct reason for freezing or delaying recruitment.

Add to that the April rise in the National Minimum Wage (NMW), and the financial burden of hiring — especially for lower-wage roles — has become harder for businesses to justify.

Redundancies Remain on the Rise

The wave of redundancies that began in 2024 has continued into 2025. Retailers like Aldi, New Look, and Ocado have trimmed their workforces, while tech giants such as Google, Dyson, and Meta have also made notable cuts.

The CIPD Labour Market Outlook reports that redundancy expectations in the private sector have increased from 22% to 27% this year — another clear marker in the evolving job market trends.

The Cost of Office Space

Physical office-based operations are another area under pressure. Rising rent and utility costs have driven many companies to rethink their workplace models. In fact, 58% of fully office-based firms reported making layoffs in 2024 to cut expenses — compared with 45% of remote-first businesses.

These job market trends suggest that remote and hybrid models may offer businesses not just flexibility, but also a competitive cost advantage.

SMEs: Focus on Retention Over Recruitment

With many SMEs unable to afford new hires, focusing on talent retention is becoming a key strategy. Our end-of-year survey of 531 small business owners found that 12% had no hiring plans at all for 2025. Yet 52% identified a skilled and motivated workforce as crucial to their success.

Given the continuing skills shortage — with 76% of employers still struggling to fill roles — the current job market trends suggest that nurturing existing talent is more important than ever. Rather than investing in expensive recruitment drives, SMEs can benefit from offering cost-effective perks like flexible schedules, remote work options, or in-house training. These measures not only help retain current staff but also improve employer brand appeal when the market improves.

The Road Ahead: Adapt and Thrive

The latest job market trends may seem discouraging, but they also offer a chance for reflection. Businesses that take this time to build stronger teams, adapt their models, and offer meaningful value to employees will be better positioned for long-term growth. As economic conditions stabilise, the most people-focused and forward-thinking companies will lead the next wave of innovation and hiring.