Labour Market Outlook

The CIPD’s quarterly Labour Market Outlook is one of the most authoritative employment indicators in the UK and provides forward-looking labour market data and analysis on employers’ recruitment, redundancy and pay intentions.

The LMO is published every February, May, August and November. Its insights help HR professionals and employers anticipate labour market movements and to adjust and prepare accordingly. It also feeds into our consultations and engagement with the UK Government and policy-makers.

Labour Market Outlook – Spring 2026

Cost management prioritised over growth as employer confidence remains subdued.

Our latest Labour Market Outlook finds that UK employers are prioritising cost management over growth as rising business costs and global uncertainty continue to weigh on confidence. Of the 2000+ employers surveyed, 58% cite cost management as their highest priority this quarter, regardless of sector and organisation size.

Improving productivity is the second biggest priority (44%), rising to 55% among large private sector employers. Growing market share comes in third, where 47% of large firms in the private sector cited it as a key priority, compared to 35% overall. This suggests that many businesses are taking a cautious approach in ongoing uncertainty. 

Although the Employment Rights Act 2025 brings significant regulatory changes for employers, just 20% of SMEs identify regulatory compliance as an organisational priority, compared with almost a third of larger firms (32%).

While fewer employers anticipate major difficulties filling roles in the next six months, one third still report hard-to-fill vacancies. Median expected basic pay increases for the next 12 months remain at 3% for the eighth consecutive quarter, However, the distribution of planned pay awards has narrowed around the 3% mark over the past twelve months.

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Labour Market Outlook - Spring 2026

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The net employment balance – the difference between employers expecting there will be an increase in staff levels and those expecting there will be a decrease in the next three months – remains at a near record low this quarter at +10.

Employment intentions in the public sector remain below zero. This means that more public sector employers expect staff numbers to decrease than increase over the next three months.

Cost management is by far the key priority of organisations currently, regardless of sector and organisation size. This is ranked above improving productivity and growing market share as businesses remain risk averse in an uncertain environment.

Only 20% of SMEs see regulatory compliance as an organisational priority, compared with around a third of other firms, as many of the measures in the Employment Rights Act 2025 come into force.