UK companies are increasingly holding back on hiring or choosing not to replace workers who leave, sending job vacancies tumbling to their lowest level in years. According to official figures, the number of available roles fell by 63,000 between March and May, with the unemployment rate rising to its highest point since 2021. The Office for National Statistics said there has been “a weakening in the labour market,” as more employers pause recruitment amid rising National Insurance contributions and higher minimum wage costs.
Feedback from the ONS vacancy survey suggests that some firms are now “holding back from recruiting new workers or replacing people when they move on.” Economists warn this trend could continue, as companies seek to offset higher employment costs by slowing hiring activity or reducing headcount. While wage growth remains ahead of inflation, the labour market is clearly cooling, and business groups say the latest £25bn “jobs tax” from National Insurance increases is weighing on sentiment and hiring plans.
But research indicates that the true cost of these decisions may be far higher than the headline payroll savings. A recent PageGroup × CEBR survey finds that UK employers are collectively losing at least £132.6 million each year in productivity, with six working weeks lost per organisation due to vacancies and slow recruitment.
For critical roles in the energy sector, the numbers are even starker: Astute People recruiters calculate the average cost of a vacancy at £2,505 per day, with key engineering positions now taking 67 days to fill. That equates to more than £167,000 lost for every empty seat. In one anonymised renewables case, the failure to replace a project manager in time delayed a 300 MW wind-farm’s grid connection by nine weeks, costing approximately £14 million in forecast revenue.
Other industries face similar pressures. UK public sector productivity is forecast to lag until at least 2030, with the CEBR warning that, unless efficiency is restored, the government may need to hire an extra 92,000 staff — potentially adding £5.1 billion to the public payroll.
Even as headline vacancies fall, ONS figures confirm that the baseline demand for talent remains above pre-pandemic levels, suggesting that many firms are under-hiring rather than facing a genuine surplus of candidates.
The cost is not only financial. According to Simon Fabb, CEO of ChiefJobs.com, “If hiring freezes and under-recruitment persist over the next three years, businesses risk facing serious talent shortages that could stunt growth and innovation. When key roles remain unfilled, workloads pile up, leading to burnout and high turnover among existing staff. This brain drain not only reduces productivity but also erodes institutional knowledge, making it harder for companies to stay competitive.”
The pattern is visible in IT and digital roles, as Sharon Armstrong of Armstrong Appointments notes: “We’ve seen a few clients delay hiring for key IT roles like cloud, DevOps, and cybersecurity in an effort to manage costs. But in many cases, it ends up causing knock-on issues. Projects slow down, teams feel the pressure, and by the time the role is reopened, salary expectations have shifted or the right candidates have moved on. One client lost the same candidate twice due to delays, and it set their digital rollout back by a few months.”
Recent employer surveys by the Bank of England and CIPD confirm that hiring is now often limited to back-filling only the most essential vacancies until confidence returns. Employer National Insurance contributions rose to 15 percent in April 2025, adding approximately £780 per £50,000 salary. A recent BDO survey finds that 30 percent of UK firms are freezing hiring and investing in automation as a direct response. Meanwhile, a higher salary floor for skilled worker visas and tighter IR35 rules have made it more challenging to source either permanent or contractor talent.
Some companies are adapting by turning to internal development, flexible hiring, and retention models. “While strategies in continuous professional development can offer short-term relief, they often act as mere ‘sticking plasters’ against the deeper issue of long-term talent drain,” says Michael Doolin, CEO of Clover HR. “A more sustainable approach requires businesses to eliminate self-inflicted surprises that exacerbate these gaps and plan and prepare for the future.”
For UK employers, the decision to freeze hiring may be understandable in the short term, but the hidden costs — lost productivity, delayed projects, and eroded capability — can quickly outweigh the benefits. Boards that audit their cost of vacancy and invest in skills and mobility now will be better placed to balance cost control with future resilience.
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