The UK job market is set to experience sizeable changes, driven by advancements in technology, evolving workforce expectations, and economic adjustments.
That’s why it’s more important than ever for employers to stay informed about sector-specific trends, emerging skills demands, and workforce planning strategies, as we move through 2025 and beyond.
Key economic factors shaping the 2025 job market
Global geopolitical tensions
Global geopolitical tensions are playing a significant role in shaping the 2025 job market. Conflicts, trade disputes, the imposition of tariffs, and shifting international alliances are disrupting global supply chains and creating uncertainty for multinational businesses. These tensions have led to increased costs for raw materials and goods, prompting some companies to localise operations or diversify suppliers, moves that impact employment patterns across regions.
Economic instability
In a period of uncertainty in global markets, many companies are tightening budgets and reassessing growth strategies, which is slowing down hiring in some sectors while accelerating automation in others. Wage growth remains uneven, with some industries struggling to attract talent due to skills shortages, while others face layoffs and hiring freezes. Additionally, shifts in interest rates continue to impact employer confidence, influencing decisions around expansion, recruitment, and workforce planning.
Regulation and wage pressures
Adjustments to National Insurance Contributions (NICs) and income tax thresholds are altering take-home pay and influencing decisions around full-time employment versus freelance or contract work. Businesses are also responding to changes in corporation tax and investment relief schemes, which affect hiring budgets and growth plans. Employers must strike a balance between offering competitive wages and managing operational costs. Developing tailored compensation packages and using platforms to access skilled temporary talent can help address these challenges effectively.
Sector-specific growth and decline projections
High-growth sectors
Certain industries are poised for significant expansion in 2025, including:
- Healthcare: An ageing population and a focus on preventative care are driving demand, with an estimated 70,000 new roles expected.
- Technology: Roles in cybersecurity, AI, and data analytics are predicted to grow by 15-20%.
- Green energy: The UK’s commitment to net-zero targets is accelerating job creation in renewable energy and sustainable infrastructure.
Employers in these sectors should focus on creating strong talent pipelines, offering training and career development opportunities to retain skilled employees.
Sectors facing challenges
Not all industries will thrive. Traditional retail, administrative support, and some manufacturing segments are expected to contract by 5-8%, reflecting the increased use of automation and shifting consumer behaviours. Businesses in these areas can mitigate risks by:
- Investing in employee reskilling initiatives.
- Redeploying staff to growth-focused areas within the business.
Emerging hybrid sectors
The rise of hybrid industries such as healthcare technology, fintech, and sustainable manufacturing is creating demand for interdisciplinary skills. Employers must adapt by growing cross-functional expertise within their teams. This approach not only meets emerging skill requirements but also allows for greater agility within the business.
Skills in demand for 2025
Addressing the technical skills gap
The UK faces a projected shortage of technical specialists in areas like AI, machine learning, and cybersecurity. To address this, employers should:
- Partner with educational institutions to create tailored training programmes.
- Invest in internal upskilling initiatives.
- Develop a broader talent pool, to pick and choose the right people.
The growing importance of soft skills
Soft skills such as adaptability, emotional intelligence, and problem-solving are becoming increasingly valued. Research shows 67% of UK employers now consider these skills as critical as technical qualifications. Incorporating behavioural assessments in recruitment processes and offering soft skills training can help organisations build well-rounded teams.
Digital literacy as a baseline requirement
By 2026, digital literacy will be a fundamental skill across all roles. This includes proficiency in data analysis, digital communication tools, and cybersecurity practices. Employers should conduct regular audits of their workforce’s digital capabilities and implement targeted training to address gaps.
Remote and flexible working evolution
Hybrid working as the norm
Hybrid working is now a standard practice, with office-based roles operating on a 2-3 day in-office model. This shift requires employers to rethink recruitment strategies and office space utilisation. Flexible staffing solutions can help businesses adapt to these changes seamlessly.
Regional talent redistribution
The rise of remote work has led to a redistribution of talent, with many professionals relocating from major cities to regional hubs. Employers must adapt by offering roles that aren’t pinned to one location and adjusting wages to reflect regional cost-of-living differences.
Investing in technology infrastructure
Effective remote work requires reliable technology. Employers must prioritise secure, user-friendly tools to support distributed teams. Collaboration between HR and IT departments is essential in this respect.
Automation and AI impact on employment
Job transformation over elimination
Rather than eliminating jobs, automation and AI are expected to transform job tasks. Employers should focus on:
- Upskilling employees to manage AI-augmented roles.
- Offering training in complementary skills such as data interpretation and ethical AI practices.
- Offer best practice guidance in terms of the preferred AI tools to use.
Creation of new roles
AI is driving the emergence of new job categories, such as AI ethics consultants and automated systems managers. Forward-thinking organisations are developing talent pipelines for these roles, to stay ahead of the curve.
Ethical considerations in AI adoption
The adoption of AI in the workplace brings ethical challenges, including bias and transparency. Establishing governance frameworks and involving HR in decision-making processes can help mitigate these risks.
Demographic shifts in the workforce
Managing a multigenerational workforce
By 2026, the UK workforce will span five generations, each with unique needs. Employers should implement:
- Age-inclusive policies.
- Flexible benefits packages tailored to different life stages.
- Mentorship schemes, whereby skills are transferred from one generation to the next.
Supporting an ageing workforce
With longer working lives, employers must address the needs of older employees through phased retirement options, mentoring programmes, and workplace accommodations. Retaining experienced workers can provide invaluable knowledge to workers throughout the organisation.
Tackling youth unemployment
Youth unemployment remains a concern, with rates for 16-24-year-olds significantly higher than the general population. Employers can address this by:
- Developing apprenticeship schemes.
- Offering internships and early career programmes.
- Working closely with local colleges and other educational institutions
These initiatives not only support young talent but also help organisations build a future-ready workforce.
The UK job market in 2025 requires employers to adapt to ever-changing economic conditions, sector-specific regulations, and evolving workforce expectations. By focusing on skills development, embracing hybrid work models, and considering the demographic make-up of their workforce, businesses can address challenges like skills shortages and automation impacts while seizing growth opportunities in high-demand sectors.
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