UK workers are “job hugging” and prioritising security over ambition, as confidence in the jobs market has weakened since last year’s autumn budget, new analysis shows.
A top economist cautioned that workers are clinging onto roles as opportunities thin out and competition for jobs intensifies.
The UK’s jobs market slumped after the October 2024 budget announcement with employment levels declining by 0.9 per cent in December, compared with the previous month, according to research by HR platform Employment Hero.
This bucks the trend of recruitment being ramped up before Christmas, with retailers and hospitality firms typically preparing for a spike in demand over the festive season.
The slowdown came in the aftermath of Chancellor Rachel Reeves announcing plans to hike business taxes through a higher rate of national insurance, which set in from April.
There has since been a rebound, with the data recovering from February and month-on-month employment rising by 1.7 per cent in July.
However, annual growth in July was less than half of that a year earlier, signalling a slowdown in the market over the past year.
Employment Hero’s report draws data from some 350,000 small and medium businesses, analysing average headcounts over the year.
Workers are prioritising security over ambition, as confidence in the jobs market has weakened (PA WIRE)
A separate survey carried out by the company found that 55 per cent of employees are prioritising security over ambition, indicating that they are clinging onto the job they have.
This sentiment was driven by younger employees, with 65 per cent of those aged 18-34 saying so.
Among the same cohort, 53 per cent said they felt there is too much competition for jobs.
Kevin Fitzgerald, UK managing director for Employment Hero, said so-called “job hugging” was on the rise “as employees look to weather the storm”.
He added that recent tax changes have “knocked confidence” and warned: “The rise in employer national insurance contributions has had a ripple effect right across the economy, and we’re now at a critical juncture.
“As we head towards the autumn Budget, avoiding more tax changes that trigger knee-jerk reactions from businesses will be vital if we want to build on the early signs of recovery.”
Nina Skero, economist and chief executive of the Centre for Economics and Business Research (Cebr), said the data indicates that workers are concerned about their ability to secure new employment quickly.
“Workers are facing a difficult balancing act – while pay growth remains strong, inflation continues to eat into real wages, and job opportunities are thinning out,” she said.
Last week, Lloyds said it was sharpening its focus on a “high-performance culture”, in a bid to boost productivity and address low rates of turnover among its employees who are staying with the bank for longer.