Last year was one of the toughest for jobseekers since the pandemic as employment taxes leapt by over £20 billion and vacancies dried up.
The number of free posts has declined in each of the past six months and by the end of last year there were 15 per cent fewer unfilled positions than at the end of 2024. The number of job vacancies in the UK fell again in December by 4 per cent to just shy of 716,800.
There are now, on average, 2.3 jobseekers vying for every advertised role, the highest level since the lockdowns of 2021, according to the latest data from Adzuna, a jobs site.
Data published by Revenue & Customs revealed that, in the year to December, payments to the government from employees and employers via national insurance contributions leapt by £20.7 billion to £194 billion, up by 12 per cent compared with a year earlier. This reflects the chancellor’s decision to raise the tax in her inaugural budget in October 2024.
Official data last week showed that the unemployment rate remains at a near five-year high of 5.1 per cent.
As part of its economic forecasts at the October 2024 budget, the Office for Budget Responsibility estimated that the NICs increase would reduce the size of the workforce by 0.2 per cent as a result of businesses cutting back employees’ working hours.
“The relatively high inflation that the UK continues to experience and the increase in joblessness over the past 12-plus months are perhaps the inevitable consequence of increasing business costs in this way,” Robert Salter, a director at Blick Rothenberg, an accountancy firm, said.
The jobs market is weakening in almost every part of the country, Adzuna found. Only the northeast of England saw an increase in adverts for new roles in December. Scotland recorded the biggest month-on-month decline, with 8 per cent fewer vacancies in December compared with November.
Rachel Reeves, seen visiting a distillery in London, has raised business costs
PAUL GROVER/DAILY TELEGRAPH/PA
Hiring across most sectors “remained subdued”. Adzuna highlighted large falls in advertising for warehouse, hospitality, catering and retail positions. Teachers and cleaners were among the few jobs where demand from prospective employers increased.
Companies have been reluctant to hire for much of the past couple of years because of a combination of lingering economic and geopolitical uncertainty, stubborn inflation and higher payroll costs.
There are no signs of a near-term improvement in business sentiment either. Private sector companies expect activity to fall again over the next three months according to the CBI’s latest growth indicator survey.
“The big picture remains similar to much of last year,” Alpesh Paleja, CBI deputy chief economist, said. “Businesses remain cautious, households are downtrading and confidence is still fragile. Recent geopolitical tensions will only have added to uncertainty at the margin.”
Andrew Hunter, co-founder of Adzuna, said: “December’s figures confirm what the direction of travel throughout 2025 made clear — last year was one of the toughest years for jobseekers since the pandemic.
“Vacancies fell for six consecutive months, competition for roles intensified and hiring slowed across many of the UK’s largest sectors as the usual year-end uplift failed to materialise.
“That said, wages grew consistently and remained resilient, even as opportunities shrank. It’s also encouraging to see signs of recovery in the graduate and entry-level sectors, all of which had a turbulent 12 months.
“The UK job market may not be out of the woods yet, but early green shoots suggest employers may be looking to start 2026 afresh and empowered.”
The tight labour market appeared to be shifting the balance of power in favour of employers, who are increasingly demanding that new recruits stop working from home so often, Adzuna found.
Adzuna’s data shows there were 45,581 fully remote jobs advertised on its website in December, which was 42 per cent lower than in the same month a year earlier and the lowest number since Boris Johnson announced the first lockdown in March 2020. Meanwhile, there has been “an uptick” in office-based job ads.
It is a reversal of the trends seen during the great resignation after the pandemic. In an effort to keep hold of workers and attract new ones, employers began offering big pay rises as well as allowing people to work from home more often.