UK Pay Growth Slows as Hiring Weakens: What It Means for Your Business
New figures from the Office for National Statistics (ONS) show signs that the UK labour market is continuing to cool.
For the three months to June, unemployment rose slightly to 4.7%, the highest in four years, while average pay growth slowed from 5% to 4.6% including bonuses. Excluding one-off payments, pay remained flat at 5%, suggesting that employers are scaling back incentive-based rewards as budgets tighten.
The Shifting Labour Market
The number of job vacancies fell by 44,000, marking the 37th consecutive quarterly decline and bringing vacancies well below pre-pandemic levels.
The slowdown is being felt across all industries, but especially in finance and business services, where regular pay growth slipped to just 3.1% — the lowest of any sector.
These figures align with the Bank of England’s recent assessment that pay pressures are easing and the labour market is cooling. While interest rates were cut slightly to 4% last week, further reductions aren’t expected in the near term as inflation remains above the Bank’s 2% target.
What Employers Are Saying
Surveys show a growing sense of caution among UK employers. The Chartered Institute of Personnel and Development (CIPD) reports record-low hiring intentions, with only 57% of private sector employers planning to recruit in the next three months — down sharply from 65% last autumn.
Rising employment costs, economic uncertainty, and a focus on retaining existing staff have all contributed to the shift.
What It Means for Your Business
For many employers in Northern Ireland, the changing labour market presents both challenges and opportunities:
Wage growth slowing may offer breathing room for businesses managing rising costs.
Recruitment caution could create opportunities to attract high-quality candidates in key roles.
Retention and reward strategies will need to adapt — focusing on meaningful benefits, flexibility, and long-term engagement rather than large pay increases.
How Exchange Can Help
In uncertain times, understanding the full financial impact of pay, recruitment, and retention decisions is essential.
Our team at Exchange Accountants can help you:
Analyse your employment costs and forecast wage impacts.
Review cash flow and budget planning to balance people and profitability.
Model the financial effect of pay adjustments or staffing changes using cloud-based tools like Xero.
With the right data and planning, your business can make informed decisions — not reactive ones — as the economy continues to shift.
If you’d like to understand how these changes could affect your payroll, forecasts, or recruitment strategy, our advisers are here to help.
Let’s Grow Together.
