By James Reed

We are in the middle of a jobs drought in the UK - one that feels different from anything I have seen in my four decades working in recruitment.

Vacancies are declining, applications are down and employers are hiring less.

This is confirmed by ONS data out this morning, which shows the number of vacancies in the UK fell by 10,000 on the quarter, to 728,000, in June to August 2025. This is the 38th consecutive month vacancy numbers have dropped - an unprecedented period of decline. Estimates for payrolled employees in the UK fell by 142,000 between July 2024 and July 2025.

While the picture is complex, two factors stand out: the increased burden of employers' National Insurance and the growing deployment of artificial intelligence in the workplace.

Thanks to a new survey of over 500 employers by Reed, we know that 22 per cent of firms say the increase in employers' NI has forced them to cut back on recruitment. Meanwhile 15 per cent say the same of AI. More than one in five firms (21 per cent) report they have implemented a hiring freeze.

In the Autumn Budget last year, the government raised employers’ National Insurance from 13.8 per cent to 15 per cent and lowered the threshold at which employers begin paying it, from £9,100 to £5,000 annually. These were not trivial changes, amounting to a £25 billion tax hike on business. We were not alone in warning that there would be an impact on the job market of the sort we are now seeing. Many employers we work with report hiring........

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