A Labour Market Losing Momentum
This year’s Autumn Budget confirmed a shift many HR leaders have already been sensing: the UK labour market isn’t in crisis, but it is slowing. Hiring pipelines have cooled, progression opportunities are narrowing, and movement between roles is declining.
For organisations, this creates a new challenge: employees are staying put, but not necessarily moving forward. Stagnation, not turnover, is becoming the hidden performance risk.
This blog explores the labour-market signals shaping 2025 and what senior HR and L&D leaders can do to respond- including how career progression coaching can help employees maintain momentum.
The Headline Numbers: A Static Market Behind the Stability
Unemployment has risen to 5%, a four-year high, while overall employment remains broadly flat. On the surface, it looks like stability. In reality, it signals suppressed movement.
Recent ONS data shows that hiring activity has slowed sharply, with fewer candidates entering the market and fewer openings available. This creates an environment where internal mobility becomes harder to sustain, and capability gaps begin to widen.
Participation Problems: Structural Challenges to Workforce Supply
Workforce participation continues to decline due to ageing demographics and long-term sickness. Youth unemployment has also climbed to 15.3%, threatening early-career pathways and future talent pipelines.
Low movement across the labour market means:
- Fewer vacancies
- Reduced churn
- Less natural progression
While this may appear to improve retention, it masks a deeper issue: employees may be staying without developing or building future-ready skills.
Wage Growth Without Real Progression
Nominal earnings are rising at around 5%, yet real incomes are expected to grow only marginally. Rising minimum wage thresholds add further pressure to budgets, stretching promotion cycles and constraining pay reviews.
For HR leaders, motivating talent becomes more challenging when traditional financial levers are limited.
Fewer Vacancies, Fewer Moves and a Changing Role Mix
Vacancies have plateaued well below their post-pandemic highs. Role mix is also shifting, with declines in retail and wholesale employment and modest increases in public administration roles.
Career paths are becoming less linear, with lateral moves, reskilling and portfolio-based progression becoming more common. For senior HR and L&D leaders, internal career development becomes a competitive differentiator when external hiring slows.
The Rise of the “Stuck” Employee
All these factors are contributing to what can be described as a career stagnation trap:
- Limited progression routes
- Reduced external mobility
- Slower wage growth
- Restricted early-career advancement
Left unaddressed, this leads to declining motivation, reduced confidence, and silent disengagement, ultimately affecting productivity.
In a cooling labour market, development becomes a strategic lever for retention (as we explain in our blog, ‘Internal Mobility: Retain Talent with Career Coaching‘), productivity and workforce planning. This is where Career Navigator supports employees, particularly those feeling stalled in their progression—through structured career progression coaching.
Career Navigator provides:
- Expert coaching to provide clarity on career direction
- Personalised career plans
- Coaching on personal branding and networking for career success
- Increased accountability for career development
For HR and L&D leaders, Career Navigator strengthens:
- Mid-career engagement
- Talent retention
- Internal mobility
- Workforce agility
Through targeted career coaching for employees, you help people move forward even when the wider labour market is standing still.
Summary
A cooling labour market doesn’t automatically create stability. It can just as easily create stagnation—unless organisations act with intent.
Investing in clarity, direction and development is now essential. Those who take action today will retain the talent others lose tomorrow.
If you’d like to explore how Career Navigator and its career progression coaching approach can support your workforce strategy, we’d be delighted to talk. Get in touch with us today.
Iona works across Chiumento’s Digital Marketing Executive. Working on blog and comms projects, Iona helps to shape how the organisation talks about change, redundancy, and the employee experience. With experience in the education, law, and HR sectors, she brings a cross-industry perspective to workforce planning and organisational change. Iona contributes to content that supports HR leaders through restructuring and is particularly interested in how clear, human communication builds trust during times of uncertainty. She holds a BA in Illustration and brings a creative, insight-led approach to everything she writes.