But are UK businesses becoming so cautious that they’re afraid to hire at all?
Hiring someone is a commitment.
Salary.
Employer National Insurance.
Training.
Management time.
Onboarding.
Benefits.
And, increasingly, employment-related risk.
So it’s understandable that businesses want to get recruitment right.
But I think there is an uncomfortable question we need to ask:
Are some businesses becoming so concerned about making the wrong hire that they are becoming reluctant to hire at all?
The latest labour market data suggests this isn’t an entirely hypothetical concern.
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The UK labour market is becoming increasingly cautious
The CIPD’s latest Labour Market Outlook, based on a survey of more than 2,000 UK employers, shows that employer confidence remains close to record lows outside the pandemic.
The overall net employment balance — the difference between employers expecting staffing levels to increase and those expecting them to decrease — is just +9.
In the private sector, it is +11, a joint record low outside the pandemic.
And perhaps most strikingly, only 57% of private-sector employers plan to recruit in the next three months, the lowest figure since the CIPD began collecting this measure in 2016, excluding the pandemic period.
The CIPD describes the current environment as a “low-hire, low-fire” labour market.
Businesses aren’t necessarily making large-scale redundancies.
They’re simply being much more cautious about adding people.
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But here’s the contradiction
At the same time, 31% of employers still report having hard-to-fill vacancies.
And 14% anticipate significant recruitment difficulties over the next six months.
So we have two things happening at once:
Employers need skills they can’t easily find.
But:
Employers are becoming increasingly cautious about hiring.
That creates an interesting question.
What happens when the cost of making the wrong hire starts to feel greater than the cost of leaving the position vacant?
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The fear of the “bad hire”
Nobody wants to make a bad recruitment decision.
And HR professionals know that a poor hire can have consequences far beyond salary.
There can be:
- lost productivity;
- additional management time;
- disruption to the team;
- poor customer experience;
- increased employee relations issues;
- additional recruitment costs;
- and, eventually, another vacancy to fill.
So organisations naturally try to reduce recruitment risk.
More interviews.
More approval stages.
More assessments.
More cautious salary decisions.
Longer recruitment processes.
And sometimes, simply deciding:
“Let’s hold the position for now.”
From an individual hiring manager’s perspective, this can make perfect sense.
But what happens when this becomes widespread?
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The employee side of the equation
A cautious labour market doesn’t only affect employers.
It affects people looking for work too.
Fewer vacancies can mean:
Fewer opportunities for young people entering the workforce.
Fewer opportunities for people looking to change career.
Slower progression for employees who want to move to another organisation.
And potentially greater job insecurity for people who remain in roles because external opportunities are harder to find.
The CIPD has specifically warned that the current subdued labour market can close routes into work for first-time jobseekers and block progression for existing employees.
This is where the discussion becomes bigger than recruitment.
A stagnant labour market affects job mobility.
And job mobility matters.
People move jobs to increase their salary, develop new skills, change career, find better working conditions or simply find an organisation that suits them better.
Businesses also benefit when people move.
New employees bring different experience, ideas and skills.
Organisations gain access to new talent.
Employees progress.
Skills move around the economy.
A healthy labour market needs movement.
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Is employment legislation part of the problem?
This is where the debate becomes particularly interesting.
The CIPD’s earlier research into the Employment Rights Act found that 37% of employers planned to reduce their recruitment of permanent staff because of at least one of the Act’s key reforms.
The same research found that 74% expected employment costs to increase as a result of the reforms.
That doesn’t mean employment rights are wrong.
Employees should have appropriate protections.
Businesses should have responsibilities.
And better employment standards can create better workplaces.
But there is a difference between asking:
“Are employees adequately protected?”
and asking:
“Have we created an environment where employers become increasingly reluctant to take the risk of employing people?”
Those are two different questions.
And I think we need to be willing to ask both.
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The cost of not hiring
There is another side to recruitment risk that can easily be overlooked.
Not hiring also has a cost.
If a business leaves a vacancy open for six months, someone is still doing that work.
Perhaps existing employees are taking on additional responsibilities.
Perhaps overtime increases.
Perhaps customer service suffers.
Perhaps projects are delayed.
Perhaps managers spend hours trying to cover a gap rather than developing their teams.
And eventually, the organisation may discover that the “safe” decision not to hire was actually more expensive than taking a calculated recruitment risk.
So perhaps the question shouldn’t be:
“How do we eliminate the risk of making a bad hire?”
Because we can’t.
The better question might be:
“How do we become better at making hiring decisions?”
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HR’s role shouldn’t be to eliminate risk
This is where I think HR has an important role.
HR shouldn’t simply be the function that says:
“That’s risky.”
We should also be asking:
“How can we manage that risk?”
That could mean:
- better job descriptions;
- clearer selection criteria;
- structured interviews;
- evidence-based assessment;
- realistic expectations about the role;
- stronger onboarding;
- effective probation processes;
- clear performance expectations;
- good manager capability;
- and meaningful early feedback.
The objective isn’t to guarantee that every hire will be perfect.
It is to make better decisions more consistently.
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What if we’re looking at recruitment the wrong way?
Perhaps the biggest mistake is thinking about recruitment as:
“We need to find the perfect person.”
The perfect candidate probably doesn’t exist.
Instead, businesses should ask:
“What does this role actually require, which skills are essential, which can be developed, and what support will help this person succeed?”
That changes the conversation.
It allows organisations to recruit for potential, not simply an already-perfect skill set.
It also makes investment in training and development part of the recruitment strategy rather than an afterthought.
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My HR perspective
I completely understand why employers are cautious.
The cost of employment has increased.
The regulatory environment is changing.
Economic uncertainty remains.
And nobody wants to make a recruitment decision that turns into an expensive mistake.
But there is a danger in becoming too risk-averse.
If organisations stop hiring because they are afraid of making the wrong decision, we could end up with a labour market where:
Businesses struggle to access skills.
Employees struggle to find opportunities.
Young people struggle to get their first job.
And job mobility slows down.
That doesn’t benefit anyone.
Good HR shouldn’t encourage organisations to hire recklessly.
But equally, it shouldn’t encourage organisations to avoid hiring altogether.
The goal isn’t risk-free recruitment.
It’s better recruitment.
Because sometimes, the biggest risk isn’t making the wrong hire.
It’s never making the hire at all.