In a sluggish and competitive jobs market, employees are prioritising holding on to their roles and ‘job hugging’ is on the rise, research has argued.
The report by Employment Hero has added to the sense of stagnation currently hanging over the UK jobs market, where a run of reports over the summer have all highlighted just how challenging the outlook is.
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The research, drawn from aggregated insights from more than 350,000 small businesses and two million employees in the UK, Australia, New Zealand, as well as a separate YouGov survey of 3,635 workers, argued the employment rate has followed a distinct U-shaped curve in recent months.
Following a sharp decline in the aftermath of the budget, where the seasonal peak in the run-up to Christmas did not materialise and a sharp dip of -0.9% was recorded in December 2024, there was a slow but steady recovery from February.
Nevertheless, overall, the UK’s employment landscape has shown signs of “a significant slowdown” over the past 12 months, said Employment Hero.
As of July 2025, while the employment rate remained positive on a year-on-year basis, standing at 3.1%, this growth rate had decelerated markedly.
This indicated a weakening labour market compared with the same period in 2024, when the year-on-year growth rate was consistently hovering around 8%. This slowdown coincided with the government’s National Insurance reforms introduced in April, Employment Hero argued.
In fact, last October’s Budget, with its changes to NI, has had a lasting impact on the employment landscape, it said.
While employment growth is slowly recovering, year-on-year gains are still down and new job opportunities are only just picking up.
At a day-to-day level, the weaker labour market meant employees are prioritising holding on to their roles and ‘job hugging’ is on the rise, it argued.
The YouGov polling, for example, showed that a majority of workers (55%) are now prioritising job security, putting their ambitions on hold while they await signs of sustained labour market growth and improved business confidence. This rose to 65% of 18–34-year-olds.
Moreover, a majority of employees (59%) also felt the UK labour market is getting worse, while 51% did not feel confident about landing a new job within three months.
This, Employment Hero argued, reflected wider sentiment around the intensely competitive nature of the labour market, as 40% felt there was too much competition for jobs, rising to 53% among 18–34-year-olds.
Kevin Fitzgerald, UK managing director at Employment Hero, said: “While the labour market is showing early signs of recovery, our data shows we’ve still got a long way to go before workers feel confident again. With most people holding a negative view of the jobs market, it’s no surprise we’re seeing more ‘job hugging’ as employees look to weather the storm. But this isn’t a long-term solution. Job mobility is key for growth – both for people and businesses.
“Recent changes to the tax regime have also knocked confidence. The rise in employer National Insurance Contributions has had a ripple effect right across the economy, and we’re now at a critical juncture. As we head towards the Autumn Budget, avoiding more tax changes that trigger knee-jerk reactions from businesses will be vital if we want to build on the early signs of recovery,” Fitzgerald added.
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