Where Have All the Jobs Gone?: A Decline in Job Vacancies

This rapidly shifting economic landscape raises a question that echoes through the halls of businesses and the minds of job seekers alike: Where have all the jobs gone? The once-vibrant UK job market, which saw record-high vacancy numbers in the wake of the pandemic, is now experiencing a sustained and worrying downturn. This isn’t a temporary blip but a multi-year trend that has left many wondering about the future of work.

This article will examine the intricate web of factors driving this decline, from economic pressures to technological disruptions, and offer insights for both employers and employees navigating this new landscape. Understanding these dynamics is no longer optional; it’s essential for thriving in a labour market that is fundamentally redefining itself.

The Numbers Behind the Trend: Understanding the Scale of the Decline

To comprehend the current state of the UK job market, we must first examine the stark statistics that paint a clear picture of decline. According to the Office for National Statistics, the estimated number of vacancies in the UK fell to 717,000 in July to September 2025, a decrease of 9,000 (1.3%) from the previous quarter. This marks the 39th consecutive period where vacancy numbers have dropped compared with the previous three months an uninterrupted decline spanning more than three years.

The situation becomes even more striking when we look at the broader timeline. Since its peak in March to May 2022, the total number of vacancies has plummeted by an estimated 583,000. When compared to pre-pandemic levels, the current vacancy count stands 78,000 (9.8%) below what it was in January to March 2020. This demonstrates that the current downturn represents more than just a post-normalisation from pandemic extremes; it signifies a genuine cooling of the labour market.

*Table: UK Job Vacancies Trends (July-September 2025)*

This decline has directly affected the balance of power in the job market. The unemployment-to-vacancy ratio a key measure of labour market tightness has risen to 2.4 in June to August 2025, meaning there are now 2.4 unemployed people for every available job. This is up from 1.7 in the same period a year ago, indicating a market that is becoming increasingly favourable to employers rather than job seekers.

A Sector-by-Sector Breakdown: Where Are Losses Most Acute?

The decline in vacancies has not been uniform across the economy. While nearly half of the 18 industry sectors tracked by the ONS saw decreases in the latest quarter, some have been hit particularly hard. The real estate activities sector suffered the largest percentage decrease in vacancies at 20.6%, while the human health and social work activities sector experienced the largest volume decrease, falling by 10,000 vacancies. This is particularly noteworthy as healthcare has traditionally been a resilient sector during economic downturns.

The pain extends across multiple industries. Accommodation and food service activities fell by 5,000 vacancies, reflecting continued challenges in the hospitality sector. Year-on-year, the picture is even bleaker, with 16 of the 18 sectors showing declines. The construction sector stands out with the largest percentage decrease in vacancies compared to the same period last year, down by 25.9%.

Some sectors continue to show resilience despite the broader downturn. Information technology continues to lead sector performance according to the ManpowerGroup Employment Outlook Survey, though hiring intentions have moderated from their previous highs. Financials and real estate also show relatively stronger hiring intentions compared to other sectors, suggesting that high-skill, knowledge-based industries may be weathering the storm better than consumer-facing and industrial sectors.

The Economic Drivers: What’s Behind the Persistent Decline?

This decline isn’t random; it’s driven by a potent mix of economic caution and technological transformation. Businesses are freezing hiring due to weak confidence, high costs, and economic uncertainty. Simultaneously, the complex adoption of AI is disrupting hiring patterns, not by mass replacement, but by redirecting resources and reducing certain entry-level roles.

Economic Uncertainty and Business Confidence

At the heart of the vacancy decline lies a profound sense of economic uncertainty that has made employers cautious about expansion. According to a report from KPMG and REC UK, recruitment activity has fallen sharply due to “weak employer confidence regarding the economic outlook”. The report notes that recruiters frequently mentioned that hiring activity had fallen due to “weak confidence around the economic outlook and greater pressure on budgets due to recent increases in payroll costs”.

This uncertainty is compounded by several factors. Businesses are grappling with increased operational costs, including recent rises in national insurance contributions. Additionally, there is significant uncertainty around both the economy and government commitments, leading many organisations to adopt a more conservative approach to hiring. As Jon Holt, UK Senior Partner for KPMG, explained: “Economic uncertainty, the complexities of AI adoption, and global headwinds are all weighing on business planning”.

The Role of AI and Automation

The impact of artificial intelligence on the job market represents a complex and often misunderstood factor in the vacancy decline. Contrary to sensationalist claims of widespread job replacement, the current influence of AI appears more nuanced. The KPMG and REC UK study suggests that the drop in permanent placements hasn’t primarily stemmed from AI taking jobs, but rather from “the complexities of AI implementation, their costly nature, and their high likelihood of failing to actually add value despite the hype”.

This suggests that businesses may be redirecting resources toward figuring out AI implementation rather than immediate expansion. However, there are signs that AI is beginning to affect hiring patterns, particularly for certain roles. Petra Tagg, Director at ManpowerGroup UK, notes: “The first half of 2025 showed that entry-level hiring was falling as firms reached for AI to take on routine tasks.” This indicates that while AI may not be causing mass job displacement, it is contributing to a shift in the types of roles employers are looking to fill.

Regional Disparities and Demographic Impacts

The job market downturn is not a uniform national experience. A clear geographical divide has emerged, with London and the Southeast holding stronger, while former industrial areas face steeper challenges. Furthermore, graduates and young workers are disproportionately affected, with entry-level opportunities shrinking significantly, creating a difficult start for the newest generation in the workforce.

Geographical Variations in Job Availability

The decline in vacancies has not been evenly distributed across the United Kingdom, creating distinct regional disparities in employment opportunities. According to reports, London and the Southeast continues to offer stronger labour markets, higher pay, and more growth industries. Meanwhile, former industrial areas and rural regions struggle with higher unemployment and inactivity due to skills gaps and weaker infrastructure.

The KPMG and REC UK study found that permanent placements fell across all four English regions monitored, with the steepest decline in the South of England, led by London. Despite this, the capital and its surrounding regions still maintain a relative advantage in terms of overall opportunities. The data suggests that searches for “when will the job market improve” have seen particularly significant increases in areas like Liverpool and Newcastle, indicating heightened concern in regions facing greater economic challenges.

The Graduate and Young Worker Dilemma

One of the most affected demographics in the current job market downturn is graduates and young workers seeking entry-level positions. Reports indicate that graduate opportunities have suffered significantly, with listings for entry-level graduate jobs down 33% year-on-year, reaching their lowest level in seven years. This contraction in early-career opportunities could have long-term implications for career progression and skill development among the youngest segment of the workforce.

Despite this sharp decline in listings, it’s worth noting that employment rates for graduates remain relatively high at around 87.6%, and unemployment among graduates sits at roughly 3.1% lower than the national average. This suggests that while finding appropriate work has become more challenging, those with higher education qualifications still maintain an advantage in the labour market compared to non-graduates, who face 68% employment and 5.6% unemployment rates.

The Bigger Picture: Employment in a Changing Workforce

Looking beyond the headline vacancy figures reveals deeper shifts in the quality and nature of work. Underemployment is rising, with more people in part-time roles or jobs that underutilise their skills. A notable divergence is also appearing between a cautious, contracting private sector and a still-growing public sector, highlighting how different parts of the economy are responding to current pressures.

The Rise in Underemployment

Beyond the headline vacancy figures, another concerning trend has emerged: the rise in underemployment. While comprehensive recent statistics on underemployment are limited, the ONS continues to track this important metric, recognising its significance in understanding labour market health. Underemployment represents workers who are employed but would like to work more hours than they currently do or those working in positions that don’t fully utilise their skills and qualifications.

This phenomenon connects directly to reports of staff availability rising at “a substantial pace,” with one analysis indicating the proportion rose at its quickest since the survey began in 1997 something attributed to “redundancies and worries over current job security”. As more workers become available for fewer positions, not only does unemployment increase, but those who remain employed often find themselves in less secure positions with fewer hours and less optimal working conditions.

Public vs. Private Sector Dynamics

The current labour market downturn has affected public and private sectors differently, creating an interesting divergence in employment trends. While overall workforce jobs decreased to 36.8 million in the UK in June 2025, representing a quarterly fall of 182,000 (0.5%), public sector employment told a different story. Employment in the public sector was estimated at 6.17 million in June 2025, an increase of 17,000 (0.3%) compared with March 2025, and an increase of 75,000 (1.2%) compared with June 2024.

This divergence highlights how different sectors respond to economic pressures. The private sector appears to be reacting to economic uncertainty with greater caution in hiring, while the public sector continues to grow, particularly in areas like human health and social work activities, which saw the largest annual increase in workforce jobs, up by 68,000 (1.3%) since June 2024. This growth aligns with ongoing demographic pressures and government commitments in these areas.

Future Outlook: When Might the Job Market Recover?

Predicting the trajectory of the job market remains challenging, but most indicators suggest recovery will be gradual rather than rapid. ManpowerGroup’s survey indicates that hiring demand among UK employers has dropped to a new low, with a Net Employment Outlook of just +11% for Q4 2025, representing a significant contraction of 17 percentage points year-on-year and 8 percentage points quarter-on-quarter. Notably, the UK recorded the biggest drop in year-on-year planned hiring globally.

Looking further ahead, expectations are that “late 2025 and early 2026 may mark the bottoming phase, with public services, health, and green sectors stabilising and selective hiring resuming”. A more visible recovery could arrive by mid-2026 if interest rates ease, investment improves, and business confidence rises, while full normalisation in many sectors may take until 2027, particularly in lagging regions.

The timing and strength of any recovery will likely depend on several interconnected factors, including the direction of interest rates, improvements in business confidence, and broader global economic conditions. As the ManpowerGroup report emphasises, businesses are looking for “relief on employment costs, clarity on policy timelines and bold investment in long-term infrastructure and pragmatic innovation”  to stimulate hiring.

Navigating the Current Job Market: Strategies for Job Seekers

In a challenging job market with declining vacancies and increased competition, job seekers need to adapt their strategies to stand out. Based on current trends and expert recommendations, here are several approaches that can improve prospects:

• Upskill in high-demand areas: Focus on developing skills in sectors that continue to show resilience, such as information technology, healthcare, and green technology. Practical, certified skills in these areas can provide a competitive edge.
• Emphasise adaptability and digital literacy: As Petra Tagg from ManpowerGroup notes, “Competence is currency in today’s job market”. Highlight transferable skills like problem-solving, leadership, and digital literacy that are valuable across multiple roles and industries.
• Tailor applications strategically: With increased competition for each role, generic applications are less effective. Zoe Blogg, Managing Director at Reboot Online, advises job seekers to “tailor CVs to highlight measurable achievements in high-demand sectors”.
• Network strategically: Building professional connections becomes increasingly important when vacancies are declining. Engage with industry communities, attend virtual events, and leverage existing connections to learn about opportunities before they are widely advertised.
• Consider sectoral and regional flexibility: Be open to opportunities in sectors and regions that are showing stronger performance. While this may not be feasible for everyone, flexibility in job search parameters can reveal hidden opportunities.

Conclusion: An Evolving World of Work

The decline in job vacancies across the UK represents more than a simple economic fluctuation; it signals a fundamental transformation of the world of work. Economic uncertainty, technological advancement, and shifting business models have converged to create a job market that demands new strategies from both employers and job seekers. While the current landscape presents significant challenges, it also creates opportunities for those willing to adapt, learn, and position themselves strategically.

The path forward will likely be characterised by gradual recovery rather than sudden resurgence, with different sectors recovering at varying paces. As we navigate this period of transition, understanding the underlying trends from the sector-specific impacts to the regional disparities and demographic challenges provides the foundation for making informed decisions. By recognising these dynamics and adapting accordingly, businesses can position themselves for future growth, and job seekers can find pathways to meaningful employment despite the headwinds.

The jobs haven’t disappeared entirely; they’re evolving. Success in this new environment will belong to those who evolve with them.

The labour market may be cooling, but opportunity remains for those with the right skills and strategies. Stay informed, stay adaptable, and consider how your unique strengths can meet the evolving needs of the UK economy.