A Labour Market in Transition, Not Decline

Author: Roger Clements, Chief Growth Officer at Matrix

Recent headlines, including the latest ONS figures, suggest a cooling UK labour market. Vacancies have decreased for the 33rd consecutive quarter, now standing at 781,000 – below pre-pandemic levels for the first time since 2021. The unemployment rate has edged up to 4.4%, and payrolled employees have declined by 78,000 in March 2025 alone. 

However, these numbers don’t tell the full story. As industry peer and workforce leader, Melanie Forbes, aptly pointed out in a recent LinkedIn post, the market isn’t as flat as it appears. Employers are inundated with applications, yet many candidates lack the necessary skills. Consequently, businesses are shifting from traditional job postings to more direct talent attraction methods, indicating a strategic pivot rather than a hiring freeze.​ 

Strategic Shifts in Talent Acquisition 

The current landscape reflects a recalibration in hiring practices. Employers are prioritising quality over quantity, focusing on targeted recruitment strategies to secure the right talent. This approach is evident in the rise of blended workforce models, integrating permanent staff, freelancers, contractors, and AI-driven tools to enhance agility and resilience.​ 

Our recent whitepaper, Unlocking Unseen Talent, reflects on the statistic that 93% of business leaders consider workforce agility crucial for success. By embracing flexible staffing solutions, organisations can adapt swiftly to market changes, address skill shortages, and drive innovation.​  

At the same time, we must acknowledge that many of the labour market reports being released – from the ONS to REC and KPMG, and even the World Economic Forum – all are built on traditional metrics. They’re valuable, yes, but they measure an employment landscape rooted in permanent, full-time work. That’s no longer the reality for a large part of today’s workforce. If we want to understand and prepare for what’s coming next, we need new barometers. New ways to measure how people are really working today, and how they want to work tomorrow. 

Addressing the Skills Mismatch 

The surge in applications juxtaposed with the struggle to find suitable candidates highlights a significant skills mismatch. According to the KPMG and REC UK Report on Jobs, candidate availability has increased at the fastest rate since December 2020, yet hiring activity continues to decline. This paradox underscores the need for strategic workforce planning and investment in upskilling initiatives.  

Moreover, as reported in this article in the Financial Times, graduates face mounting challenges in securing employment, with an average of 140 applications per vacancy and employers hesitant to provide necessary training. This scenario calls for a re-evaluation of talent development strategies to bridge the gap between academic qualifications and industry requirements.​ 

The recent Future of Jobs Report 2025 by the World Economic Forum reinforces this point. It forecasts that 78 million new jobs will be created by 2030, many driven by AI and emerging technologies. However, 60 million roles are expected to be displaced over the same period. That’s a net positive, but only if we act now to prepare people with the right skills. Without a serious and sustained investment in upskilling and reskilling, we risk creating an even wider gap between opportunity and accessibility. 

Embracing the Blended Workforce Model 

The traditional 9-to-5 employment model is giving way to a more dynamic, blended workforce. Organisations are increasingly leveraging a mix of full-time employees, contingent workers, and AI technologies to meet evolving business needs. This model offers access to a broader talent pool, fosters innovation, and enhances operational flexibility.​ 

However, implementing a blended workforce requires robust frameworks to ensure compliance, inclusivity, and effective integration of diverse work arrangements. At Matrix, we support organisations in navigating this complexity, enabling them to harness the full potential of their workforce.​ 

So, What Now? Navigating the Evolving Landscape 

The UK job market is not in decline but undergoing a significant transformation. Employers are adapting to new realities, adopting strategic hiring practices, and embracing flexible workforce models to remain competitive. By focusing on agility, skill development, and inclusive talent strategies, organisations can thrive amidst uncertainty and shape a resilient future of work. 

We need to evolve our thinking – not just in how we hire, but in how we measure the world of work. Traditional data captures only a fraction of what’s really happening. If we continue relying on outdated indices, we risk misreading a market that isn’t in decline, but in transition. The reality is more complex and more promising. The future of work is being shaped by skills, flexibility, and purpose, delivered through agile ecosystems that blend permanent talent, contingent workers and AI. But AI is not a substitute for people – it’s a partner. A tool that, when used right, enhances the human strengths we need most: creativity, empathy, adaptability. That’s the story we should be telling – and the future we should be building towards. 

Roger Clements is the Chief Growth Officer at Matrix. For more insights, download our whitepaper, “Unlocking Unseen Talent”, or visit us at teammatrix.com.