How to ask for and get, a pay rise – even during a pandemic!

The accounting industry is facing a growing talent crisis, with 94% of firms reporting that recruitment challenges are limiting their ability to grow. Staff shortages, an ageing workforce, and rising salary pressures are driving a shift toward outsourcing, offshoring, and tech investment.

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The latest data shows that the UK labour market continues to perform steadily in 2025, with employment levels holding firm and job vacancies remaining historically high. While pay growth has slowed slightly, overall workforce activity remains strong, supported by high participation and resilient hiring demand. Liz Jones, Recruitment Director at people2people UK, says that this steady picture aligns closely with trends identified in the firm’s 2025 UK Market Report. “We are still seeing a healthy labour market,” she explains. “Employment is growing, and job openings remain strong, especially in sectors such as healthcare, logistics and professional services.” Employment Rate Rises, Unemployment Falls According to the July 2025 bulletin, the UK employment rate rose to 76.4 percent, the highest in over a year. The unemployment rate dropped to 3.7 percent, a level not seen since early 2020. This marks continued improvement in labour force participation following a volatile period during the pandemic recovery. Jones notes that this trend is being felt across multiple industries. "Businesses are rebuilding workforces and candidates are returning to the labour market," she says. "It is encouraging to see stronger engagement from both employers and jobseekers." Pay Growth Slows but Remains Positive One notable shift in the July update is a softening of pay growth. Annual wage increases for the period stood at 5.2 percent, down from 6.1 percent earlier in the year. This reflects a more balanced economic climate as inflation eases and employers stabilise budgets. “While pay growth is slowing, it is still above historical averages,” Jones comments. “Employers are adjusting to cost pressures, but most remain committed to offering competitive salaries to retain talent.” Vacancies Stay High, Reflecting Continued Demand Despite slower wage growth, the number of job vacancies remains elevated. Sectors such as care, education, and IT continue to post consistent hiring demand, with temporary and contract roles seeing a modest rise in 2025. “Our market report shows that employers are being more selective, but they are still hiring,” says Jones. “The competition for skilled talent is keeping demand steady, especially for roles that require specialist expertise or qualifications.” Implications for Employers With a stable employment base and slower but sustained pay growth, Jones suggests that now is a critical time for companies to refine their recruitment strategies. She recommends: Reviewing salary benchmarking to stay competitive in priority roles Streamlining recruitment processes to reduce vacancy durations Investing in retention through training and internal mobility Enhancing employer branding to attract passive candidates “The market is not slowing down,” she says. “It is settling. Employers who respond with clarity and flexibility will continue to secure great talent.” Summary The July 2025 labour market update confirms a period of stability for the UK workforce. While pay increases are moderating, employment levels remain high and hiring activity continues across core sectors. For recruitment leaders, this is a time to invest in strategy, not to pull back. With the right planning, employers can navigate this market with confidence.

Pressure to Return to the Office Is Driving Resentment Among UK Workers As flexible working continues to define the future of employment, new findings suggest the UK may be facing a growing disconnect between employer expectations and employee preferences. According to people2people UK’s 2025 Market Report, more than half of workers feel increasing pressure to spend additional time in the office, a shift that is impacting engagement and retention across multiple sectors. Liz Jones, Recruitment Director at people2people UK, says that rigid workplace policies are now a leading contributor to candidate reluctance and employee churn. "Our data shows that 54 percent of UK employees feel pushed to return to the office more than they want to," she explains. "This pressure is not just inconvenient. It is reshaping how people view their current roles and future opportunities." Where the Pressure Comes From The 2025 Market Report found that much of the drive to return to the office stems from top leadership, with executive teams leading the call for more on-site presence. This push is not always aligned with performance metrics or employee feedback. "This is not about output or productivity," says Jones. "It is about outdated assumptions. Leadership often equates visibility with value, but that mindset is increasingly out of step with how modern teams work best." The mismatch between executive expectations and employee needs is contributing to declining morale, particularly in office-based roles that could easily operate on a hybrid basis. Flexibility Still Matters Despite the push to increase office attendance, flexibility remains a top priority for candidates and employees. The Market Report confirms that roles offering flexible working continue to receive more applications, fill faster, and maintain lower turnover rates. "Flexibility is not a temporary trend," Jones adds. "It is now a standard part of what professionals expect. Candidates are telling us clearly that how they work matters just as much as where or for whom." The data reveals that teams which embrace flexible models tend to report stronger engagement, better collaboration, and improved retention outcomes, especially in sectors such as tech, finance, and professional services. What Employers Should Do To stay competitive, Jones advises that employers need to reevaluate their return-to-office strategies with both data and empathy in mind. people2people UK recommends: Involving employees in setting attendance expectations Tailoring policies by role, function, and team needs Communicating the reasons for on-site requirements clearly and consistently Measuring the impact of attendance policies on productivity and engagement "One-size-fits-all approaches no longer work," Jones notes. "Companies that listen to their teams and create flexibility within structure will outperform those that rely on top-down mandates." Looking Ahead As the labour market continues to evolve, the ability to offer meaningful flexibility will be a deciding factor in who attracts and retains top talent. The 2025 UK Market Report shows a strong correlation between adaptive working policies and long-term business resilience. "Employers have a choice," Jones concludes. "They can lead with trust and flexibility, or risk losing great people to those who do."