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Hiring strategies to overcome the effects of rising unemployment in the UK
Written by Danielle Fargnoli-Read on 25 February 2026
Unemployment has crept up to its highest level in almost five years, with official figures now sitting at 5.2%. Hiring activity has cooled, and businesses across all sectors are approaching recruitment more cautiously. On paper, this might seem like good news for your business: more people looking for work should make hiring easier. In reality, it’s not that simple.
In this expert guide, we explain why, what we’re seeing at WorkNest, and how our team of UK-based HR Consultants can help you make the most of the current market.
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The effects of rising unemployment for UK businesses
There may be more job seekers, but that hasn’t necessarily led to higher-quality applications. Employers we’re working with are reporting the surge in applications is forcing them to spend more time sifting through CVs and many hiring managers are struggling to identify the right fit.
Combine that with tighter budgets, slow decision-making, and upcoming changes in employment legislation, and recruitment can quickly become a drain on time and energy – despite the apparent abundance of candidates. We’re also seeing a noticeable change in how candidates are approaching the job market:
- Strong candidates are being more selective – they’re looking for roles that align with their goals and values.
- Early-career and junior candidates are facing more competition, making it tougher to secure roles.
- Passive candidates are more open to conversations – but only if the opportunity ticks key boxes like flexibility, growth, and job security.
For employers, this makes employer brand, role clarity, and a smooth recruitment process more important than ever. Candidates may need work, but they’re still looking for the right work at the right organisation.
You can check out our guide to 7 effective recruitment trends to help play into these new job candidate expectations.
Unlocking recruitment opportunities in a troubled economy
Here’s the interesting part: slower markets can create smarter hiring opportunities. When recruitment cools across the board, proactive businesses often end up tapping into talent they simply couldn’t reach during hotter markets. But this only works if your approach is focused, realistic, and well-structured.
It’s good business practice to ask yourself:
- Are we clear on what we need in this role?
- Are we assessing potential as well as experience?
- Is our recruitment process helping or hindering our chances of securing the strongest candidates?
A positive step here is to use strategic workplace planning techniques to identify skills gaps, anticipate upcoming business needs, and plan your recruitment/training ahead of schedule.
Creative hiring techniques to deal with a difficult job market
Here at WorkNest, this is exactly the kind of job market where we can make the biggest long-term difference. Our team of UK outsourced recruitment specialists helps organisations like yours:
- Streamline recruitment strategies – designing fair, efficient, and engaging workflows that save time and reduce frustration.
- Rethink their approach – optimising advertising channels and recruitment stages to help you reach the right people at the right time.
- Enhance employer branding – refining job adverts, descriptions, and person specifications to attract the candidates you want.
- Leverage technology – using applicant tracking software (ATS) to create a smooth candidate experience, reduce drop-outs, and maximise hiring success.
- Identify quality applicants quickly – employing the ATS to sift through high volumes of applications and pinpoint strong potential candidates.
Whether you’re hiring for growth, backfilling roles, or want to be ready when the right person appears, having the right recruitment support in place makes all the difference.
Solve your staffing challenges today
Rising unemployment doesn’t mean recruitment becomes easy – it means it becomes more strategic. To succeed, you need to adapt your approach, stay visible to top talent, and continue to invest in hiring even when the market feels uncertain.
If you’re reviewing your recruitment plans for the year ahead and would like support from those who understand what’s really happening in the market, get in touch with our team on 0345 226 8393 or request your free consultation using the button below.
FAQs
Is unemployment rising in the UK?
Yes, in the UK there is a five-year high (as of December 2025) in unemployment. Notably with young people aged 16-24, with the youth unemployment rate rising to 16.1%.
Why is unemployment rising in the UK?
The core drivers in this increase are due to weaker hiring activity from UK businesses, the rising costs of running an organisation, and continued economic uncertainty. Fewer entry-level roles have also ensured younger generations are struggling to start their careers.
What industries are most effected by rising unemployment?
The UK industries most affected include retail, wholesale, hospitality, construction, administrative, manufacturing, and the charity sector. The key trends across all of these are youth unemployment, a lack of entry-level roles, regional impacts, and a rise in self-employment.
What is the impact on a small business of an increase in unemployment?
The impact may include reduced consumer demands, due to less disposable income. This may affect your sales and revenue, placing your organisation under financial risk. To overcome this, you can introduce business workforce planning and/or turning to outsourced HR support to guide you through difficult times.
