The CIPD’s Labour Market Outlook report for Spring 2026 has found that UK employers are prioritising cost management over growth as rising business costs and global uncertainty impact employer confidence.
The report, which is published quarterly, reveals that 58% of employers said cost management is their highest priority this quarter, regardless of sector and organisation size. The second biggest priority was improving productivity at 44%, increasing to 55% among large private sector employers, while growing market share was identified as the third key priority (47% of large private sector employers compared to 35% overall).
The net employment balance, which is the difference between employers expecting there will be an increase in staff levels and those expecting there will be a decrease in the next three months, remains at a near record low this quarter at +10. The median expected basic pay increase remains at 3% overall, and across all sectors, with real pay set to fall.
Regulatory compliance was cited as an organisational priority for only 20% of SMEs, compared to 32% for larger organisations, despite the wide-ranging reforms being introduced through the Employment Rights Act 2025. We have already seen a number of significant changes come into force in April this year, including the expansion of the Statutory Sick Pay system and day-one paternity leave and parental leave rights, with more on the way in October 2026. The CIPD highlights that employers will need to communicate these changes clearly to everyone, especially line managers, who will need to understand what this means in practice for their teams.
Recommendations in the report include building capability on regulatory compliance, including keeping informed on upcoming Employment Rights Act 2025 changes, and preparing for strengthening of trade union rights by upskilling teams. The CIPD says that organisations will need to strengthen employment relations skills to help ensure that voluntary agreements can be reached and to avoid disputes.
From October 2026, the Employment Rights Act 2025 will establish a statutory right for trade unions to access workplaces. The Government has been consulting on a draft Code of Practice on this new right, which is expected to be implemented by October 2026, subject to parliamentary approval.
