Marvin OnumonuThe latest CIPD Labour Market Outlook found cost management was the top priority for 58% of organisations.
Improving productivity followed at 44%, with growing market share at 35%.
Larger private sector employers put more focus on productivity and market share, but the overall approach was cautious.
Employer confidence stayed close to record lows, with many key measures subdued.
The net employment balance was +10, showing only a slight increase in hiring intentions.
Hiring was strongest in professional services, IT, and manufacturing.
It was weakest in compulsory education, public administration and other public sector roles.
Over one in five employers expect to make redundancies in the coming three months, rising to a quarter in the public sector.
The proportion planning to recruit in the next three months rose slightly to 63%, mainly due to stronger hiring intentions in the public sector.
The Employment Rights Act 2025 has brought new rights and compliance demands for employers.
Only 20% of small and medium-sized enterprises (SMEs) named regulatory compliance as a priority, compared to 32% of larger firms.
Pay awards remain around 3%, unchanged for two years, but with inflation rising, most workers are likely to feel worse off.
40% of employers expect to award increases between 3% and 3.99%, while only 15% expect to give rises of 5% or more.
Recruitment pressures have eased, with only 12% of employers expecting major difficulties filling roles in the next six months, down from 15% a year ago.
However, a third of employers still report hard-to-fill vacancies, showing ongoing skills shortages across the economy.
CIPD has called on the Government to ensure SMEs have access to clear and practical information.
James Cockett, senior labour market economist at CIPD and author of the report, said: “Our survey finds that organisations are prioritising cost management above growth and productivity ambitions, reflecting the cautious approach many businesses are taking in response to sustained increases in labour, energy, and wider operating costs, with further increases expected this year.
“With employer confidence remaining low, it’s vital that government creates the right conditions employers need to invest, grow, and plan for the future.
“Targeted support for skills and workforce development and guidance to help employers comply with new measures in the Employment Rights Act will be crucial.”
Cockett added: “With so much happening externally, organisations should focus on the areas they can directly influence.
“This means taking a proactive approach to workforce planning and ensuring investment in technologies such as AI is supported by the right mix of people, skills, and systems to deliver meaningful productivity gains.”
