Experts Share: Why Are Businesses Stalling When It Comes To Employment?

The UK unemployment rate went up to 5.1% in the 3 months to October this year. The Office for National Statistics said the figure matched market expectations and came from 5.0% in the earlier period.

Total unemployment reached 1.832 million people… that was an increase of 158,000 over the quarter, according to the Office for National Statistics. The rise covered people out of work for under 6 months, between 6 and 12 months, and more than a year.

Employment numbers went down as well as the report recorded a fall of 16,000 jobs, taking total employment to 34.226 million. This marked a second quarterly fall and came mainly from fewer full time jobs.

How Are Working Patterns Changing In The UK?

The share of people holding more than one job edged up. The Office for National Statistics said 1.302 million people had a second job, equal to 3.8% of those in work.

The employment rate went down by 0.3% to 74.9%. The activity rate stayed at 79.0%, according to the same data set. This shows that the share of people either working or looking for work did not change.

These numbers place the current rate at its highest since the 3 months to March 2021. The Office for National Statistics linked the trend to fewer full time posts rather than changes in part time work.

The data gives a snapshot of the labour market during late summer and early autumn. The Office for National Statistics published the figures as part of its regular labour market release.

What Do US Labour Figures Add To The Picture?

In the States, the rates stood higher in September than a year earlier in 275 out of 387 metropolitan areas. The U.S. Bureau of Labour Statistics reported that 83 areas posted lower rates and 29 showed no change.

The national unemployment rate in September was 4.3%, which is an increase from 3.9% a year earlier, based on numbers given by the U.S. Bureau of Labour Statistics. A total of 45 areas recorded rates under 3.0%, while 8 areas posted rates of at least 8.0%.

Sioux Falls in South Dakota and Minnesota had the lowest rate at 1.8%. El Centro in California recorded the highest at 21.5%, according to the same release.

Payroll job totals rose over the year in 10 metropolitan areas and showed little movement in 377 areas. The U.S. Bureau of Labour Statistics said New York, Philadelphia and Chicago posted the largest job gains in raw numbers.

Publication of the September data arrived more than 6 weeks late because of a federal government shutdown. The U.S. Bureau of Labour Statistics said October metropolitan figures will not appear and that November data will come out in January 2026.

Why Are Businesses Stalling When It Comes To Employment?

Experts share their thoughts on why businesses are not responding to the unemployment rate rises…

Our Experts:

• Aliaksandr Kazhamiakin, CEO & Founder, Yotewo
• Ignacio Palomera, CEO and Co-Founder, Bondex
• Ben Johnston, COO, Kapitus
• Paul Naybour, CEO, Parallel Project Training

Aliaksandr Kazhamiakin, CEO & Founder, Yotewo

“Businesses aren’t stalling on employment because demand has disappeared — they’re stalling because the definition of employability has changed faster than the labour market can adapt.

“In tech hiring, the bar for entry has risen sharply. What were once considered “entry-level” tasks are increasingly handled by AI, automation, or leaner teams using AI copilots. As a result, companies are no longer hiring for raw potential or theoretical knowledge alone. They’re hiring for AI fluency, niche technical depth, strong communication skills, and demonstrable real-world experience — even at junior levels.

“This creates a structural mismatch. Young workers are entering the market with degrees and generalist skills, while businesses are under pressure to hire specialists who can deliver value immediately. By definition, those profiles are harder to find among early-career candidates.”
 

Ignacio Palomera, CEO and Co-Founder, Bondex

“There’s a bigger issue at play than just hesitancy from businesses. The hiring infrastructure itself is outdated. Traditional platforms don’t give employers what they need to confidently hire younger workers – especially Gen Z. They’re stuck with static resumes, siloed profiles, and zero context. You can’t build trust or assess credibility off that.

“What we’re seeing, especially across the Bondex network, is that employers want to hire. But they’re being more selective, not because they’re risk-averse, but because they’re overwhelmed by noise. There’s no real system in place to surface emerging talent in a trustworthy, verifiable way.

“That’s the gap we’re solving with Bondex. We’re building a reputation-driven hiring economy, where young professionals can show, not just tell—what they’ve done, what they know, and who vouches for them. Our take? Hiring hasn’t stalled. It’s just waiting for better infrastructure.”

Ben Johnston, COO, Kapitus

“Finding responsible, dedicated employees at affordable wages is a constant struggle for small businesses. Despite the labour market being softer today than it was a year ago, small businesses are struggling with other obstacles that are placing pressure on margins. Tariffs have driven the cost of goods higher for most small businesses forcing them to decide how much of this cost to pass on to the end customer and how much to cover themselves.

“At the same time inflation is putting pressure on consumer sentiment and spending, making demand more difficult to gauge. As a result, many small businesses are scaling back their plans for expansion and are keeping a close eye on their cash positions.”

Here are some of the factors impacting small business hiring:

1. A tight labour market and rising unemployment.

“Despite an extended period of high interest rates and recent softness in job creation numbers, labour markets remain surprisingly tight. However, we have seen the unemployment rate creep steadily higher for the last two and a half years. As of September, unemployment sat at 4.4% up from a low 3.4% in April 2023.

“In some ways, slightly higher unemployment may be a good thing for small businesses who suffered through difficult times as the US economy emerged from Covid. During that time small businesses struggled to rehire and retain employees as demand for goods and services surged. However, while higher unemployment makes hiring quality candidates more affordable, higher unemployment suppresses wage growth and weighs on consumer spending, the primary driver of small business revenue.”

2. Small businesses are having challenges in finding qualified candidates.

“As unemployment rises, small businesses are benefitting from a less competitive labour market. This we believe is a product of competing forces, one driven by AI and automation which allows corporate America to do more with less and loosens its dependency on the labour market. The other is the impact of the Federal Government’s changes to the H-1B program and crackdown on undocumented immigration. Restrictions on availability of foreign labour reduces the labour supply and ultimately makes hiring more expensive.

“AI and Automation: We believe that AI is beginning to displace workers, especially in white-collar jobs. Companies are currently investing heavily into AI technologies that can analyze data and quickly make decisions that once could only be made by humans. For example, companies are using natural language models to search the web for information, access proprietary corporate data, and collect information from third party data sources, to then synthesize this information and draw business conclusions that once could only be determined by a human.

“At the moment, these actions have been largely contained within traditional white-collar functions such as data analytics, underwriting, editing, and written communication. However, with the advent of more sophisticated and specialised robotics, we see the potential for AI technologies to be combined with mechanical actions capable of simulating many physical functions currently required to perform blue-collar jobs. These jobs include truck and delivery cab drivers, longshoremen, factory workers, warehouse logistics operators, and at some point in the future, even contractors and home healthcare workers.

“Work Visa Reduction: We don’t expect the federal government’s decision to charge $100,000 for each new H-1B visa to have a significant impact on small or medium sized businesses. This is because the primary applicants for these visas are concentrated in the world’s largest technology and consulting firms. We expect that these firms can afford to pay the fee if it means accessing top talent that they have difficulty finding in the U.S.

“However, given other changes to the programme that award higher wage earners a greater likelihood of selection, we expect to see a shift in the visas awarded toward older, more experienced applicants. This could have an impact on US universities which in recent years have grown their enrollment of international students. Many international students come to US schools with the expectation that they will be able to work here under the H-1B program upon graduation. If fewer visas are available for lower wage earners, this may curtail the demand for a US education for some international students.”

Paul Naybour, CEO, Parallel Project Training

“I think two main factors are at play here. Firstly, businesses are not stalling because there’s no work to be done, but because uncertainty in the global economy makes them risk-averse. In both the UK and the US, we’re seeing organisations delay permanent hiring while they wait for clearer signals on inflation, interest rates, and on productivity gains from new technology, namely AI. The result is a reluctance to commit to early-career roles, even though demand for skills hasn’t disappeared.

“A second, related factor is that many UK businesses are relying more heavily on outsourcing, contractors, and automation to fill immediate gaps; rather than investing in early-career talent

“This same thing is happening in the US. Companies focus on flexibility rather than development, and the downside is that young workers are locked out of opportunities to gain experience, while businesses quietly erode their future leadership and delivery pipelines.

“It’s a strategic failure disguised as efficiency.

“Long-term success depends on capability building, not just cost control – and delaying early-career hiring is one of the most damaging shortcuts organisations can take.”