The UK’s job market is taking a battering in the wake of Chancellor Rachel Reeves’ record tax-raising Budget, with hiring slowing at the worst rate in four years since the Pandemic.
Businesses are bracing for the impact of soaring National Insurance contributions set to come into effect from April next year, leaving jobseekers facing bleak prospects.
New figures from the Recruitment & Employment Confederation (REC) and KPMG reveal that demand for staff last month plunged at its sharpest rate since August 2020, when the UK was grappling with the pandemic’s economic fallout. The downturn is particularly pronounced in permanent roles, with recruitment in this sector almost grinding to a halt.
Rising Redundancies and Growing Job Uncertainty
The survey also highlights a worrying trend: growing numbers of Britons are entering the job market, driven by a rise in redundancies. The combination of reduced hiring and an increase in jobseekers has cast a long shadow over the UK’s economic outlook as businesses tighten their belts.
As reported in the Telegraph, Neil Carberry, chief executive of REC, explained:
“It should be a surprise to no one that firms took the time to reassess their hiring needs in November after a tough Budget for employers. The drop in vacancies was led by private sector permanent roles, and slower permanent recruitment billings across the month also reflected this trend. The real question now is whether businesses will return to the market as they go into next year with greater certainty about the path ahead.”
Businesses Slam Reeves’ National Insurance Hike
The dire state of the jobs market comes in the wake of Reeves’ Budget, which has been met with widespread condemnation from business leaders. Under her plan, the rate of employer National Insurance contributions will rise from 13.8% to 15% next year. Simultaneously, the earnings threshold at which workers start incurring the tax will plummet from £9,100 to £5,000.
The changes are expected to rake in £25 billion for the Treasury, but critics argue the move will decimate businesses already grappling with inflation, rising costs, and economic uncertainty. The Chancellor has been accused of “milking” corporate Britain to fund Labour’s spending pledges, with many warning the hike will stifle growth, discourage investment, and exacerbate an already precarious jobs market.
Jobseekers Face Bleak Prospects
The stark findings underscore the ripple effects of Labour’s tax policies, as employers pause hiring plans to absorb the added financial strain. With businesses increasingly hesitant to commit to long-term hires, jobseekers could face one of the toughest employment markets in years.
As the April deadline for Reeves’ National Insurance hike looms, the question remains: how much more strain can British businesses—and workers—take?
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