Reeves’s National Insurance Raid Sparks Sharpest Hiring Slump in Four Years
The UK job market is experiencing its steepest hiring slowdown in four years, with businesses preparing for the financial hit of Chancellor Rachel Reeves’s new National Insurance tax policy. The looming increase in employer contributions and changes to the earnings threshold are creating uncertainty and reshaping recruitment strategies.
A Tough Market for Jobseekers
Recent data from the Recruitment & Employment Confederation (REC) and KPMG paints a bleak picture for jobseekers. Demand for staff in November declined at the fastest pace since August 2020, when the economy was grappling with the pandemic. Hiring for permanent roles saw a notable downturn, reflecting a shift in employer priorities.
Adding to the concerns, there is a growing pool of jobseekers, fueled by reports of rising redundancies. The challenging environment highlights the strain on both businesses and workers as they navigate this policy-driven turbulence.
The Business Perspective: Adjusting to a Tough Budget
Neil Carberry, Chief Executive of REC, attributed the slowdown to the aftershocks of the Chancellor’s Budget. He stated, “It should be a surprise to no one that firms took the time to re-assess their hiring needs in November after a tough Budget for employers.”
Private sector permanent roles were hit hardest, with many businesses adopting a wait-and-see approach as they anticipate further clarity on the economic trajectory. Carberry expressed hope that hiring might recover in the new year as companies gain confidence in the market outlook.
Reeves Faces Backlash from Corporate Britain
The slump follows significant criticism of Rachel Reeves’s Budget, which included a controversial increase in the employer National Insurance rate from 13.8% to 15%. Additionally, the earnings threshold for employee contributions will drop from £9,100 to £5,000. Together, these measures are expected to generate £25 billion for the Exchequer.
Businesses, however, have accused Ms. Reeves of burdening the private sector, with some describing the policies as “milking” corporate Britain. The combination of higher costs and tighter margins has left many firms feeling squeezed, prompting caution in their recruitment plans.
Outlook: Uncertainty and Hope for Stability
The latest figures underline the fragility of the UK’s jobs market as businesses and workers alike brace for the impact of the new tax measures. While the slowdown is pronounced, some experts remain optimistic about a potential rebound once companies adjust to the new financial landscape.
The coming months will reveal whether confidence can be restored and if hiring momentum can be regained, or if the Chancellor’s policy will leave a lasting mark on the UK labour market.
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