Employment dips as businesses brace for cost hikes
Employment shrank by 0.4 per cent in February as small businesses prepare for rising costs, according to a new report from the hiring platform Employment Hero.
In a monthly report looking at data from 105,000 employees, the company found that employment reforms and business tax hikes in the Budget have impacted hiring and employee retention.
The contraction follows a small rise of 0.2 per cent in January, but it follows a broad trend set since the Autumn – with employment growth decreasing by 0.3 per cent on average each month since October.
Prior to Rachel Reeves’ Budget in October, the firm had tracked consistent employment growth across 2024.
New costs will kick in for businesses from the start of April, with the £12.25 hourly National Living Wage now applying to workers from 21 (down from 23).
Younger workers were hit the hardest by this decline, with the data finding that those aged 18-24 made up for a disproportionate 1.8 per cent of job losses.
Kevin Fitzgerald, UK MD of Employment Hero, said: “This 0.4 per cent contraction in employment growth is particularly concerning given its disproportionate impact on younger workers.
“While employers will have to pay more for these roles, the bigger challenge is that younger employees often require more training and support.”
According to Office for National Statistics (ONS) statistics in 2024, there were 946,000 young people not in higher education, work or training.
Morning Wire reported today on new data from PwC, which found that a quarter of young workers are currently considering quitting the workforce.
Welsh workers were also amongst the hardest hit, seeing a 3.3 per cent decline in February – offsetting gains seen in Wales in 2024.
Meanwhile, Scotland and the South of England saw the strongest employment growth in the UK – both at 0.9 per cent.
Fitzgerald added: “If this trend continues, we could see a much more challenging job market emerging in the months ahead, particularly for younger workers trying to get their foot on the career ladder.
“We are already nearing one million young people not in education or employment – this will only get worse.”