Young people have been the worst hit by job cuts following Rachel Reeves’ record-breaking tax raid last autumn. According to the latest official figures, there were 51,000 fewer under-25s in payrolled work in August compared to April.
The sharp fall in under-25s in payrolled work comes after the rise in employer’ National Insurance Contributions (NICs) came into force in April, pushing up labour costs. The figures also reveal that the number of under-30s on out-of-work benefits had risen by 66,000 since the General Election.
The decline in the number of workers comes as businesses across the UK cut employees and reduce recruitment following the rise in worker costs. Ben Gregg, a senior researcher at the Centre for Social Justice, said: “Young people are facing a toxic cocktail of rising employment costs and an influx of lower skilled migration into entry-level jobs. Many are turning to a life on mental health benefits as a result.”
Economists sounded the alarm on the jobs market on Tuesday after wage growth, staff numbers and vacancies all declined in the latest official figures. In August, the number of people on payroll declined for the ninth month out of 10 since Rachel Reeves raised taxes by £40bn in her Budget last year, official figures showed.
The Office for National Statistics (ONS) said the number of payrolled staff declined by another 8,000 people in August to 30.3m. Payroll employment is now thought to have fallen by 153,000 since October last year.
ICAEW economics director Suren Thiru said: “These figures suggest that the UK’s jobs market is wilting under the weight of a stagnating economy and skyrocketing staffing costs as more businesses look to shrink their workforce in response to these twin headwinds.”
The number of job vacancies in the economy has fallen from a peak of 1.3 million in the hiring boom of 2022 to 728,000 in the three months to August, according to the ONS. It marks the 38th month in a row that vacancies have declined. Average regular earnings excluding bonuses rose by 4.8pc in July, which was the weakest pace since June 2022.
Economists expect the Chancellor will have to raise taxes in her Budget on November 26 as she seeks to fill another black hole in the public finances. It is also expected that the figures will force the Bank of England to keep interest rates on hold again this year.
