UK Employment Hits 14 Year Low

New stats reported by the Telegraph show that the UK’s labour market has dropped to its weakest point since 2011, with many companies across key sectors not hiring.

The higher cost of having employees, alongside uncertainty around the budget have pushed employment to a 14 year low.

The Weakest Job Market Since 2011

The stats, which were measured by accountancy and advisory firm BDO’s Employment Index, look at hiring, job losses and unemployment based on a number of surveys.

Additional data from KPMG and the Recruitment & Employment Confederation (REC) confirmed the same findings, with the number of full time jobs on offer hitting a 16 month low ahead of the budget. (The Telegraph).

Even more shocking is that job offers across every one of the 10 sectors mentioned in the survey dropped, with construction and retail showing the sharpest slip.

The Budget Is Blamed For Making Hiring Harder

And whilst many are shocked by these stats, those that have been closely following the Labour government’s budgets will say this was inevitable.

In her first budget last year, Chancellor Rachel Reeves increased employer National Insurance and then went on to increase the minimum wage by 4.1% for over 21s and 8.5% for 18-20 year olds.

This made the cost of hiring staff exponentially higher for businesses across the UK. The result? Businesses just aren’t hiring in an attempt to keep their heads above the water.

And things really are that bad, with a spokesperson from the BDO commenting that output and employment are the worst they have seen since the financial crash. (Telegraph).

As Permanent Hires Are Down, Part-Timers Are On The Up

Whilst the amount of permanent roles has dropped, it looks like businesses are staying afloat through hiring temporary workers. KPMG and REC both reported an increase in temporary job roles, showing that businesses are thinking more about getting through the day to day than they are long term.

This isn’t just a problem for people’s job stability, but also for progression. For young people, moving from job to job doesn’t give them the ability to really grow and learn from a company in the same way.

For businesses it makes sense, but for many, it makes finding and holding a job much more difficult.

One Million Young People Out Of Work

This is having a hugely negative impact on young people currently NEET (not in education, employment or training) – of which stats show there are currently 1 million. This group of young people has risen 26% since the pandemic, a huge number for the age group that should be driving an economy forwards.

To help combat this, Prime Minister Kier Starmer launched a £725 million pledge to create 55,000 apprenticeships. However, with companies not even having jobs to hire for, it’s unlikely many will have the capacity to take on apprenticeships, even with government funding.

The reality? Taxing businesses more mean they have less money to hire.

A Wider Economy Of People Out Of Work

An even bigger picture of the UK economy shows that not only are people out of work, but there isn’t much incentive for them to go back.

According to the Centre for Social Justice, 5 million people are now receiving out-of-work benefits, almost double pre-pandemic levels. This means that 1.5 million children live in workless households, the fastest rise on record.

And it’s no surprise when the amount you can earn living on benefits is significantly higher than those in work.

According to the Mirror, a family on full benefits can receive £18,000 more per year than a working household at the national living wage. Additionally, a working family would need £71,000 pre-tax to match a three-child household on benefits. To put this into perspective, the average UK salary sits at £39,039 per year according to the ONS.

What incentive then do people across the country have to get up and work?

The UK’s Employment Figures Raise Broader Questions

The figures around unemployment in the UK aren’t just worrying, they need to be urgently addressed. The country is battling weaker employment than it has seen at any point since the early 2010s, high employer costs and rising dependency on benefits.

And whilst the government is investing in apprenticeships and encouraging people into work, without businesses being able to afford employees, and without people having an incentive to work, the UK is entering a vicious cycle.

So, how will the government get the economy moving again? Time will tell.