109k jobs cut as first signs of NI increase strikes

Payrolled employment was down by 109,000 employees in May 2025 based on early estimates when compared with April 2025, with the overall unemployment rate rising to 4.6%. This is the highest figure since April 2021, just after the full impact of the pandemic.

Kate Nicholls, chief executive of UKHospitality, said: ‘Losing more than 100,000 jobs across the economy in a month goes far beyond the worst-case scenario predicted by the government’s own fiscal watchdog, major banks, and countless business groups.

‘These shocking figures should make it abundantly clear to the government that the changes to employer NICs are inflicting more harm than good, and they should be reviewed and reversed urgently.’

It is still too early to see the full extent of the NI hit to business.

With less than a month’s full data from HMRC since employer NICs went up from 6 April, the Office for National Statistics (ONS) warned: ‘Early estimates are subject to significant revisions as more returns are received by HMRC next month. The earlier timing of the data extract for May 2025 means these estimates are more uncertain than usual.’

Daniel Herring, head of fiscal and economic policy at the Centre for Policy Studies, said: ‘The provisional employment data confirms our concerns about Labour’s job tax. When you make it 11% more expensive to hire minimum wage workers, businesses simply stop hiring. 

‘The CPS warned that this government’s National Insurance hike would hurt job creation, and these early figures suggest we were right. Payrolled employment appears to have fallen by 274,000 over the last year, with unemployment rising to its highest rate since 2021.’

The latest figures also show a long-term decline in payrolled employees as more workers move into self-employment and gig economy jobs, especially in retail and hospitality. But overall PAYE salaries remained much higher than pre-pandemic with rising tax burden and high wage growth.

The jobs market remains tight in certain sectors with significant skills shortages across the accountancy profession, construction and health.

This has resulted in strong wage growth, excluding bonuses, of 5.2% in the three months to April, although this was down from 5.5% the previous month.

Professor Joe Nellis, economic adviser to MHA, said: ‘This persistent high wage growth is something that the Bank of England has their eye on. If it continues, it will be a sore spot for an already divided Monetary Policy Committee as it explores further interest rates cuts this year.’

The long-term inactivity rate for 16- to 64-year-olds was 21.3%, an improvement over the last quarter and an early indication that tackling NHS waiting lists may be having a small impact.

The estimated number of vacancies in the UK fell by 63,000 on the quarter, to 736,000 in March to May 2025.