Hiring intentions among private sector companies remain at a record low with younger staff, entry level and new graduates worst affected
The downturn in vacancies and job opportunities come as businesses struggle to deal with the increases in National Insurance contributions (NICs) and other rising costs.
Just 57% of private sector employers plan to recruit staff in the next three months, down from 65% in autumn 2024, according to the CIPD’s latest Labour Market Outlook. The hospitality and care sectors, and organisations that hire young people, have been hit the hardest by rising employment costs.
The impact of rising taxes is being felt by the majority of employers and is beginning to impact salary rises, the number of vacancies advertised with a surplus of candidates for jobs amid reports of increasing number of redundancies, according to the KPMG REC UK jobs report.
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With great concern about more tax rises for business at the Budget later this year, the next three months are likely to be difficult for recruiters and candidates alike.
With rising young people out of the job market, the CIPD is urging the government to renew its focus on supporting the employment and training of young people and ensure that proposed changes to the Employment Rights Bill do not act as a further barrier to their recruitment.
The latest survey of more than 2,000 employers from the CIPD, the professional body for HR and people development, found that an overwhelming 84% of UK organisations said their employment costs have risen since changes to NICs took effect in April 2025.
The biggest factor weighing on more than a third (36%) of employers was the rise in NICs, with energy costs (15%) and minimum wage increases (12%) lagging well behind the 1.2% tax rise announced at last autumn’s Budget.
James Cockett, senior labour market economist at the CIPD, said: ‘Business confidence is faltering further under rising employment costs - and it’s sectors like hospitality and those offering vital opportunities to young people that are being hit hardest.
‘Looking ahead, some measures in the Employment Rights Bill risk adding further to the cost of employing people. This is why it’s crucial that planned measures, such as the introduction of a new statutory probationary period and process for dismissing new staff, are carefully consulted on to ensure they can work in practice.
‘If new employment laws increase the risk and complexity of recruiting and managing new staff, employers are less likely to take a chance on young workers with limited experience and more development needs.’
CIPD also said confidence was ‘muted’ across the public sector, with more of these employers expecting to reduce, rather than grow, their workforce in the next three months.
Cockett added: ‘We simply cannot afford for businesses to lose confidence in employing people if the government’s Get Britain Working agenda is to be successful and the economy is to grow.’
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