Hospitality and retail job hiring cut after National Insurance budget hike

Recruitment for new jobs and temporary staff over Christmas collapsed after they were tied up tax and wage increases were included in Rachel Reeves’ Budgetsaid industry experts.

Advertisements for roles in the hospitality and tourism sector were down 7% from last month Budgetwhile in retail The number of advertised jobs fell by 2%, according to job site Indeed.

Temporary seasonal job postings that tend to focus on dating Christmas– related demand in this period of the year decreased by 23 percent year-on-year.

Overall, job postings for all sectors were down 1.7% since the budget.

Some employers are putting permanent hiring decisions on hold and turning to temporary employment as an interim solution while they decide how to move forward, according to Manpower UK, one of the country’s biggest recruitment firms.

Lower-wage jobs are particularly hard hit, with a shift to more temporary employment for roles such as grillers, warehouse workers, drivers, production agents and food production staff, the company said.

Petra Tagg, director of Manpower UK, said the Chancellor’s decision to increase the employer national insurance contributions (NICs) has “put already cost-conscious businesses on the back foot as they consider their long-term plans”.

Earlier this week, major retailers issued a joint letter warning of “inevitable” job losses after Reeves outlined plans to increase NICs and the minimum wage in April.

National insurance payments will rise by 1.2 percentage points for employers, from 13.8 per cent to 15 per cent. The secondary earnings threshold – the level at which employers start making NIC – will be reduced from £9,100 to £5,000.

In another joint letter organized by UK Hospitality earlier this month, bosses said some minimum wage jobs would become “unviable” as a result.

Tagg said “many” companies are still unsure of the best solution to cover the costs they are facing – and are putting a pin on new hires as a result.

“Our analysis shows that increasing NICs could cost employers up to 33% more for each lower-paid worker – they have to make up that difference somewhere,” she said. and.

“As employers weigh this dilemma, we’re seeing them hold back on permanent hiring decisions, which has led to an increase in demand for temporary staff as a stopgap.”

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She said employers had hired temporary staff such as warehouse workers and drivers to support an expected Christmas home delivery boom, but expected to see “a very different picture by 2025” once insurance changes national will come into force.

“We expect costs to be pushed to a point where companies will have to raise prices to cover the changes – so next year’s holiday demand picture may not look as rosy,” Tagg added.

Jack Kennedy, senior economist at Indeed, said job demand has been “slow” recently, with jobs posted 14 percent below pre-pandemic levels and falling gradually over the past two years.

He said it was “potentially too early to tell” how much the recruitment slowdown is due to the measures announced in the Budget, but said: “We anticipate further headwinds against the NI rise as well as the 6.7% rise in the Living Wage at the national level. both are due to come into force in April next year, which will particularly affect lower-wage sectors and for the hiring of permanent employees.

“Even before the changes in April, we’re seeing seasonal temporary job postings decline.”

He said retailers “appear to be anticipating a slow Christmas trading period” and are “looking to contain staff costs”.