There’s a major flaw in Chancellor Rachel Reeves’ plan to push people off benefits and into work—how can they get jobs if there aren’t any? Business leaders are sounding the alarm, warning that her tax plans could end up doing more harm than good. The biggest concern? A hike in employers’ National Insurance contributions, set to hit next month, could make hiring new staff too expensive, leading to a serious employment crisis.
For those hoping to land entry-level jobs in sectors like hospitality and retail, the future isn’t looking bright. UK Hospitality’s Kate Nicholls has warned that the industry is facing a “crisis of confidence” not seen since inflation soared above 10%. That means fewer pubs, restaurants, and shops taking on staff – a bleak prospect for job seekers, reported the Express.
Finding a bar job or a retail gig is about to get a whole lot tougher. The industry estimates that employers will now have to start paying National Insurance for 774,000 workers for the first time, racking up an extra £1 billion in costs. That’s money businesses simply don’t have right now.
If the economy was booming, maybe businesses could absorb the extra tax burden. But it’s not. The OECD has just slashed Britain’s growth forecast to a dismal 1.4%, and whispers of a looming recession are growing louder.
The signs aren’t good. The Chartered Institute of Personnel and Development found that over a third of companies are planning to cut jobs. Meanwhile, the Federation of Small Businesses reported that confidence in the last quarter of 2024 sank to its lowest point in a decade.
If the Chancellor really wants to get Britain working, businesses argue she should be removing barriers, not piling on more costs. A strong, growing economy will naturally create jobs and boost wages—something no government scheme can match.
Instead, four in 10 businesses say they’ll have no choice but to raise prices, while a quarter are already scaling back or canceling investment. The impact could be devastating. The British Retail Consortium has warned that of the 1.5 million part-time retail jobs, one in 10 could disappear over the next three years as employment costs rise.
Labour wants to be seen as the party of workers, but these policies could end up doing the exact opposite—wiping out jobs, driving up costs, and freezing wages.
And this is happening at the worst possible time. With a trade war brewing between the US and major global economies, the world is changing fast. If there was ever a moment for the government to rethink its approach, it’s now.
