UK hiring has fallen faster than in other major advanced economies following recent tax and minimum wage changes, according to new figures from recruitment platform Indeed.
Analysis shows the number of newly posted job adverts in the UK has dropped by 12.3 per cent since late October last year, when the Labour Government set out its initial fiscal plans.
The figures relate to job adverts no more than a week old and are widely used as a proxy for new hiring activity.
The decline is the largest among G7 countries for which comparable data are available. Figures for Japan were unavailable for analysis.
By contrast, new job postings have fallen by 5.4 per cent in Germany and 4.4 per cent in France over the same period. In the United States, hiring has declined by 3.2 per cent, while Italy has seen a 1.9 per cent fall. Canada recorded a 9.9 per cent drop, and across the euro area as a whole hiring is down by 4.5 per cent.
Economists say the sharper downturn in the UK reflects the impact of recent policy changes that have increased employment costs for businesses.
Jack Kennedy, a senior economist at Indeed, said government decisions had played a significant role in weakening the labour market.
“There are really three policy drivers to that,” he said. “The employer National Insurance contribution increase was obviously pretty consequential. We’ve had fairly large minimum wage increases and the Employment Rights Act. It’s a triple whammy that’s been contributing to that caution.”
Employers were warned ahead of the Budget that plans to raise National Insurance contributions would deter hiring. Businesses are facing a £26bn increase in employer taxes, alongside above-inflation rises in the minimum wage, which will increase by a further 4 per cent to £12.71 an hour in April.
The UK now has one of the highest minimum wages among advanced economies, a change that has particularly affected sectors such as hospitality, retail and social care, which employ large numbers of lower-paid and part-time workers.
Mr Kennedy said the data showed a clear divergence between the UK and other European economies.
“In the UK, we’ve now got low-wage jobs trending weaker than high-wage jobs, which is really quite contrasting to what we see in other European economies,” he said. “In France, Germany and Italy, low-wage job postings are still holding up better.
“That certainly speaks to the pressures that sectors that employ fairly large numbers of low-wage workers have been facing. For me, that’s quite a telling data point.”
Indeed’s international figures show that no other comparable economy has experienced a downturn in hiring on the same scale. The Netherlands recorded a fall of 1.2 per cent and Ireland 2.5 per cent, while job postings rose by 18 per cent in Spain and 1.5 per cent in Australia.
The figures come despite the Chancellor’s recent claims in Parliament that government policy is helping to boost employment and support young people entering the workforce. Ms Reeves has also argued there is no connection between higher employer taxes and the recent rise in unemployment.
Official data show unemployment has increased to 5.1 per cent, close to a five-year high, while redundancies are at their highest level since the Covid pandemic. The wider economy has also struggled, with output contracting by 0.1 per cent in October and little growth recorded since May.
Surveys suggest younger workers and recent graduates have been among the hardest hit by the slowdown in recruitment.
Mr Kennedy said lower interest rates could provide some support in the year ahead, following the Bank of England’s decision this month to cut rates to 3.75 per cent, but warned that a strong recovery is unlikely without faster economic growth.
“Hopefully, interest rate cuts will continue in 2026, as long as inflation continues to subside,” he said. “We probably would hope to see a little bit more confidence in the market, but I don’t really see an imminent, strong recovery. Really, what we need to see is clearly more growth in the economy.”
Main Image: Treasury. Licence – Creative Commons
