Feb 24, 2025
The British job market is witnessing its most challenging start to a year since the COVID lockdowns of 2021. According to a report by Adzuna, the number of available jobs dropped to fewer than 828,500 in January, marking a 1.9% decline from December and a 4.5% decrease from the same period last year. These figures reflect the most significant slowdown in January hiring since 2021.
Despite the reduction in hiring, the average advertised salaries have reached a new high of approximately £40,850. This surge in salaries has raised concerns at the Bank of England over the potential for wage growth to drive inflation up to 3.75% later in the year, exceeding the target rate of 2%.
Sector-specific impacts are becoming more apparent, with the retail industry seeing a dramatic decline in hiring, as vacancies dropped by over 42% compared to January 2024. The retail segment’s downturn is partly attributed to the UK’s Chancellor’s decision to raise the minimum wage and increase National Insurance contributions (NICs). From April, the NIC rate will rise from 13.8% to 15%, and the earnings threshold will decrease, heightening cost pressures for businesses that employ lower-wage or part-time workers.
Advertised job opportunities have fallen by 38% in PR, advertising and marketing, and by 35% in the energy, oil, and gas sectors. Conversely, there has been an increase in the hiring within the education sector and trade and construction, with positions rising by 34% and 23% respectively.
The hospitality industry is particularly vulnerable, with a survey indicating that 70% of businesses in this sector plan to cut jobs starting in April due to increased operational costs. Furthermore, 60% of these businesses might cancel planned investments, with 29% anticipating reduced trading hours.
The British Beer and Pub Association and other industry bodies have called on the government to reconsider the NIC threshold changes to prevent further damage to a sector that significantly contributes to economic growth.
With tax pressures escalating, accounting firm BDO reported that one in six mid-sized companies are at risk of becoming “zombie” businesses — entities barely generating enough revenue to service their debts. BDO’s Ben Peterson highlighted the compounded difficulties these companies face amidst the anticipated increases in employment-related taxes.
A Treasury spokesperson reiterated that recent fiscal policies aim to support business investments while shielding workers from higher taxes, emphasizing measures to boost economic growth and enhance living standards across the UK.