Fewer than one in five firms is confident about hiring staff amid rising employment costs, a poll has revealed. Only 15% of businesses are comfortable about hiring, a drop from 24% in 2025.
Entry-level jobs disappearing
Youngsters are being overlooked as entry-level jobs disappear because of soaring costs. Nearly half (44%) of businesses polled for the Confederation of British Industry/Pertemps annual employment trend survey showed that rising recruitment and onboarding costs are pushing them towards experienced hires.
Businesses voiced frustration at a hike in employers’ National Insurance Contributions as well as rises in the minimum wage.
CBI boss calls for Budget action
CBI boss Rain Newton-Smith said: “Britain’s businesses want to invest, grow and create good jobs, but these findings are a clear signal that the cost and confidence equation in the labour market needs to change.
“Higher employment costs and growing regulatory pressures are making firms more cautious about hiring and investment. That matters not just for businesses, but for living standards and particularly for young people trying to get their first foot on the career ladder.
“The good news is that this is not irreversible. Government can use the upcoming Budget to rebuild confidence by giving firms greater certainty over future employment costs, ensuring regulation supports rather than inhibits hiring, and working with business to bring down the cost of creating jobs.”
Labour costs threaten competitiveness
More than seven in 10 (73%) of the 682 firms said labour costs are the biggest threat to the competitiveness of the UK employment market, followed by workers' regulation.
Carmen Watson, chairwoman of Pertemps, warned businesses are becoming “increasingly cautious” about recruitment. She added: “Employers still want to grow and invest in their people, but rising employment costs, subdued demand and continued uncertainty are putting greater pressure on decisions around hiring, pay and workforce investment.
“The consequences are being felt across the workforce and by jobseekers at every stage of their careers.”
The Department for Work and Pensions has been contacted for comment.
