When the Chancellor announced £26 billion in extra taxes and higher employer National Insurance Contributions (NIC) last autumn, the impact on business confidence was immediate.
Businesses are now grappling with:
For labour-intensive sectors such as retail, care, and hospitality, these changes pushed employment costs up by several percentage points almost overnight.
Is wage growth slowing?
While mandated pay rises have offered a short-term boost for lower earners, overall wage growth is faltering.
A recent Recruitment and Employment Confederation (REC) survey shows starting salaries increasing at the slowest rate in more than four years.
Many businesses have tightened payroll budgets, meaning pay rises above statutory minimums are now rare.
With redundancies, job moves, fewer vacancies, and career changes, there are more candidates in the job market for employers to choose from.
This supply-demand imbalance has further reduced wage pressures, particularly outside specialist and technical roles.
Are businesses hesitant to hire?
According to the Chartered Institute of Personnel and Development, only 57 per cent of employers plan to recruit in the next three months, down from 65 per cent last autumn.
While permanent vacancies have fallen, temporary and flexible contracts are helping fill some gaps.
However, this is more a reflection of caution than expansion.
Many companies are delaying investment until there is greater clarity on tax policy in the next Autumn Budget.
What this means for your business
Balancing compliance with competitiveness has become a key challenge for employers.
We are working closely with businesses like yours to manage the impact of higher costs through smarter payroll planning, reviewing employee benefits, and using technology to improve efficiency.
Get in touch for a tailored payroll review and discover how strategic planning can help ease the pressure of rising employment costs.
