British companies are cutting back on hiring staff due to growing labour costs and concerns over higher taxes, three new surveys have reported.
A monthly survey from KPMG and the Recruitment and Employment Confederation (REC) said companies reported falling demand for workers, slower pay growth, and a glut of candidates in July.
The availability of workers rose at the fastest monthly pace since 1997, while vacancies contracted at the fastest rate since April, it added.
“Economic uncertainty, the complexities of AI adoption and global headwinds are all weighing on business planning,” said Jon Holt, group CEO at KPMG.
A separate survey by the Chartered Institute of Personnel and Development (CIPD), showed only one in four employers expected to increase staff numbers over the next three months, with 16% planning to make cuts.
Higher National Insurance and minimum wages were hitting jobs in low-wage sectors like retail and hospitality especially, said James Cockett, economist at CIPD, who also highlighted concerns over planned changes to make it harder to sack new employees in their first two years.
A third survey from BDO painted a similar picture, with the group’s employment index falling to its lowest reading since October 2012.
Companies had “tightened labour budgets” due to changes in Labour’s last budget, BDO said, and were “preparing for further cost exposure ahead of the autumn statement.”
BDO expects its employment index to remain low for the rest of the year, with “limited scope for a meaningful recovery in employment conditions”.
The Bank of England is watching the jobs market closely as it weighs up further rate cuts. The bank said last week that it believed job numbers were flat since the end of last year, with the weakness explained by the state of the economy and National Insurance hikes.
But policymakers must weigh the risk of strong wage growth fuelling another bout of inflation versus a clear slowdown in the jobs market.
Kate Shoesmith, REC deputy chief executive, said with low-wage sectors reducing hiring due to cost pressures and uncertainty, it would take co-ordinated action” from the government and the Bank of England to drive a recovery.
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