The UK job market is in a perilous position at the moment and there is no suggestion that it will get better soon.
Unemployment is the highest it has been in four years, having risen to 4.6 per cent in the three months prior to May 2025, but there are 63,000 fewer jobs listed during the same period.
The lack of new hires, pay rises, and retentions is being blamed on rising employee expenses.
The cost of living is increasing, the cost of doing business is rising, and increased employee expenses are more than some businesses can handle.
While set to be appealing to workers, Labour’s pledge not to increase Income Tax or employee National Insurance Contributions (NICs) leaves businesses holding the bill as they have to juggle rising employer NICs, an increased National Living Wage, and an increased National Minimum Wage.
Changing thresholds have resulted in many businesses being hit by steeper NIC bills.
From April 2025, the secondary threshold at which employers begin paying Class 1 NICs dropped from £9,100 to just £5,000 per annum, and the rate of pay rose from 13.8 per cent to 15 per cent.
An increase in the maximum relief offered by Employment Allowance, up from £5,000 to £10,500, was designed to offset the change, but fiscal drag pulls many businesses over this threshold, resulting in an overall increase to the NIC bill.
Knowing that things are unlikely to change soon means that the problem cannot be avoided.
Instead, businesses need to carefully plan to accommodate the rising costs.
Where possible, outsourcing can be a useful way of easing the burden as businesses gain access to high-quality services without incurring the expenses of wages, NICs, pensions, and other associated costs.
Further price increases may be on the horizon if Labour remains committed to its pledge not to increase the burden on employees.
Optimising cash flows and utilising clear financial forecasting can help ensure that businesses keep pace with all future burdens, whatever they happen to be.
Our team of experts is on hand to help you make the necessary preparations that will allow you to handle employee expenses without sacrificing growth and stability.
Keep up with rising employee expenses. Speak to our team today!
