The latest employment figures paint a sobering picture.
Recent labour market data shows a sharp drop in job numbers, with over 100,000 payroll positions lost in May alone.
It is the largest single-month fall in four years, and it is not happening in a vacuum.
Sectors like hospitality, retail and technology are seeing the heaviest losses.
While several factors are at play, the timing points clearly the increase in Employers’ National Insurance contributions from April.
Raising NICs by 1.2 per cent may seem modest on paper, but in practice it has lifted the cost of hiring across the board.
For businesses already managing tight margins, this is yet another pressure point.
When employment becomes more expensive, hiring decisions inevitably slow down. In some cases, existing roles are reviewed too.
Whether you run a café, a software firm, or a construction company, the question remains the same: can your current cost base support your team in the months ahead?
Rather than reacting with cuts, the priority should be gaining a clear picture of where cost pressures are building. For many businesses, that means:
If you have not reviewed your employment costs since April, now is the time.
What looked manageable six months ago may no longer hold.
There are still ways to reduce your employment tax bill, or at least soften the impact.
The Employment Allowance continues to be available for eligible businesses and can offset a portion of your NIC liability.
In some sectors, R&D tax reliefs remain a valuable source of support, particularly if you are developing new products, systems or services.
These allowances are not always obvious, so it is worth seeking professional advice.
If cutting roles is something you are considering, make sure you have explored alternative operational changes first. These might include:
Every option comes with trade-offs, but having a wider range of choices means you are less likely to make rushed decisions under pressure.
Although some are calling for the Government to rethink the NIC increase, it would be unwise to plan around policy changes that may not come.
Businesses need strategies that work now, not just in the event of future reform.
Preparing for higher employment costs as a longer-term trend is a sensible move.
That means investing in forecasting, trimming inefficiencies, and keeping the flexibility to respond if conditions change again.
There is no one-size-fits-all response to rising employment costs, but getting a clear view of your options and acting early puts you in a stronger position.
Speak with us today if you would like to talk through the numbers and find the best way forward for your business.
