Another jobs tax – how the Budget fails to deliver growth or jobs

The Autumn budget was a missed opportunity. It wasn’t quite the catastrophe of last year, but it fell far short of the pro-jobs, pro-growth Budget the country so desperately needed. There was little for businesses to celebrate and even less for job creation, instead it added another layer of cost for employers already struggling with higher National Insurance contributions and wage pressures.

Job vacancies fell a further 5% in October 2025 compared to September

The UK is facing a jobs recession. Job vacancies fell a further 5% in October 2025 compared to September and were 12.4% lower than the same month in 2024 – a sharp decline that breaks the usual seasonal uplift expected at this time of year. At the same time, unemployment rates are up and the number of people in payrolled jobs is down. Confidence on both sides has evaporated, with businesses hiring less, and job seekers getting ever more desperate.

And yet the Budget gave the jobs market three further blows. The rise in the minimum wage, the three-year freeze in employer National Insurance (NI) thresholds and the £2000 cap on salary sacrifice, all adding to the cost of employment.

National Living Wage

From April 2026, the National Living Wage for over-21s will rise to £12.71 an hour, while pay for 18–20-year-olds jumps 8.5% to £10.85, narrowing the gap between younger and older staff. On the surface, this seems positive for workers, but for employers, particularly those in labour-intensive sectors such as retail, hospitality and logistics, it increases the baseline cost of hiring, likely leading to fewer advertised vacancies, reduced hours and more selective recruitment. It’s likely to disproportionately impact the younger generation, which is worrying given there are almost 1 million 16 – 24-year-olds not in employment, education or training.

Some businesses may also respond by consolidating responsibilities into smaller teams, accelerating automation, or favouring candidates who can “hit the ground running” rather than investing in inexperienced staff. 

Meanwhile, the freeze on employer NI thresholds quietly increases payroll costs over time, deepening the hiring crisis. Wages continue rising with inflation, but the NI threshold stays fixed. For SMEs employing juniors in the mid-£20,000s to managers on £45,000+, a £2,000 pay rise per employee adds hundreds in additional NI contributions. Across a team of 10-20 staff, this adds thousands of pounds to annual payroll by the early 2030s.

The proposed Employment Rights Bill also threatens to undermine confidence and hiring. While, well-intentioned businesses have been vocal that it swings the balance too far, making recruitment riskier and more costly, particularly for SMEs already on thin financial margins. More red tape, ambiguity and legal exposure will only further deter employers from creating more permanent roles.

AI adoption is already reshaping entry-level employment

At the same time, AI adoption is already reshaping entry-level employment. Without targeted growth incentives, companies are beginning to use automation to reduce headcount rather than use and complement existing roles. In a growth-oriented economy, AI should boost innovation and productivity, but under current conditions, it’s being leveraged to reduce costs, and subsequently jobs.

Perhaps the biggest positive from this Budget is that it’s over. The lengthy and extended period of speculation can be put to bed, and businesses now have clarity and (relative) stability in which to plan. I accept that’s not a ringing endorsement.  

As CEO of one of the UK’s largest job boards, I see the stark reality – fewer vacancies, more competition for roles, rising anxiety for businesses and jobseekers. A pro-jobs Budget could have boosted productivity, increased tax receipts, reduce welfare dependence and unlocked opportunities for millions. This Budget simply reinforced current employment trends – with no real trajectory for growth.

By Lee Biggins, Founder and CEO of CV-Library