Britain’s youngest workers are facing a tougher jobs landscape as businesses react to higher employment taxes and a looming rise in the minimum wage by cutting back on hiring.
Fresh data from HR services firm Employment Hero, which tracked 105,000 employees at more than 1,500 small and medium-sized firms, showed that overall SME employment shrank by 0.4 per cent in February—wiping out the 0.2 per cent gain recorded at the start of the year.
Youth employment has dropped most steeply, with a 1.8 per cent contraction among those aged 16-24 last month alone. Analysts say this is no coincidence: businesses hit by rising costs appear to be laying off or not replacing younger staff, who will become more expensive to employ from April. The upcoming hike in employers’ national insurance and the end of a lower minimum wage band for 21- to 23-year-olds mean the new £12.25 national living wage will apply to all workers over 21.
Employers will also face a higher bill for each member of staff, estimated by some to average around £900 more per employee. Kevin Fitzgerald, managing director at Employment Hero, says this leaves smaller firms with little choice but to absorb the workload themselves rather than hire or retain younger staff, who often need extra training and support.
The trend comes at a time when the number of 16-24-year-olds not in education, employment or training (Neets) has reached an 11-year high of 987,000. With younger men more likely than women to fall into this category, concerns are growing that this demographic could miss out on the early-career experiences that typically set them on a stable professional path. Rising mental health challenges among this cohort, with more than a third reporting “common” mental health issues, only add to the difficulties.
The government’s response so far includes a “youth guarantee” for 18- to 21-year-olds in England, offering a route to employment, training or further education. Yet many fear these measures may not be enough if the overall market continues to tighten.
Despite the grim outlook for young jobseekers, broader figures from the Recruitment and Employment Confederation do show a tiny 0.1 per cent uptick in UK job openings in February, rising to 1.55 million. Construction has led the way, with vacancies surging by 13.2 per cent in a single month. Neil Carberry, chief executive of the REC, sees this as evidence that “businesses are ready to hire again” despite “wage increases, global political shifts and uncertainty about” reforms to workers’ rights.
For the moment, however, Britain’s young workforce is feeling the immediate strain of surging payroll costs, leaving policymakers and employers alike to grapple with how best to ensure opportunities are still open to those at the very start of their careers.
