London hiring plunges as Rachel Reeves’ tax grab weighs
London hiring has suffered a steep drop as rising costs weigh on employers following Rachel Reeves’ tax grab.
Permanent staff places in the capital – hires with no fixed end date – fell at the sharpest rate in 22 months in June.
Meanwhile, temporary bills, which track the total income recruitment agencies earn from placing temporary workers with firms, marked the strongest drop since February.
This came as overall vacancies declined amid limited appetite across the Capital, according to a report compiled by KPMG and REC.
Neil Carberry, REC Chief Executive, said: “The labour market is sending mixed messages month to month, suggesting employers are taking a practical and conservative approach, hiring more when they need to, rather than when they want to.
“Much of that hesitation stems from the scar tissue left by the Spring tax hikes.”
Redundancies and tight budgets have contributed to a rapid enlargement of the pool of job seekers, researchers said.
Financial services and hospitality shed jobs
The fall in permanent vacancies marked the eleventh consecutive month of reductions in London, with June’s drop being the sharpest in four months.
Businesses across the UK have warned they would be forced to row back on hiring plans after Reeves upped employers’ national insurance contributions 1.2 per cent in her Maiden Budget.
The tax grab, which came into effect in April, has sparked fierce backlash. Following the latest dire growth statistic revealing the economy shrunk 0.1 per cent in May, shadow business secretary Andrew Griffith urged Labour to “reverse their onslaught of tax and red tape”.
Increases to the national minimum wage and Deputy Prime Minister Angela Rayner’s overhaul on employment law has also been listed by firms as headaches effecting hiring.
The financial services sector has felt the sting of job cuts with research from the CBI indicating there would be no slowdown in headcount trimming over the coming months.
Hiring managers have had to adapt to the lowering in the salary threshold for employers’ national insurance contributions (NICs) down to £5,000, with the Employment Rights Bill also proving to make recruitment more knotty.
Figures from the Office for National Statistics (ONS) this month also revealed the hospitality industry has shed 69,000 jobs since Reeves’ tax hike.
UKHospitality chief executive Kate Nicholls has warned that if current trends continue, up to 200,000 workers – nearly six per cent of the sector’s 3.5 million-strong workforce – could lose their jobs within the first full year of the policy.