Britain’s jobs market suffered the worst start to a year since the depths of the Covid lockdowns in 2021, as hard-pressed employers cut hiring in the face of Rachel Reeves’s record tax increases.
Fewer than 828,500 jobs were available in January, a drop of 1.9pc compared with December and down by 4.5pc from January of last year, according to vacancies website Adzuna.
It marked the worst January for hiring since 2021, Adzuna said, during the height of the pandemic.
Despite weaker hiring, advertised salaries hit a record high of almost £40,850, raising fears that rapid pay growth risks stoking more inflation even as the economy stagnates – a phenomenon known as stagflation.
Officials at the Bank of England are particularly concerned that sustained rises in wages will contribute to pushing inflation towards 3.75pc later this year, well above its 2pc target.
Across the retail industry, hiring almost halved, Adzuna said, with the number of vacancies down more than 42pc compared with January 2024. The industry is expected to be one of the hardest hit by the Chancellor’s decision to raise the minimum wage and an increase National Insurance contributions (NICs) paid by employers on staff wages by £25bn.
The rate of NICs will rise from 13.8pc to 15pc from April, while the earnings threshold at which it kicks in drops from £9,100 per year to £5,000, meaning companies that employ lower-wage or part-time workers face particularly large rises in their tax bills.
Hiring is falling across most sectors, with annual falls of 38pc in PR, advertising and marketing, and 35pc in energy, oil and gas. Adzuna also found a higher number of jobseekers, with more than two people available for every one position, in a further sign of a weakening labour market.
A select few industries recorded an increase in hiring, led by a 34pc rise in teaching positions and a 23pc increase in trade and construction.
Separate data suggested that Britain’s pubs, restaurants and hotels are preparing to ramp up job cuts from April, with a survey finding 70pc of hospitality businesses plan to reduce employment as higher pay and taxes take their toll.
At the same time, 60pc expect to cancel planned investment and 29pc will reduce trading hours to save money.
The British Beer and Pub Association, the British Institute of Innkeeping, Hospitality Ulster and UKHospitality all urged the Government to delay the plan to cut the threshold at which NICs are charged.
“Pubs, brewers and hospitality venues will be forced to make painful decisions to weather these new costs, which will have damaging impacts on businesses, jobs and communities,” the industry groups said.