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"The NI increase has been a tipping point" for the UK jobs market

ended 18. February 2025

This morning, ONS data showed the estimated number of vacancies in the UK decreased by 9,000 on the quarter to 819,000 in November 2024 to January 2025. The UK unemployment rate for people aged 16 years and over was estimated at 4.4% in October to December 2024. This is above estimates of a year ago, and up in the latest quarter. Meanwhile, estimates for payrolled employees in the UK decreased by 14,000 (0.0%) between November and December 2024 but rose by 44,000 (0.1%) between December 2023 and December 2024. Newspage asked experts for their views, below.

4 responses from the Newspage community

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Kate Underwood
Founder & Chief People Strategist at Kate Underwood HR and Training
The jobs market feels like a pressure cooker right now. Employers are under huge pressure, and we’re seeing many small businesses ditch permanent hires for contractors to cut costs. But here’s the catch: you save money short-term, but you lose control and risk quality. Contractors run their own businesses, and that doesn’t always align with yours. The NI increase has been a tipping point. Businesses are saying: “We’d rather be smaller and profitable than bigger and constantly battling rising costs.” Recruitment has slowed, and many are in survival mode, scaling back or holding off on hiring altogether. Looking ahead, I’d expect unemployment to rise through 2025. Even though we avoided recession last quarter, businesses are tightening their belts, and sadly, headcount is the first to go. Small businesses are stuck between a rock and a hard place—invest in permanent staff and take the financial hit, or lean on contractors and lose control. Neither option feels great.
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Tony Redondo
Founder at Cosmos Currency Exchange
In the jobs market the main trend we're seeing is a widespread slowdown, driven by a stagnating economy and tax hikes on private employers. Businesses are shifting to contractors, freelancers and remote workers over permanent hires, raising concerns about job security and worker benefits. The NI increase in April and new workers' rights laws are deterring hiring, leading to layoffs and freezes. Companies are tightening spending, bracing for further economic uncertainty. Sadly, unemployment is likely to rise from 4.4% to as high as 7% in 2025.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Many businesses are about to be hit with highly impactful cost increases from Nationional Insurance and minimum wage changes. This is leading to many lay-offs or restructuring and even where that is not the case, there will be fewer employers hiring replacements from any natural leavers. Ultimately this will hurt productivity and the economy as a whole.
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Bradley Winstanley
Founder at Winstanley Associates & Ability Therapies
Due to the uncertainty surrounding the economy, permanent hiring in 2024 took a hit. The safest bet in many employers' minds was staffing with a contractor. Normally this results in a higher daily fee but less comitment to the employer. In my 20 years working in recruitment, 2024 has to be up there with the number of layoffs — and pay rises were a thing of the past. At he start of 2025 we are seeing signs of movement and clients acknowledging the need to either back fill or hire for expansion. I think the continuous rise in business costs and the current economic uncertainty could mean a small increase in UK unemployment.