Vacancies lowest since 2014 (surprise)

This is what happens when you make employing someone more expensive just as automating gets easier. The last time vacancies were this low, outside the pandemic, was 2014. Small firms feel every bit of that. The rise in employer National Insurance, and the lower threshold it kicks in at, landed squarely on them, and when the numbers get tight the first thing that goes is the marginal hire, the apprentice, the person you were going to take a chance on. Add AI that keeps getting cheaper and more capable, and the maths shifts from "who do I hire" to "what can I subscribe to". I'm not anti-technology, and we use it heavily. But the people who lose out first are those at the very start of their working lives, and we already have over a million young people not in education, employment or training. The honest fix runs through the tax system: reward the firms that take people on and train them, the way we reward research and development. Right now we're taxing the thing we say we want more of.

A culture of fear and uncertainty tends to put the brakes on people and businesses taking action and making decision decisions . You only have to look at the latest Chamber of Commerce data to see that business confidence around investment and hiring remains subdued. Higher costs, increased taxes and wider economic uncertainty are making many SMEs reluctant to add to their fixed cost base.

That is reflected in conversations I’m having with clients. Most are either pausing recruitment or hiring only where there is a clear and immediate need. But it isn’t universal. I spoke to a technology business last week operating in the AI space that is doubling down on investment and recruitment, backed by its funders and a determination to capture first-mover advantage.

For most SMEs, I suspect caution will remain until after the Budget. Businesses need greater certainty over the direction of tax and economic policy before they have the confidence to invest and hire again.

Businesses are thinking twice about recruiting and this data should come as no surprise. The more you hike up labour costs, people will seek alternatives and AI is there to welcome them with open arms. Let’s see what happens in Burnham’s first budget. If this issue is not addressed things could get a lot worse.

This statistic is systematic of the crises and policies made. Increasing the cost of employment, meddling with employee rights, raising business taxes, hiking business rates, interest rates quadrupled- the list goes on. Raising tax too high stifles any market as the budget constricts - relaxing this turns the tap back on. Seems the government are satisfied with a little of something rather than a lot of everything. We have had national and global complications but most of our issues are home grown policies created by individuals with no business sense or experience.

If the government loosened the noose around business owners necks, this stat would shift quickly. The ambition of small business owners hasn’t changed, the will to expand is still there. This is the result of a stumbling economy and the cost of hiring.

Job vacancies are at their lowest since 2014…and it was entirely predictable. The Employment Rights Bill, rising employer National Insurance, and stricter dismissal rules have made every new hire feel like a gamble businesses can't afford to lose. When the numbers get tight, the first to go is the marginal hire, the apprentice, the entry-level candidate, the person you were going to take a chance on. And with AI getting cheaper and more capable by the month, the question has shifted from 'who do I hire?' to 'what can I subscribe to?' Companies are smashing revenue records with zero new headcount. We're taxing the very thing we say we want more of…and paying the price in a generation locked out before they've even started."

For a small firm, taking on someone new is a much bigger commitment than their salary alone suggests. National Insurance, pensions, employment costs and general overheads have all risen, while many businesses still lack confidence about future demand.

It is similar to what we are seeing in the property market: there may be an appetite to invest, but uncertainty encourages people to wait. AI may help some firms avoid adding administrative roles, but I think cost and confidence are the bigger factors. Many employers are probably choosing to work their existing teams harder until the outlook becomes clearer.

As Chancellor Healey said back in the 1970s, Dennis, not John, "we will squeeze them until the pips squeak." Labour's first two budgets have piled £66bn of extra tax on business, largely landing on employers, and it shows: job vacancies have fallen to 707,000, a level unseen outside the pandemic since late 2014. Add a minimum wage now worth nearly two-thirds of a graduate's starting salary, employment rules that turn a single bad hire into a real balance-sheet risk for an SME, and relentless cost-of-doing-business inflation across energy, insurance and overheads that firms have no pricing power to pass on, and the maths simply doesn't work. Rather than expand headcount, businesses are turning to AI and automation to absorb the lower-level work themselves. High costs, low visibility: the result is a hiring freeze built on caution, not confidence.