Labour market statistics can be pretty dry. Inactivity rates, nominal regular earnings growth, payroll numbers and claimant counts tend not, at first glance, to fire up the imagination. The data dumps are hoovered up by economists and analysts, not least as a guide to future Bank of England interest rate decisions or as a barometer for the UK’s economic vigour.
These are important endeavours but it doesn’t take much to look beyond the numbers and reflect that the aggregate is comprised of millions of human stories. Someone still out of work, someone signing on. Someone not hiring, someone being let go. Someone getting a pay rise, someone feeling the squeeze.
This came to mind yesterday as I looked over the figures and realised that the drop in vacancies (to a level not seen for more than five years) was driven almost entirely by small businesses tightening the purse strings.
More than 13 million people, accounting for 47 per cent of all private sector employment, work at a company with fewer than 50 staff. Many of them will be at micro businesses, employing fewer than 10 people.
Farce dressed up as governing
For these companies, the decision to take on an additional employee is fraught with risk. As of April this year, it costs an employer £25,852 annually to hire a full-time, minimum-wage worker over 21. This is up from £24,806 in 2025 and £22,438 in 2024. The cost has increased by 15 per cent in two years.
In Newcastle last week I spoke to businesses of all sizes and from different sectors. They all bemoaned the incessant rise in costs (from direct labour costs to energy and the cost of regulation) but none more loudly than the smallest employers. For the government to have imposed additional costs, not least via National Insurance, at a time of economic fragility was nothing short of reckless arrogance.
Ministers are now scrambling around to cook up schemes to subsidise something that their policies have made too expensive. This is farce dressed up as governing. Economists have warned that a marked slump in hiring among the smallest businesses could be a sign of a very chilly winter ahead.
Next week’s Budget is an opportunity for John Healey to reverse some of the damage caused by his predecessor. A ‘do no harm’ Budget won’t be good enough. Labour needs to make amends.