UK Jobs at Two-Year Low Following Reeves Tax Raid
The UK labour market has taken a sharp downturn, with the number of workers on company payrolls hitting its lowest level in almost two years.
Official data from the Office for National Statistics (ONS) revealed payroll employment fell to 30.3 million in July, a drop of 164,000 compared with the same month last year. This marks the weakest jobs figure since October 2023.
The fall comes in the wake of Chancellor Rachel Reeves’s controversial tax raid on businesses, which saw an increase in the national minimum wage and higher employer National Insurance contributions introduced in April. Companies have been feeling the squeeze ever since.
Wage growth, meanwhile, is showing signs of easing. The ONS reported average pay growth slowing from 5% to 4.6%.
Job vacancies also continue to slide, falling for the 37th consecutive month. Between May and July, available positions dropped by 44,000 to 718,000 — the lowest in years.
ONS director of economic statistics Liz McKeown said: “Taken together, these latest figures point to a continued cooling of the labour market.
The number of employees on payroll has now fallen in ten of the last twelve months, with these falls concentrated in hospitality and retail.
Job vacancies, likewise, have continued to fall, also driven by fewer opportunities in these industries.”
Despite the slowdown, the unemployment rate held steady at 4.7% for the three months to June.
Analysts say the figures highlight the immediate economic strain caused by Reeves’s tax changes, particularly for smaller firms operating in sectors with tight margins.
While supporters argue the measures boost pay for low-income workers, critics warn that rising employment costs are pushing businesses to cut staff, freeze hiring, and scale back expansion plans.
The coming months will test whether the labour market can stabilise, or whether this slide deepens into a broader employment crisis.
