Costs Crisis Hampering Hiring

18th August 2026

Reacting to the latest labour market data from the ONS, Patrick Milnes, Head of Policy for People and Work at the British Chambers of Commerce, said:

“Although unemployment has held steady at 4.9%, this cannot hide the wider problems bedeviling the UK’s jobs market.

“Business confidence is at a post-Pandemic low and the squeeze on firms’ finances shows no signs of easing. 

“With last week’s announcement that changes to zero hours contracts could cost businesses almost £3bn, many will be reassessing their recruitment plans.?? 

“The BCC's latest economic forecast suggests unemployment could reach 5.2% by Christmas, with youth unemployment spiraling to 17%, as businesses continue to face pressure from high labour costs. 

“While Andy Burnham has spoken about a new deal on education and changes to apprenticeships, if businesses cannot afford to take people on then progress will be slow. The ONS cites a downturn in hiring among SMEs as the main driver of falling vacancies. 

“The BCC’s cost stack calculator shows that costs for the average SME have increased by more than 70% in the last ten years due to successive governments’ policies. 

“Much more must now be done to bolster business confidence and unlock hiring by tackling cost pressures on firms, including a holiday on employer national insurance contributions for under 25s.” 

More detail on the labour market data can be found here.