Redundancies 'a clear and present danger', top recruiter warns, as 'jobs tax' kicks in and tariffs spark market chaos

7 April 2025, 11:00

Ask the Experts: Recruitment Boss James Reed takes your calls | 07/04/25

One of Britain's top recruiters has warned that job losses are "a clear and present danger" because of the increase in employee national insurance, coming as new US tariffs create financial chaos.

James Reed told LBC's Nick Ferrari at Breakfast that the change was "a tax on jobs", and warned that "the timing couldn't be more terrible".

It comes as his company Reed also shared new data with LBC that revealed that the number of new job listings in the UK economy had plummeted by nearly a quarter in the last year.

The increase in employee national insurance contributions came in this month - just as Donald Trump imposed tariffs, sending stock markets into a tailspin around the world.

The changes imposed by Chancellor Rachel Reeves included an increase to the national insurance contributions paid by businesses, which rose from 13.8% to 15%, as well as lowering the point at which companies must start NICs for their staff to £5,000 per employee.

Read more: Job postings down nearly a quarter amid fears over Employer National Insurance rise

Read more: Prices ‘pushed higher’ and warnings of job losses as National Insurance rise comes into effect

The UK economy shrank unexpectedly by 0.1% in January

Mr Reed said the changes were "piling costs on employers at a time when they're struggling".

He added: "I think there's going to be a tough few months ahead."

Mr Reed said that his company's recent survey of over 250 employers showed that 46% were cutting back on hiring.

"Almost two thirds are concerned or very concerned about the impact of this national insurance increase," he said.

Mr Reed told LBC in December that "warning lights" for a recession were flashing.

"All the news we've had over the last few days, I'm afraid, makes that more rather than less likely," he added on Monday.

Warning on jobs and price rises as national insurance hike comes into effect

As part of their monitoring of the jobs market, Reed.co.uk, which handles 30 million job applications per year, tracks the listing of new positions on its website and analyses how the landscape compares to previous years.

The recruitment giant’s data, provided exclusively to LBC, shows a 23% decrease in the number of new jobs being uploaded to their site across March 2025 when contrasted with the same month in 2024, likely reflecting the additional costs faced by businesses and the uncertainty caused by President Trump's tariffs.

In October’s Budget, the Chancellor announced measures which have been criticised by industry groups for hammering businesses’ finances.

The changes included an increase to the national insurance contributions paid by businesses, which rose from 13.8% to 15%, as well as lowering the point at which companies must start NICs for their staff to £5,000 per employee.

Addressing the criticism of the decision in a recent interview with LBC’s Nick Ferrari, the Chancellor Rachel Reeves stressed that the measure was necessary to plug a £22 billion shortfall in the public finances, and pointed to “record investment” in the form of £60bn secured for the UK economy at the government’s investment summit last year.

Watch again: Nick Ferrari was joined by Heidi Alexander | 07.04.25

However, businesses across the country have warned that the rise in national insurance contributions could result in them scaling back their recruitment plans.

The British Chambers of Commerce have warned that businesses ‘are sitting on a powder keg of costs’, referring not only to the NICs rise, but also additional expenses that could emerge as a result of Labour’s Employment Rights Bill, which is set to introduce reform to areas such as statutory sick pay.

Retail and hospitality are two sectors which have been highlighted as particularly vulnerable to the increase that came into effect yesterday.

The British Retail Consortium has cautioned that 160,000 part-time jobs could be at risk.

Meanwhile, Kate Nichols, chief executive of Hospitality UK, which represents about 130,000 pubs, restaurants and bars, described the move to increase NICs contributions as the “biggest regressive tax change” she’s seen in her 30 years in the industry.