Rising Hiring Costs Are Squeezing Young People Out of UK Jobs

Rising hiring costs are squeezing young people out of UK jobs, according to the Confederation of British Industry (CBI), reported by The Oldham Times. Some 73 per cent of the 682 firms the group polled in August and September 2026 called employment costs the single biggest threat to the competitiveness of the UK labour market. Hiring confidence has fallen sharply too: only 15 per cent of employers said they felt confident about recruiting, down from 24 per cent a year earlier.

When taking staff on gets more expensive, young applicants are the first to lose out. Some 44 per cent of companies said rising recruitment and onboarding costs were pushing them towards experienced hires instead, cutting the number of entry-level openings. A further 53 per cent said wider cost pressures meant they were offering fewer apprenticeships than they wanted to.

The figures behind the warning are already grim. An estimated 981,000 people aged 16 to 24 were not in education, employment or training — NEET — between April and June this year, according to the Office for National Statistics. That was 30,000 higher than the same period last year, even though the count had dipped from the first three months of the year.

Why firms are backing away from first-time hires

Employers told the poll that a pile-up of costs is behind the pullback. Higher employer National Insurance contributions, increases to the National Living Wage, new obligations under the Employment Rights Act, and wider pressure from energy bills, taxation and borrowing costs were all named as squeezing recruitment and investment budgets.

Small firms are feeling the squeeze most sharply. A Federation of Small Businesses (FSB) survey of 1,033 small business owners and sole traders, carried out over two weeks in September, found that 28 per cent would hire more staff if small business rate relief were expanded. More than a quarter — 26 per cent — said they would raise pay or benefits instead. The discount scheme, which cuts or wipes out the business rates bill for eligible small firms, is due for review at the Budget later this year.

Rain Newton-Smith, the CBI's chief executive, said the poll results were a "clear signal" that the labour market needed reform, and urged ministers to use the upcoming autumn Budget to rebuild employers' confidence. She warned: "Higher employment costs and growing regulatory pressures are making firms more cautious about hiring and investment." The consequences, she said, reach beyond boardrooms to living standards — and particularly to young people trying to get their first foot on the career ladder.

What business wants — and what it means for young job seekers

The employers' group set out its demands in a youth employment report published in August, titled Opportunity in Every Postcode, which argued that fixing youth unemployment starts with cutting the cost of doing business. Its main asks are a cut to employer NICs designed for maximum impact, a 52-week reference period and a low-hours threshold of no more than eight hours for new guaranteed-hours rules, plus a common national framework for skills devolution so young people can find quality opportunities wherever they live.

Not everyone in business agrees on the fix. Recruitment entrepreneur James Reed has proposed a different lever: a tax on robots and AI to fund cheaper hiring of young people, an idea raised in UK business coverage this week. The FSB, meanwhile, is pressing for the rate-relief expansion, with its national chairwoman Tina McKenzie saying small firms are "up against huge and persistent cost rises" and calling the upcoming Budget the most important chance for ministers to turn pro-small-business talk into action.

For a young person looking for a first job, the message is sobering: fewer entry-level vacancies, tougher competition from experienced candidates, and fewer apprenticeship places than employers would like to offer. But the picture is not entirely bleak. The CBI's August report found that schemes already running across the country — work experience at McDonald's, apprenticeship programmes at Tesco and supported internships at Amazon and Transport for London — are changing lives, and policymakers are being urged to build on them rather than tear them up.

The story has built through the autumn. The employers' group published its youth employment report in August, arguing that the cost of doing business sat at the root of the crisis; its September poll hardened that case with fresh numbers; and ministers now face a Budget decision on whether cutting employment taxes and easing cost pressures can turn hiring confidence around. For context, this is part of the wider frozen job market, and teens in New Zealand face a similar squeeze across the globe; young applicants also face entry-level jobs demanding years of experience. The CBI chief executive struck an optimistic note: "The good news is that this is not irreversible."