RUTH SUNDERLAND: Labour must tackle the cost-of-hiring catastrophe

Updated: 03:59 EDT, 26 October 2026 The country has spent years talking about the cost-of-living crisis. The obsession is such that it has its own irritating Gen Z slang label, Cozzie Livs, which is not only annoying but also trivialises a serious problem.In Wednesday’s Budget, Chancellor John Healey should pay more attention to the cost-of-hiring crisis (please no one call it Cozzie Hires).The two are linked: people need to earn in order to maintain a decent standard of living and bosses need the confidence and the cash to employ them.Latest figures on the jobs market show the deadening impact of Labour policies, in particular a collapse in vacancies at small businesses with fewer than ten staff.Advertised openings at these firms are down by nearly a third in a year, a stomach-lurching drop. Higher costs have prompted a surge in unemployment and the young are most vulnerableRachel Reeves’s 2024 Budget made it more expensive to employ people due to hikes to national insurance and the minimum wage.Labour is also ushering in workers’ rights reforms that are making employers very nervous.The upshot is that vacancies overall are at their lowest level since 2014, aside from the pandemic. The number of employees on payrolls has fallen by 111,000 in the year to August alone.In human terms this equates to a permanent loss of opportunity. For the economy it means lost productivity, growth and tax revenues that could have paid for public services.The cost-of-hiring is a major component of a wider cost-of-doing-business crisis.Costs imposed by government policy on a typical small firm have risen by more than 70 per cent in a decade, according to the British Chambers of Commerce. A quarter of the increase has come since that notorious Budget of autumn 2024.Most vulnerable are the young. The Government claims it is helping employers ‘unlock over 200,000 paid jobs for young people’, whatever that means.Grand, but there are nearly a million NEETs, those not in education, employment or training. And no one seems even to be thinking about the nearly 3.4m people aged 50 to 64 who have fallen out of the jobs market.Former Labour minister Alan Milburn could, when he produces his much-anticipated report on young NEETs after the Budget, recommend incentives for employers.That would go down badly with the Left wing, so he probably won’t.Ominously, Marc Bolland, the former M&S boss drafted in by the Government to spearhead a drive to get young people into work, warns that if employers do not hire NEETs, they will end up paying even more tax in future.Yet no amount of threats can make a firm take on staff it cannot afford.Barclays is axing 5,000 jobs worldwide because AI is a cheaper and less troublesome option than its human staff, who recently rebelled against attempts to curb working from home.The Government’s increase in gaming taxes prompted betting giant Flutter to cull 1,400 jobs in the UK and Ireland.Business Secretary Jonathan Reynolds declared on Friday, apropos new anti-red tape measures, that staff at a baker’s should be filling pasties, not forms.Quite so, but tell that to employees at Greggs, where 740 bakery and supply-chain roles are at risk.The national debt has just surpassed £3trillion and interest rates are likely to go up. The answer to this is not to pile more taxes on to employers.What is needed is discipline on government spending, coupled with judicious cuts to business and employment taxes to give firms the confidence to hire and invest.The Budget is an opportunity for Healey to repair some of the damage.Again, he probably won’t.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you