Tax hikes and wage pressures are putting UK jobs at risk of automation and offshoring, according to a leading recruitment firm. Hays has expressed concerns that Britain is becoming less attractive for permanent hiring as employer costs have increased over the past year.
Tom Way, Hays’ UK and Ireland chief executive, stated that wage pressures and changes to national insurance are driving employers to explore alternatives like automation and offshoring. He noted that the financial burden, coupled with a shift away from valuing employee loyalty, has weakened the jobs market.
Over the past year, businesses have been grappling with the consequences of Chancellor Rachel Reeves’ decision to increase national insurance by 1.2% in the 2024 Autumn Budget. This was accompanied by a rise in the national minimum wage, both of which came into effect in April.
Hays highlighted that ongoing pressures are forcing companies to reassess the necessity of human roles, leading many to adopt AI solutions.
The advent of artificial intelligence is already impacting the jobs market, with companies reducing hiring. A Bank of England survey of UK finance chiefs released earlier this month revealed that employers cut jobs at the fastest rate in four years due to the financial impact of Reeves’ tax hikes. Employment fell by an annual rate of 0.5% in the three months to August, marking the worst decline since 2021.
The UK’s Big Four accountancy firms have significantly reduced graduate roles, with some cutting intake by up to 29% as they invest in AI. In the banking sector, one in ten jobs is reportedly at risk as the industry invests heavily in AI.
As attention shifts to Rachel Reeves’ upcoming Autumn Budget, businesses are calling for relief from the financial burdens they face. The UK’s largest retail business group warned that further tax increases could keep shop prices elevated for an extended period.
