UK job vacancies dropped by 13.8% compared to the same period last year as critics warn Rachel Reeves’s “tax on jobs” is biting. New figures by the Office of National Statistics (ONS) showed the estimated number of vacancies in the UK dropped by 26,000, or 3.2%, in the first quarter of 2025.
This marks the 33rd consecutive quarterly decline. Vacancies are now 125,000 lower than a year ago (13.8%) and 15,000 (1.8%) below pre-pandemic levels—the first time since March to May 2021 they have dipped below that benchmark. According to the data, the UK unemployment rate remained at 4.4%. Critics argue that the “tax on jobs” – a reference to measures such as increased National Insurance contributions—is discouraging hiring and weighing on business confidence.
At the start of April, larger businesses faced increased employer National Insurance Contributions (NICs), with thresholds dropping from £9,100 to £5,000 and rates rising from 13.8% to 15%.
Stephen Perkins, managing director at Yellow Brick Mortgages, said: “Fewer people working and fewer available vacancies is not the recipe for growth the Government was promising. This is the inevitable impact of a tax on jobs, which has only just begun to influence these labour market figures.”
George Holmes, managing director of Aurora Capital added: “The fall in job vacancies and payrolled workers is a clear sign that the labour market is cooling, and small businesses are on the front line of this shift. With employer costs up sharply due to higher National Insurance and minimum wage increases, many firms are halting hiring or reassessing growth plans altogether.”
Meanwhile, UK pay growth remained elevated after recent public sector pay increases. The ONS said average weekly pay grew by 5.9% for the three months to February.
This was the same as the previous quarter, which had been the highest level since April last year. Pay growth, including bonuses, was 5.6% for the period, in line with market expectations.
Bank of England officials will consider elevated wage growth when they vote next month on whether to reduce interest rates from their current level of 4.5%.
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales (ICAEW), said: “The UK’s jobs market is entering a turbulent period with a troubling mix of escalating global uncertainty and rising cost pressures, notably the National Insurance hike, likely to moderately push up unemployment, despite continued challenges over skills shortages.
“While these figures may not shift the dial on a May interest rate cut, concern over the impact of this global financial volatility may push rate setters to act to avoid a marked deterioration in economic conditions.”
Craig Fish, director at Lodestone Mortgages & Protection, added: “This latest jobs data could be the confirmation needed by Threadneedle Street that a cut to the base rate has to come, and soon. Less job vacancies, less people working and lower wage growth are all signs that growth is not happening and, of course, we still aren’t feeling the full effects of recent changes to NI and the ongoing trade war.
“Something needs to change and it looks like the ball is in the Bank of England’s court to deliver that change.”
