Employers are pausing recruitment across the board to cope with the Labour government’s £26 billion increase in payroll taxes and a new higher minimum wage

Published Tue, Aug 26, 2025 · 08:16 AM

[LONDON] Britons looking for their first jobs face the worst hiring drought since the depths of the Covid-19 pandemic, as the rise in artificial intelligence (AI) and higher employment costs distort career opportunities.

Postings for graduate jobs, apprenticeships and junior roles that do not require degrees have declined 4.5 per cent in the month to July to just below 210,000, according to data from job-search website Adzuna. Entry-level roles now account for just a fifth of all vacancies, well-below the 27 per cent average recorded between 2022 to 2024 and the lowest share since October 2020 when the economy was under pandemic restrictions.

First-time job seekers are bearing the brunt of the UK’s labour market slowdown, as they are the most vulnerable to hiring freezes. Employers are pausing recruitment across the board to cope with the Labour government’s £26 billion (S$45 billion) increase in payroll taxes and a new higher minimum wage. Youth unemployment reached 14.1 per cent in the three months to June, a two-point rise from pre-Covid-19 levels.

The report also adds to mounting evidence that AI is starting to reshape hiring plans. Graduate roles, which typically involve AI-friendly tasks such as sifting through documents or creating presentations, have declined 28 per cent over the last year, almost four times as fast as entry-level jobs, Adzuna figures showed.

“Hiring appetite is clearly uneven,” Andrew Hunter, co-founder of Adzuna, said.

Overall vacancies ticked down in July to almost 865,000, a 1.2 per cent monthly decline, the report also showed. The slowdown in entry-level hiring and a fall in healthcare jobs were partly offset by double-digit growth in construction vacancies.

Employers continued their shift away from hiring full-time staff towards part-time workers after an increase in payroll costs. Contract jobs have increased 22 per cent since the new higher minimum wage and tax increases in April, while permanent postings have dropped 9 per cent over that period. BLOOMBERG

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