The CIPD is urging the government to enhance support for the employment and training of young people and to ensure that proposed changes to employment rights do not hinder their recruitment.

British employers are experiencing the weakest hiring intentions since the COVID-19 pandemic, with only 57% planning to recruit in the next three months, according to a recent Chartered Institute of Personnel and Development (CIPD) survey.

This marks a slight decline from 58% in the previous quarter, suggesting a potential slowdown in the job market.

Jon Holt, CEO of KPMG, indicated that economic uncertainty and challenges from AI adoption are contributing to a cooling labor market as executives hesitate to increase recruitment budgets.

A report from KPMG and the Recruitment and Employment Confederation (REC) highlighted a significant drop in recruitment activity in July, particularly for permanent positions, as employers face increased budget pressures.

The REC also noted that growth in starting salaries for July was the slowest since March 2021, indicating broader challenges in the labor market.

Increased costs from higher employer social security charges and a raised minimum wage, introduced by Finance Minister Rachel Reeves, are negatively impacting job growth, especially in the hospitality and social care sectors.

Critics, including former footballer Gary Neville, have condemned the NIC hike, arguing it has adversely affected employment and increased burdens on businesses.

The hospitality and care sectors, which employ many young people, have been particularly affected, with 37% of employers hiring under-21s reporting significant cost increases due to NIC changes.

Reeves has been alerted to a potential £50 billion shortfall in government finances, which may lead to tax increases or spending cuts.

Upcoming official unemployment data is expected to show the jobless rate holding at 4.7%, near a four-year high, with economists closely monitoring pay growth trends.

Broader economic challenges, including weak domestic demand and uncertainties related to U.S. trade tariffs, are also affecting hiring practices.