One million young people need work — but firms cannot afford to hire

Cut the jobs tax before a generation is locked out

More than one million young people are looking for employment, education or training opportunities, yet the cost of giving them their first chance keeps rising. The CBI says employer taxes and regulation are choking off entry-level jobs and wants the Chancellor to cut National Insurance before an entire generation is shut out of the workplace.

CUT EMPLOYER TAXES TO GET YOUNG PEOPLE INTO WORK

Youth unemployment is a “cost of doing business” problem according to the CBI and it calls on the Chancellor to act.

The Confederation of British Industry (CBI) is one of the UK’s most influential business bodies, and it has warned that, with more than one million young people looking for employment, education or training opportunities, the problem can’t be solved without tackling the rising cost of hiring, which is a particular problem for small and micro businesses.

In a new report the CBI said unemployment among young people is the “symptom of a wider cost of doing business problem”, and that the Chancellor needs to cut employer national insurance contributions (NICs) in the Autumn Budget.

The CBI argues that employers are being squeezed so hard by tax and regulation that they aren’t hiring for entry level jobs, leaving fewer opportunities for school‑leavers, college graduates and young workers trying to find work.

Employers Retreating

Youth unemployment is over 16%, with the number now above one million. (At Business111 we refuse to call young people ‘Neets’, as we feel ‘not in employment, education or training’ is dismissive. We believe they are LEETS: Looking for Employment, Education and Training.)

Former health secretary Alan Milburn’s independent review into the problem, estimates the crisis costs the UK £125bn a year, in benefits spending on young people and in lost productivity. The CBI says the link is clear and higher employer costs means fewer entry‑level jobs which is pushing up the number of LEETS.

Unlock Hiring

The CBI is calling for a major rethink of employer taxation with a cut in the headline employer NICs rate from 15% to 14% and possible NIC exemptions for workers under 25.

As with all these moves the costs of cuts run into billions, but the CBI boss says: “Young people have a tremendous amount to offer, yet too many are locked out of the labour market. The same challenges that are holding back growth are hurting young people.”

Squeezing Employers

The CBI says businesses are struggling with a decade of rising overheads, including:

• higher employer NICs

• increases to the national living wage

• new obligations under the Employment Rights Act

• energy bills

• borrowing costs

• regulatory burdens

• planning delays

• insurance inflation

Surveys show there was huge frustration across business after the previous Chancellor, in the 2024 Budget, increased costs across the private sector. That resulted, as many business organisations predicted, in fewer chances for young people to get started in entry‑level roles and apprenticeships.

Freezing Out Young Workers

The CIPD (Chartered Institute of Personnel and Development) recently warned that the UK has entered a “low hire, low fire” cycle, where employers neither expand nor restructure and simply hold steady. That’s stagnation and it disproportionately harms young people, who rely on entry‑level and junior admin roles, customer service positions, retail and hospitality opportunities and apprenticeships and trainee schemes.

When employers freeze hiring, young people are often the first to lose out.

Guaranteed Hours

Following the Employment Rights Act coming into force, and the consultation on banning Zero Hours Contracts, the CBI is also pushing for a 52‑week reference period for guaranteed hours contracts, and a “low hours” threshold of no more than eight hours per week.

Industry groups say the current rules risk reducing job opportunities if employers feel forced to guarantee more hours than they can afford, which again can affect young people first.

Fix the Cost of Hiring

The CBI’s message is that the UK can’t fix youth unemployment without fixing the cost of hiring. The ‘LEETs’ crisis is not just a social problem but an economic one, and the CBI is framing it as a cost‑of‑doing‑business crisis, not a failure of young people or education.

If employer NICs stay high, the CBI warns entry‑level hiring will continue to shrink, youth unemployment will go on rising and long‑term economic growth in the UK will suffer. The UK can’t afford to lose a generation of talent before they’ve had the opportunity to get into the workforce.