The Autumn Budget failed to provide enough confidence for businesses to hire, according to recruitment professionals. Chancellor John Healey announced a slower increase in the national minimum wage for 18 to 20-year-olds. However, the Recruitment and Employment Confederation stated the government “failed to hit the bullseye on business confidence to hire.”
Maxine Bligh, interim chief executive of the REC, said the Budget will “leave job seekers waiting far longer than necessary for a strong jobs recovery.” She argued the government is not creating the right conditions for firms to grow, hire, and invest. Bligh added that too much regulation is landing on employers’ desks and that agencies should have been exempted from guaranteed hours rules to help young people enter the labour market through temporary work.
Maxine Bligh highlighted a critical issue for employment costs: the Budget lacks a detailed plan to gradually restore the employer national insurance threshold. She also mentioned that employers are seeking more flexibility in the Growth and Skills Levy and additional support for concise, targeted training programs.
Cost Pressures on Businesses
Joel Barnett, CEO of Fortune Hill, noted that UK employment costs have surged by nearly 10% in the past year, alongside rising operational expenses like energy and fuel. He praised the government’s £20.4 billion allocation to a National Wealth Fund, which aims to strategically invest in growing companies.
Barnett explained that boards have become very selective about adding senior staff. They are asking if someone internally can step up, if an existing role’s scope can stretch, or if an external hire brings a new capability. He said measures that encourage investment and give businesses more confidence in the outlook should help create more room for expansion and hiring.
Michaela Gartside, director at The HR Dept, pointed out that small businesses will struggle with increased operating costs due to the 3.9% minimum wage rise. She emphasized that these businesses often operate with minimal staff, leaving little room to absorb higher wages without impacting workloads or service quality.
Future of Minimum Wage Rates
James Green, partner at Burges Salmon, described the 3.9% minimum wage increase for 18- to 20-year-olds as a balanced approach. However, he warned that this doesn’t prevent future significant rises for this age group. Green noted that the decision aims to balance progress toward a single adult rate with employer concerns about hiring younger workers.
Green questioned whether employers should prepare for a substantial wage increase for 18- to 20-year-olds in April 2028 to fulfill the manifesto pledge of equalizing minimum wage rates. The Low Pay Commission previously suggested lowering the national living wage eligibility to age 20 by 2027 and to age 18 by 2028 or 2029.
Kelly Gajjar, senior consultant at Isio, cautioned that businesses must consider how wage increases for younger workers will affect overall salary structures. She highlighted the risk of pay compression, where raises for lower-paid employees reduce the gap with more experienced staff.
Gajjar advised employers to reassess the affordability of their compensation packages amid ongoing cost pressures. She also stressed the importance of the Chancellor’s commitment to ‘act soon’ on pay transparency, which could help tackle persistent inequalities.
Healey also confirmed today that non-compete clauses in employment contracts “will no longer be a barrier” to hiring in start-ups and scale-up firms. He also stated that “workers in the everyday economy are not prevented from moving jobs.”
On immigration, the Chancellor stated that the government will enhance access for international talent through visas like the Global Talent Visa, while tightening access for low-skilled or low-paid workers.
Immigration and Non-Compete Reforms
Kelvin Tanner, immigration partner at Charles Russell Speechlys, noted that these changes will offer employers greater flexibility in recruitment and retention. However, he expressed uncertainty about how these measures will interact with the controversial Earned Settlement proposals, which could reduce the UK’s appeal to migrant workers.
Tanner noted the government clearly wants to make the UK more attractive to global talent while maintaining tighter controls overall. He said the test will be whether these reforms make the system genuinely easier and more predictable for employers to deal with.
Alan Lewis, partner at Constantine Law, added that depending on the final rules, visa reform could affect access to specialist skills. He also said changes to non-competes could make it easier for people to move jobs or establish competing businesses.
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