IoD press release Government must make employment reforms more workable as unemployment rises to five-year high
Responding to the latest ONS labour market data, Alex Hall-Chen, Principal Policy Advisor for Employment at the Institute of Directors, said:
“Today’s data shows a further weakening of the labour market, with the UK’s unemployment rate reaching a near five-year high of 5.2% in the final three months of 2025, up from 5.1% in the three months to November 2025.
“The best way to boost employment is to make it less risky and less costly for businesses to hire staff. Every major employment reform over the past year and a half – the Employment Rights Act, above-inflation increases to the National Living Wage, and the employer’s National Insurance hike – has had the opposite effect. The business community has consistently highlighted the negative impact which these reforms will have on hiring, but the Government has so far not shown that it is committed to addressing the majority of employers’ concerns.
“If the Government is serious about increasing employment, particularly for groups currently furthest away from the labour market, it must take concrete steps to strengthen the business case for hiring. A welcome first step would be to use secondary legislation to make the Employment Rights Act more workable for businesses, for example, by exempting all SMEs from trade union access provisions and increasing the reference period for the guaranteed hours entitlement to 52 weeks.”
