IoD Press Release  Labour market continues to soften as employment policies undermine employer confidence

“Today’s data points to a further weakening in employer demand for labour, with payrolled employees decreasing on the year by 0.5% and vacancies down by 44,000 (5.8%) on the quarter.

“This continued softening of the labour market is a direct result of policies which are increasing the cost and risk of employing staff. The recent increase in Employer National Insurance Contributions, alongside employment law reforms and above-inflation increases to the National Living Wage, have substantially weakened the business case for hiring.

“Government action to restore business confidence in hiring is urgently needed. IoD research in July found that two thirds (64%) of directors cited addressing the cost of employment as a top-three action government could take to support their business. As a first step, government should support key amendments to the Employment Rights Bill recently passed in the House of Lords. These include reducing the qualifying period for unfair dismissal from two years to six months rather than to day one, and reinstating the 50% voting threshold for industrial action.”

Full results:

894 responses from across the UK, conducted between 11-30 July 2025. 17% ran large businesses (250+ people), 18% medium (50-249), 23% small (10-49 people), 33% micro (2-9 people) and 10% sole trader and self-employed business entities (0-1 people).

In which of the following areas would you most like to see government action to support your business? Please select your top three