The hospitality sector accounted for almost half of job losses in the latest employment figures from the Office for National Statistics.
Trade bodies blamed the hike in employers’ national insurance contributions announced in the last budget for the loss of 84,000 jobs.
The sector accounted for 45% of all job losses, equating to around 13,000 a month. There were an estimated 79,000 vacancies in the sector between April and June this year.
The chair of UKHospitality, Kate Nicholls, said: “The change to employer NICs in particular, was socially regressive and had a disproportionate impact on entry-level jobs.
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“Without a change of tack from the government, we could be looking at even more job losses in hospitality, when we should be bringing people into the jobs market.”
The trade body wants the government to extend existing exemptions on NI contributions to include both young people and people moving from welfare to work.
Saxon Moseley, partner and head of leisure and hospitality at accounting firm RSM UK, said the reduction in hospitality staff was part of a long-term trend, but had been accelerated due to the rise in employment costs.
“We would expect to see vacancies in the sector come down from immediate post-Covid highs, but the continued decline below 2019 levels suggests government policy is weighing heavily on the sector,” he said.
“Some operators have reached their limit in passing on costs to customers and so have turned to reducing headcount to mitigate their expenses and preserve margins, which risks denting the customer experience. The hope is that the government revisits the National Insurance increase in the Autumn budget to offer the sector some form of relief.”
A further concern for the industry is uncertainty around immigration policy, Moseley added.
Upcoming changes to the visa regime will mean minimum salary thresholds for skilled worker visas will go up from £38,700 to £41,700, which could impact access to chefs and similar roles.
He said: “The sector relies heavily on overseas workers, so an inability to get hold of the right staff will only exacerbate workforce issues further.”
Retail also hit hard
The retail sector has also been heavily impacted by the rise in employment costs, with an analysis of figures from HM Revenue & Customs by The Times showing that roles in the sector have fallen by 45,600 since the budget.
Helen Dickinson, chief executive of the British Retail Consortium, said the combination of changes to NI contributions and the increase in the national living wage had “almost overnight” forced up the cost of employing entry-level workers by 10%.
She said: “From young people taking their first step into the world of work, to parents and carers returning to the workforce around other commitments, retail offers opportunities that meet the needs of people in all corners of the country.”
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