Policy changes linked to informal job losses

The story here is UK labour costs — and whether a big policy squeeze is now showing up as disappearing formal jobs. That matters because if employers react by cutting hours, delaying hiring, or shifting work outside normal payrolls, the pain lands first on younger workers and small service businesses. But the gap between “pressure is real” and “the data proves a surge in informal work” is still pretty wide. What changed is clear: from April 2025, employer National Insurance got more expensive, minimum wages rose sharply, and by spring 2026 the official jobs data looked softer. (legislation.gov.uk) ### What actually changed in policy? Two things hit at once in April 2025. Employer NICs rose from 13.8% to 15%, and the earnings threshold where firms start paying them fell from £9,100 to £5,000 a year. At the same time, the National Living Wage for workers 21 and over rose to £12.21, while the 18-to-20 rate jumped to £10 — the biggest increase for that group since the minimum wage began. (legislation.gov.uk) ### Why do people keep pointing at young workers? Because the cost shock was unusually concentrated there. The IFS argued that the 2025 changes could make it harder for young adults to get a first foothold in work. A full-time worker on the adult minimum wage became 7.1% more expensive to hire in real terms year over year. A part-time min(legislation.gov.uk)e minimum wage rose 12.7% in real terms. That is exactly the kind of math that makes entry-level hiring wobble first. (ifs.org.uk) ### Are employers saying they felt it? Yes — pretty loudly. In ONS business survey data from late February 2025, 67% of firms with 10 or more employees expected staffing costs to rise over the next three months. Nearly half said they would respond by raising prices, and 26% said they would reduce employee (ifs.org.uk)t is not made up. Employers were already signaling it before the changes fully landed. (ons.gov.uk) ### Do the latest jobs numbers show damage? They show softness, not a clean smoking gun. In the April 2026 labour-market release, HMRC payroll data showed 74,000 fewer payrolled employees in February 2026 than a year earlier, and the early March estimate was down 65,000 on the year. T(ons.gov.uk) self-employment, cash-in-hand work, fewer hours, or no work at all. (ons.gov.uk) ### What about the “unpaid family worker” claim? This is where the online story gets shakier. ONS does publish an “unpaid family workers” series, so the category is real. But the labour-market data still carry quality warnings because of Labour Force Survey problems, and ONS itself says thos(ons.gov.uk) employer reclassification strategy. It may be noise, a niche shift, or something real but smaller than the posts suggest. (ons.gov.uk) ### Are small hospitality and retail firms the obvious weak spot? Yes. Those sectors run on low margins, lots of part-time staff, and a high share of minimum-wage work. The House of Commons Library says 99.6% of hospitality businesses are SMEs. That means even if the average employer can absorb some of the tax(ons.gov.uk)n is still likely to be concentrated in the exact kinds of firms people are worried about. (commonslibrary.parliament.uk) ### Is insolvency data backing up the panic? Not cleanly — at least not yet. Company insolvencies in England and Wales were 2,022 in March 2026, up 7% on February and roughly similar to March 2025. That is elevated, but not a sudden collapse tied neatly to one policy move. The insolvency service also said that March’s jump was heavil(commonslibrary.parliament.uk)omy, but they do not yet prove a retail-and-hospitality washout caused by payroll taxes. (gov.uk) ### So what is the honest read? The pressure story is real. The strongest evidence says April 2025 made low-wage hiring more expensive, firms expected to trim headcount, and payroll employment weakened into 2026. But the more dramatic claim — that policy changes are clearly driving a broad shift into informal or “unpaid family” work — is ahead of th(gov.uk)r-specific insolvencies. That is where the real answer will show up first. (ifs.org.uk)