The Recruitment and Employment Confederation has warned that government plans to tackle the NEETs crisis will go nowhere unless Chancellor Rachel Reeves cuts employment costs at the Budget this month.
The REC says the Chancellor must make it easier, not harder, for employers to take a chance on new hires, invest in skills and create the jobs needed for higher economic growth next year. Without changes to National Insurance, it argues businesses will not hire and invest at the speed or scale needed to deliver the growth the government has promised.
Employer confidence fragile
The REC's latest Jobs Outlook report shows surveyed employers' confidence in making hiring and investment decisions has been in negative territory since mid-2025, while confidence in the economy has sat in negative territory since autumn 2021. With the labour market showing signs of stabilisation in recent months, the confederation says the Budget is a chance to back pro-work and pro-growth policies.
While reports suggest ministers are considering reducing the cost of hiring young people, the REC says employers need action to reduce the overall cost of hiring if the government wants to unlock growth across the economy.
Maxine Bligh: 'Bold action'
Maxine Bligh, REC interim chief executive, said: "The Chancellor must take bold action and cut employment costs to drive job creation. Higher employer National Insurance costs, rising wage bills and increasing regulation are making employers too cautious about hiring. Cuts to employer National Insurance Contributions (NICs), as well as restoring the NICs threshold, would provide immediate support."
Guaranteed hours warning
The REC is also concerned that proposed guaranteed hours measures risk one of the UK's greatest economic strengths, the flexible labour market. Bligh said the Chancellor need not look far for solutions: the £40 billion recruitment sector and a flexible labour market already help nearly 900,000 temporary and contract workers into work each day.
"That is why the government's guaranteed hours gamble is so risky. It would bury employers in cost and complexity, making it harder to hire and reducing opportunities for workers seeking choice over how and when they choose to work. Ministers should work with us on a compromise that will not damage agency work," she said.
Recruiters support the government's focus on helping more of the nearly one million young people not in education, employment or training into work. Bligh said flexible and entry-level opportunities can help young people enter the workforce, and called for more routes for temporary workers to access skills and training, including short courses within the Growth and Skills Levy and a better Skills England offer for agency workers.
