The release of the latest employment data should serve as a wake-up call for business owners.

Over 100,000 jobs were lost in May, the worst figure in four years, with hospitality, tech and retail bearing the brunt.

One of the biggest factors contributing to these figures is unquestionably the 1.2 per cent rise in Employers’ National Insurance contributions (NICs).

This was not entirely unexpected, but the speed and scale of the impact have taken many by surprise.

When it becomes more expensive to employ someone, businesses will hesitate to hire, or may even cut back.

Behind the figures – A question of confidence

What we are seeing now is linked to confidence, stability and the everyday decisions employers are having to make.

Do we take on that new team member? Can we afford to keep our current headcount?

How do we balance the books when employment costs keep rising, yet the workload does not slow down?

For some sectors, particularly hospitality and retail, where margins are tight and workforces are large, these are decisions being made daily, and with real consequences.

Taking a step back

The numbers are of course, worrying, but it is not time to panic. What matters now is understanding how these changes affect your business, not just the national picture.

We are seeing the pressure this is placing on clients of all sizes. So what can be done?

Understand where the pressure is coming from

With National Insurance going up and wages still rising, it is getting harder for many businesses to keep their cash flow steady.

It is worth revisiting your staffing model and looking at how those costs are likely to track over the next six to 12 months, and not just this quarter.

Check whether reliefs and allowances apply

The Employment Allowance could offset some of the NIC increase. If your business is investing in tech or innovation, R&D tax credits may also provide support.

This is where getting the right advice can make a tangible difference.

Explore whether operational changes are right for you

For some, outsourcing non-core roles or adopting more flexible contracts might offer short-term breathing space.

However, these decisions need to be taken carefully, with a clear eye on compliance and employee morale.

Keep your eye on the wider picture

There is already pressure on the Government to revisit its National Insurance changes, especially with the ONS admitting the data is still provisional.

Wishful thinking and hoping for policy reversal, however, is not a plan.

Businesses need to work with the hand given to them, while staying ready to adapt again if conditions change.

Planning ahead is the best defence

The reality is that employment costs may well remain high for the foreseeable future.

That does not mean businesses are powerless, far from it.

However, it does mean they need to be more deliberate and proactive in how they respond.

If you would like to talk through what this means for your business, or explore ways to manage the current situation, we are here to help.

Contact us today and let us help you put together a strategy that works for your business.