Hospitality Suffers Largest Job Losses Amid National Insurance Hike
Posted by Emma on 14th Aug 2025 Reading Time:
The UK hospitality sector has suffered a dramatic blow, losing over 100,000 payrolled employees in the past year, with the majority of losses occurring since the Government announced increases to employer National Insurance Contributions (NICs) last autumn.
According to analysis from UKHospitality, 84,000 of these jobs have disappeared since Chancellor Rachel Reeves’ inaugural budget revealed changes to employer NICs—changes that will cost the sector an estimated £3.4 billion annually. The Office for National Statistics (ONS) confirms that accommodation and food service activities recorded the most significant fall in employment of any sector, with 108,286 fewer payrolled employees between July 2024 and July 2025—a 4.9% decline.
Impact on Entry-Level and Seasonal Jobs
The most significant decline has been among younger workers seeking entry-level positions or seasonal summer roles. Traditionally, hospitality has offered a critical first step into the workforce, providing essential skills and experience. However, with fewer opportunities, a generation of young people risks being shut out of the industry.
Kate Nicholls, chair of UKHospitality, described the trend as alarming:
“The biggest fall in employment is among younger workers, those seeking their first roles, in entry-level jobs or holiday jobs – a group now losing out on opportunities to gain vital experience and essential skills.”
Businesses Forced to Cut Back
For many operators, rising costs and policy changes have forced difficult decisions. Some restaurant owners have cancelled expansion plans, reduced staffing, and even asked chefs to assist with front-of-house duties to offset the financial pressure.
Vacancies are also falling sharply, with 7,000 fewer openings across the sector in the three months to July—a drop of nearly 9%. The Recruitment and Employment Confederation (REC) reports that summer job postings in hospitality have fallen by 25% year-on-year.
The ONS notes that some businesses are refraining from hiring or replacing staff altogether, indicating a broader reluctance to expand or invest under current economic pressures.
A Call for Government Action
Industry leaders argue that the Government must reassess the impact of employer NICs if it is serious about tackling youth unemployment and supporting economic growth. Nicholls warns that continued tax burdens could further erode the sector’s capacity to hire and invest:
“Hospitality businesses are being taxed out by rising costs and policy decisions that make it harder to hire and invest. If the Government is serious about supporting growth and tackling youth unemployment, it must urgently rethink the pressure it’s placing on hospitality businesses.”
The Broader Picture
The decline in hospitality employment reflects a broader trend across the economy, with the total number of payrolled employees in the UK falling by 149,000 in the year to June 2025. However, the concentration of losses in hospitality—particularly among young people—raises questions about the long-term health of one of the UK’s most important service industries.
As the debate over tax policy continues, the risk remains that a generation could be denied the opportunities hospitality once provided, and businesses could face further erosion of their workforce and growth potential.